More Tech Mergers on the Horizon

"The rules of economics don't apply to the high-technology sector - or so it might appear to anyone who has been waiting for a high-tech shakeout. Growth has slowed, profits have shrunk, and investors are eager for the billions of dollars in potential value to be had from mergers, acquisitions, downsizings, and liquidations. All signs point to an imminent restructuring, yet so far not much has happened.

There are certainly formidable barriers to the consolidation of high tech, but the same was true of defense, banking, automobiles, petroleum, and indeed every sector that has restructured. Fundamental economic forces ultimately prevailed, however. In high tech too, the barriers are starting to erode.1 While they might delay change a little longer, restructuring is inevitable - and likely to happen sooner rather than later.

It's time for technology executives to gain a better understanding of what restructuring means for them and to move forward with plans to thrive as it gathers steam. To do so, these executives will have to understand how the unique dynamics of their individual industries shape what companies can achieve in the imminent restructuring. "

From The McKinsey Quarterly.