
Software eating the Fortune 500 - pathdependent
http://www.gabrielweinberg.com/blog/2012/06/software-eating-the-fortune-500.html
======
cs702
This line of analysis looks promising, but the post leaves too many important
questions unanswered, including:

* How have mergers and acquisitions affected the rate of churn in the S&P 500? It could very well be that S&P 500 companies are disappearing from the list at a faster rate because they're being merged into or acquired by other companies at a faster rate.

* To what extent does the rate of churn in the S&P 500 reflect declines in specific sectors of the economy unrelated to software? For example, US manufacturing has faced challenging times for several decades, so one would expect to see this trend reflected in the list.

* How did the inflating and bursting of the Housing Bubble impact the companies exposed to that industry in the S&P 500? For example, many home builders and mortgage lenders boomed during the bubble and then went bust when the bubble burst. How is that reflected in the data?

* How did the growth in financial services as a percentage of GDP affect the index prior to the financial crisis? How about after the financial crisis? Think not just about Lehman Brothers's demise, but about all the formerly high-flying financial firms that went bust or whose size is considerably smaller today.

~~~
refulgentis
This line of questioning looks promising, but the post leaves a question
unanswered:

* Did the questioner notice the article was referring not to the S&P 500, but the Fortune 500?

~~~
nandemo
I think GP comment is worth of discussion if you mentally replace "S&P" with
"Fortune". No reason to downvote it.

~~~
cs702
Yikes. I'm the poster. Unfortunately, I can't edit now :-( Sorry about the
mix-up!

------
jrkelly
"In another 50 years, would you expect Apple or Exxon to still be near the top
of the list?". Is that a trick question? Exxon obviously - they make the thing
we can't live without.

~~~
uptown
50? Sure. But Exxon will also need to continue to evolve in order to ensure
their relevance whenever the world's oil supply begins to wane. Probably won't
be in our lifetime ... but someday something else will be more dominant out of
necessity and Exxon won't necessarily be the one leading that charge.

~~~
krakensden
Of course, as the supply of oil dwindles and demand grows, their volume will
go down but their profit margin will go up.

~~~
uptown
Unless it becomes considerably more expensive to obtain, and/or affordable
alternatives arise.

------
arethuza
For an article about "software eating the world" it would perhaps have been
nice to use a list that isn't restricted to US companies.

For example, there is the Forbes Global 2000 - this is just public companies,
but Apple isn't even in the top 20 there (it's #22)

<http://www.forbes.com/global2000/list/>

~~~
meric
What is that list ranked by? None of the columns are in any strict
ascending/descending order. In particular Apple has the highest market
capitalisation out of all the firms of that list, 540+b compared to Exxon
(#1)'s 400b.

~~~
arethuza
Good point - they explain it here:

[http://www.forbes.com/sites/scottdecarlo/2012/04/18/methodol...](http://www.forbes.com/sites/scottdecarlo/2012/04/18/methodology-
how-we-crunch-the-numbers/)

NB I'm not particularly attached to the Global 2000 - just it would be
interesting to use a list that isn't only US companies.

------
tsotha
_In another 50 would you expect Apple or Exxon to still be near the top of the
list?_

Exxon yes, Apple no. There isn't enough advantage to being the incumbent in
Apple's weird combination of fashion and consumer electronics.

~~~
SudarshanP
What if the world switched primarily to renewables? It is 50 long years...

~~~
tsotha
There will still be a need for hydrocarbon extraction. We use oil and gas as
feedstock for all sorts of chemical production from fertilizer to plastics.
Plus we'll still be using oil for things like air travel and military
operations.

------
gojomo
Love the chart. Another fun thing to plot might be: what's the retrospective
half-life of the Fortune 500? (That is, how far back do you have to go from
each year for 50% of the companies to be different.)

------
CUR10US
"In another 50 would you expect Apple or Exxon to still be near the top of the
list?"

Well, maybe it depends on who is supplying power to the world, including,
e.g., supplying the power to run Apple gadgets and Apple datacenters. Chances
are it's still going to be Exxon.

------
jnorthrop
I'm intrigued by the idea of "regulatory capture." I hadn't heard that term
before but that economic theory is playing such a prominent role at the moment
in the growth of the market I work in, privacy (e.g. EU Data Directive, US
Privacy Bill of Rights). We of course saw it clearly working in favor of IT in
the US in the last decade with the advent of HIPAA, SOX and GLBA. Whole
segments of the IT security business were basically born (re-born) due to this
legislation.

I wish Gabriel went into more depth on this point. Specifically I wish he
provided some examples. I think we would all benefit from considering what
changes legislation will bring and seeing if we can't jump on the
opportunities early.

~~~
astrange
It's a common term. He didn't make it up and I don't think he needs to discuss
it.

~~~
jnorthrop
I didn't imply that he was making it up. I just wish he elaborated on some
examples of where that was going to take hold. There is no reason to get
defensive.

------
kfk
The margin paragraph is simply too optimistic, margins now are good because
there is still small to no competition, when competition will come, margins
will drop.

------
stcredzero
Is software eating programming?

~~~
peterjancelis
To the extent that it does, it will increase the rate of software eating the
world.

------
verra
In 50 years, Exxon Mobile will be #1 while Apple will be nowhere in the top
50.

