I had an interesting discussion with two friends recently and since then I am thinking about it (thank you guys 😅). It all started with a simple question: Is Netflix an IT company? What about Amazon? And Apple? Microsoft? Spotify? You can imagine how long it took right?
One of the main arguments was: If a company has an HR qualified to search and hire high qualified IT professionals, and if the company has a strong system structure that invests in modern and high tech stack it is an IT company. If I think about it as a criteria to define an IT company, we could say that banks, car manufactures, and even big coffee franchise companies are in the IT segment. Which company does not need IT nowadays? Even small business needs some kind of financial system to support their operation. And to stand out from competitor’s, IT is THE investment to achieve this, and it can be by using a CRM software to try to understand your customers, an ERP to have a an optimal finance control, or a Data Science team to help you understanding your market and discovering opportunities to outstanding.
The second argument was more focused on the product or service of the company. If it sells electronics or software, or some IT service, like IT consultancy, it categorizes in the IT segment. And that would excluded big players from this category. Netflix would just be a movie company, Spotify a music company, and Alibaba a simply retail store.
And now, in short, what I think about this topic: both are too extremes. I did some digging on what is company segment, what categorizes the segment of the company and so on. The following explanations can help a bit:
- “A segment is a term used to describe a component of a business that generates its own revenues and creates its own product or product lines.”
- “Usually, if a unit of a business can be carved out of the entire company and remain self-sufficient, it may be classified as its own segment.”
To use Netflix as an example, for me to summarize my opinion in a more concrete way, I extracted this sentence from Netflix’s investors page: “Netflix is a global streaming entertainment service offering movies and TV series commercial-free, with unlimited viewing on any internet-connected screen for an affordable, no-commitment monthly fee. Netflix is a focused passion brand, not a do-everything brand: Starbucks, not 7-Eleven; Southwest, not United; HBO, not Dish.”
After reading that, I am sure one of my friends is thinking: “I told you so, I was right!” Maybe! But here I have a perfect example to try to show why both arguments are too extreme for me. First of all, Netflix is dictating new technology trends and has become a dream job of many IT professionals because of that. I myself already read many tech blog posts from the company and it is really inspiring. The way they use technology to improve the user experience, from a new database model for faster load of a movie/series to algorithms to help them to easier find something new to watch. How can we say it is not an IT company?
Now you will think that I am sitting on the fence here, but for me this is a too fuzzy area. Like I mentioned before, technology can be the difference between being a big and successful company and a failed one. So the fact that a company has a strong tech focus maybe does not make it an IT company, but neither doesn’t make it a not IT company if they don’t sell technical products or services.
PS1: And just to be clear, I am not talking about an official financial market categorization here, but a more informal friends discussion kind of categorization. 😂 PS2: No, I did not added the wrong images to the post, each one of them represents one of my friends. PS3: If after reading all of that you are thinking that I might have overthinking that a bit too much, what can I say?
Sources:
https://www.investopedia.com/ask/answers/061615/what-are-some-examples-businesses-use-market-segmentation.asp
https://www.investopedia.com/terms/m/market-segment.asp
https://ir.netflix.net/ir-overview/long-term-view/default.aspx