TOKYO -- When SoftBank Group Chairman and CEO Masayoshi Son found himself in a meeting with Saudi Arabian King Salman and U.S. President Donald Trump in the king's palace in Riyadh in May, it was all part of a gamble by the Japanese tycoon to take his empire beyond telecommunications and into the realm of the true giants. Think Google, Apple and Amazon.com.
Son was there thanks to a 10 trillion yen ($89.8 billion) investment fund that SoftBank established with Saudi Arabia to channel oil money into U.S. information-technology startups. The move also served a diplomatic purpose by helping improve shaky ties between the U.S. and the Middle Eastern country.
The fund's massive scale reflects Son's thinking that small bets and "safe driving" will get him nowhere in his push to make SoftBank a world-class IT powerhouse.
Becoming a "platformer"
Last fiscal year, SoftBank's net profit topped 1 trillion yen, making it only the second Japanese nonfinancial company to hit that number after Toyota Motor. But Son's ambitions go far beyond profit figures.
The global IT industry is currently dominated by the likes of Apple, Google and Amazon. Son has described such companies as "platformers" -- players so powerful that they set the industry standards. Their presence has spread to countless sectors, from automobiles to financial services to health care, and has fundamentally changed the way business is done.
Son had hoped that pursuing takeovers in the telecom business would be enough to join the global IT elite. But he found that the platformers have an edge because they can expand their "economic blocks" by obtaining ever-more control of customer data and exerting their dominance across an array of industries.
This realization prompted the Japanese businessman to binge-buy stakes in companies that he regards as potential platformers. His targets have included ARM Holdings of the U.K., which controls 90% of the smartphone-chip-design market, and U.S. companies OneWeb, a satellite company, and Nvidia, which makes graphics processors for autonomous-driving technology.
In launching the new fund, Son made maximum use of his personal connections, enlisting investment from Oracle founder and friend Larry Ellison, as well as from Apple, whose late founder, Steve Jobs, first met Son at Ellison's house.
Large strategic investments have pumped up SoftBank's debts to 14 trillion yen. But this is all part of Son's bet to create his own economic bloc.
Just as Son has shifted his focus away from telecoms, AT&T chief executive Randall Stephenson, a player in the U.S. telecoms industry, sees the company's future in the convergence of telecommunications and broadcasting.
Under this vision, AT&T has acquired satellite broadcasting company DirecTV and is in the process of a $108 billion deal to acquire Time Warner, which has news and film operations.
Stephenson's strategy to grow through acquisitions recalls the external growth tactics that his predecessor, Edward Whitacre, used to take what was then a regional telecom player to the top position in the U.S. industry.
Trump opposes the push to buy Time Warner, but Stephenson appears undeterred. He is determined to make AT&T a leading platformer in the age of fifth-generation mobile technology.
According to U.S. research company IDC, the volume of data flowing worldwide will expand fortyfold in the decade through 2020 on the back of advances in the internet of things and artificial intelligence technologies, and as the use of 5G grows.
In the smartphone era, the winners have been Apple, Google and Amazon. But with technology changing at such a head-spinning pace, the next decade may see new industry royalty emerge. Will Son find himself with a crown?