What’s an Industry?

LONDON – Carmakers are afraid of Apple. YouTube, Netflix, and Amazon are upending the television industry. Skype, Facebook, Twitter, Snapchat, and others have changed consumers’ notions of how – and how much it costs – to communicate with one another. Sectors and industry delineations as we know them are breaking down.

Once upon a time, those delineations established a fairly clear-cut world. Car companies made cars, and they were in the automotive industry. Phone companies ensured that we could speak to one another over great distances, and they were in the telecommunications sector. Broadcasting companies made television shows, and they were in the media sector.

Everything was neat and orderly. Analysts could easily categorize companies and tell the markets what they were worth, boards could oversee firms with a view to shareholders’ happiness, and all was right in the world. Until it wasn’t.

That world – in which clearly defined sectors enable easy classification of what a company does – is disappearing before our eyes. Is Apple a technology company or a luxury watchmaker? Is Google a search-engine firm or an up-and-coming car company manufacturing driverless vehicles?