
What Is And Is Not A Technology Company - twampss
http://al3x.net/2012/05/08/what-is-and-is-not-a-technology-company.html
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fleitz
Kinda, you can tell what kind of a company is by where it makes it's profit.

IBM is a services company that develops technology so it can service that
technology.

Microsoft is a desktop operating system and office suite company that develops
software to sell desktop operating system and office suites.

Apple is a consumer electronics company that develops technology to sell
gizmos.

Facebook is an ad platform company that develops software to sell ads.

ARM is a licensing company that develops technology so it can sell licenses.

Wal-Mart is a retail company that develops technology to deliver lower prices.

Technology means far more than just ICs and software.

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flixic
"ARM is a licensing company that develops technology so it can sell licenses."

I think ARM falls nicely into "technology company". Calling something "a
licensing company" doesn't make sense when they license their own technology
products.

Same for IBM. They might service software from other vendors, but I suspect
most of their profit is by servicing their own. As such, again, it doesn't
make much sense to call them "a services company".

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tg3
IBM also makes a large amount of money servicing and implementing other
company's technology products, specifically SAP and Oracle (and probably a lot
of Microsoft too). To me, they are a technology services company providing
consulting, implementation, and outsourcing services, and they also happen to
develop some of the technology products that they sometimes implement.

~~~
vonmoltke
That assessment of IBM is way off. They service other company's products
insofar as is necessary to develop complete integrated systems for their
customers, systems they build mostly with their own technology elements. In
some cases, they build systems entirely with their own elements (a Power7
machine running a DB2 server in AIX, for example). Their relatively recent
acquisitions of companies like Rational and Telelogic were moves to own more
of what they service. Owning and developing the hardware and software they
sell and service is core to IBM's business.

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pron
I would like to suggest a simple litmus test that lends a similar, though
slightly different, definition of a technology company:

 _If one or more people at your company need to constantly read recent
scientific research papers in one or more fields of one or more of the hard
sciences in order to build a critical and central component of one or more of
your central products then you're a technology company._

The only difference this will have with the OP's definition is that even if
you decide not to license your applied science to others but merely sell an
application, you're still a technology company. E.g. if you actually read
physics papers in order to come up with a novel microwave emitter, you're
still a technology company even if you've decided to just sell microwave
ovens.

OTOH, if all you need to develop your product is news about the latest web
framework, or even a blog post explaining some nice sorting algorithm - you're
an applications company.

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moocow01
The "software is eating the world" meme when put into perspective is like
saying "accounting practices are eating the world" or "sales strategies are
eating the world" in 99% of real world cases. In most businesses, software has
become another staple support of a competitive business but it is not an end
in itself. In other words, software is a means of trying to achieve maximum
efficiency of existing processes and this has been the case for a long time.

We probably don't like to acknowledge it but software is predominantly a
support role in most of the companies it is so called "eating." It is utilized
to streamline the business process once it has been defined and proven to have
an impact on the bottom line.

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jerf
Accounting and sales is now done with software. And not only "done with
software", but with increasing amounts of domain and business knowledge
embedded in the software.

 _That's_ what "software is eating the world" means. It isn't just that every
business needs software in some vague sense, it's that every _thing_ the
business does has software in its foundation. Accounting, sales, billing,
analysis, development, logistics, pretty much everything except high-level
executive vision.

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jorgeortiz85
There's a useful distinction between companies that sell technology and
companies that use tech for competitive advantage.

However, language is defined by how we use it. In common parlance, "tech
company" means the latter kind of company. Normatively decreeing otherwise is
futile.

Should we talk more about the former kind? Yes. But I disagree that the latter
kind is not a useful category. Distinguishing between "factory companies" and
"non-factory companies" was probably very useful at the beginning of the
industrial revolution. We're still in the early days of the information
revolution.

By "software is eating the world", we don't mean that every company uses email
or has a blog. That's not software that gives a competitive advantage,
precisely because everyone already has it. "Software is eating the world"
means that Uber is a better taxi dispatch service than traditional taxi
dispatch services, because of software they developed. It means Netflix is a
better movie rental service than Blockbuster, because of software they
developed. It means Apple and Google upended every mobile phone manufacturer
and carrier, because they could develop better operating systems and browsers.

"Software is eating the world" does NOT mean that every company uses software
(duh), but rather that companies with software competency (or even excellence)
will have a significant advantage with which to edge out their competitors.

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Smerity
The part of this article I really associated with is the focus on "startup
drama". The startup drama has its place -- stories of founders fighting
through the hard time or working out when to throw in the towel are
wonderfully didactic in nature whilst getting across the human story. It's why
Founders at Work is one of my favourite books.

Most tech blogs however have distorted these startup dramas to the point they
look like poorly scripted television shows. They've discovered, just as gossip
magazines did, that more drama => more eyeballs => more revenue. Very few
sources I have come across prioritize information over hype and it feels like
the tech community is paying for it.

What I disagree with in the article though is the focus only on wanting to
hear of tech startups. I asked an entrepreneur on advice about Natural
Language Processing startups (of which he'd founded a few). He said "To bake
banana bread you need to be able to bake bread". Tech startups, as different
as they are to normal businesses and startups in other fields, share a great
deal as well. We'd do well learning from their trials and follies too and
hence why HN is so open to articles from all over the map.

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troymc
Kevin Kelly's book _What Technology Wants_ defines technology very broadly, so
that it includes just about anything invented by humans (i.e. not already in
the cosmos prior to humans), including language and sewing machines. That
makes a lot of sense, but it doesn't reflect popular usage.

My favourite definition, because it aligns most closely with typical usage:

"Technology is a word that describes something that doesn’t work yet."

— Douglas Adams

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sanxiyn
Technology is anything invented after you were born.

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casca
Most companies are "Technology Companies" because they would fail to function
in a meaningful way if their technology no longer functioned correctly. To
divide companies in the way the author has is perfectly reasonable, as are
many other arbitrary lines in the sand.

