Blogs & Comment

Just what is "Canadian tech"?

The issue of Canadian Business that hit newsstands Thursday features our annual Tech 100ranking. We took a different approach this year: it’s still the list of Canada’s biggest publicly traded technology companies, but we decided that running company financial metrics in a big table spread over two pages was a waste of precious space not only was it hard for readers to glean much useful information, but it was out of date in almost no time. Instead, we published two narrow sidebars that rank the companies with their market capitalizations as of May 31, and Calvin Leungwrote some brief investment-focused stories on a few of the more notable companies. As for the data, it’s all here, in a more dynamic table format that you can sort. Plus, CB data manager extraordinaire Phil Froatsupdates it quarterly.
But something else we changed is the criteria for what even makes the list. We revisited the question, Just what is“Canadian tech”? Research In Motionand Nortel Networksobviously make the list, but Canada does not have a huge pool of traditional computer manufacturers, for instance, or even many big software developers. Standard industry classifications, like those used by our data provider, Bloomberg, are not always completely accurate or up-to-date, and relying on them wouldn’t provide an accurate snapshot of technology companies in Canada it would be easy to cast too wide a net and rank non-tech companies, or conversely, miss firms worthy of inclusion. For example, in the aerospace sector, MacDonald, Dettwiler & Associatesis a very high-tech company, but it’s shifting much of its business into information services. It needs to be on any Canadian tech list, but its traditional industry peers in aerospace are in many cases more like contract manufacturers than real R&D shops. Using R&D as a litmus test has shortcomings, too: the formerly Canadian Inco (now a subsidiary of Companhia Vale do Rio Doce), conducts a lot of high-tech R&D to improve its mining operations, as do oil & gas producers, but you wouldn’t want them on a list of tech companies. What about telecom and cable companies? They seemhigh-tech they sell Internet connectivity, for starters but they mostly buy technology from other sources, and several of them are starting to have more in common with broadcasting companies.
So what is tech enough to make a list of tech companies?
In the end, we decided that the list ought to focus on those companies with business models that depend on in-house advanced technological knowledge and ingenuity to create a unique value proposition for its end market that is ultimately what investors seek when they buy shares in high-tech. And in addition to that broad definition, we specifically focus on companies that conduct meaningful advanced technology R&D for their own products or services, develop advanced hardware or software for end markets, provide advanced IT services (like CGI) or manufactures advanced IT products (such as Celestica). Clean tech is most definitely in, while the communications sector is out and biotech, well, that’s just a whole other world.
I think our list is pretty representative of the choices investors have in the Canadian technology universe as small as it is. But I would be interested in your thoughts. And if you think we’ve missed a company that needs to be included, be sure to let us know. As the technology landscape continues to change, and the worlds of communications, IT, services, and entertainment products converge, this game of defining the edges of Canadian “tech” will only get more tricky.