~~~
delinka
But I fear that definition does just what the article decries- lumps too many
companies into the "Technology Company" category. For example, all of the
banks in my town fail to function in a meaningful way when their technology no
longer functions correctly: the data line goes down, they can't cash checks;
all the PCs go down, they can't accept deposits ... never mind that 30 years
ago there were still banks doing every thing on paper because no one is
trained to Do The Job now, they're trained on how to operate the software.

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pudakai
I think a software-centric company is more in the "technology" company mold if
they have secret sauce somewhere in their apps that give them an edge and the
implementation of said secret sauce is not necessarily something that is
obvious from the end effect of their app(s).

That is, you couldn't just hand a spec of the company's app to another group
of generic developers with the full expectation that it could be reliably
replicated in due course.

So some of the magic is in the underlying algorithms - this is what I call a
technology driven company, as opposed to a market driven company, wherein the
magic is in recognized some business opportunity in the market and applying
rather mundane, if laborious, software solutions to them.

This is a spectrum, few, if any companies, are purely one or the other.

Another good test is whether the engineers are considered a profit or a cost
center and how the company treats them. This applies more to bigger,
established companies rather than smaller companies that may have been started
up by engineers even if they are fundamentally market driven.

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sbov
Depends on your point of view.

Is Best Buy a tech company? If you're talking about the stock market, probably
- their fortunes align with tech. If you ask me, a potential employee, I would
say no. Their focus isn't in developing tech, it's in selling it.

As an employee, I'm more interested in what your employee pool does when
determining if it's tech or not - not what you're selling.

~~~
moocow01
In terms of business speak, BestBuy is in the services sector and in the
business of retail. I think most would qualify it as an electronics retail
company.

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JVIDEL
Market-speak is cyclical, buzzwords come and go the moment it becomes too
overused and washed-up.

Remember when everything had to be "interactive"?

What about "multimedia"? you just can't buy a toaster that isn't multimedia!

"Pivot" is already frowned upon, 2.0 is totally 2004, just to show some
buzzwords are about to disappear.

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merrick
This resonates more with me:

"Airbnb makes its money in real estate. But everything inside of how Airbnb
runs has much more in common with Facebook or Google or Microsoft or Oracle
than with any real estate company. What makes Airbnb function is its software
engine, which matches customers to properties, sets prices, flags potential
problems. It’s a tech company—a company where, if the developers all quit
tomorrow, you’d have to shut the company down. To us, that’s a good thing."

Marc Andreessen <http://m.wired.com/epicenter/2012/04/ff_andreessen/all/1>

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Kronopath
Another interesting industry to look at through this lens is game development.
Game companies develop and sell software (and sometimes hardware) to
consumers, so they must be technology companies, right?

Wrong. The games industry is not a tech business, it is an entertainment
business that just so happens deliver entertainment through software. Looking
at things from this perspective can be very illuminating, especially if you're
looking at things like the success of Nintendo's Wii six or so years ago.

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diminish
Similarly, after reading this blog; the writer's daily starting point, I
checked once again techmeme; and this does not provide much technology news
really, it is not the place to check if you are really in tech. Individual
tech blogs are better in this case imho.

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staunch
If you come up with a new definition of "tech company" and it doesn't include
Google you're probably not on to something. Google lives and dies by their
technology. They are _the_ technology company.

Reductio ad absurdum and all that.

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stevenj
I'm surprised that the OP doesn't consider Simple a technology company. Isn't
it solely selling an experience via software?

If so, making good software must be its top priority.

~~~
vannevar
You could say the same about the UX for any company that sells primarily
online. I think the author's point is that just depending on a website as a
critical part of your business doesn't make your business a technology
business, anymore than having a fleet of delivery trucks makes a furniture
store a transportation company.

~~~
strlen
Couple of things:

If a furniture company is unable to function without having an in-house fleet
of trucks (as opposed to outsourcing it to a transportation company and/or
contracted drivers), then they are really a logistics and transportation
company (which could readily start selling or transporting other goods, if
they so wished).

If whether or not they did this in house didn't make a visible impact on their
growth rate, they would still be a purely furniture company.

Pre-AWS Amazon.com, on the other hand, was an entirely different beast: they
built a highly scalable, relevant (they built out a whole division in Palo
Alto devoted to machine learning and search relevance), web application. This
would be akin to a furniture company building their own trucks (even if on
somebody else's chassis).

Likewise, Google doesn't just display advertising they build their own
advertising technology. If they merely used banner advertising, they would be
(at _most_ a) $100 million company, and not a $200 billion one.

~~~
vannevar
_If a furniture company is unable to function without having an in-house fleet
of trucks...then they are really a logistics and transportation company..._

Perhaps, but we would still refer to them as a furniture company until they
started selling something else. The author's point is that the term 'tech
company' has become a meaningless distinction when the 'tech' in question has
become ubiquitous.

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RyanMcGreal
> Over breakfast, we’d divvy up the newspaper. I’d go straight for the
> Business section

Impressive. When I was a kid, I went straight for the comics.

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sidchilling
Can anyone explain why should we be having this discussion? How does it matter
whether or not you are a tech company.

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erichocean
Was/is Pixar a technology company?

Or were/are they an animation studio?

~~~
Q6T46nT668w6i3m
I think Pixar is similar to Apple, who Alex addressed:

 _Apple is a technology company thanks to some of its lines of business
(hardware, software), but is not a technology company in all of its lines of
business (music, movies, books)._

i.e. Pixar is a technology company thanks to some of its lines of business
(e.g. RenderMan), but is not a technology company in all of its lines of
business (e.g. Toy Story).

