
The Great Tech War Of 2012 - ssclafani
http://www.fastcompany.com/magazine/160/tech-wars-2012-amazon-apple-google-facebook
======
SoftwareMaven
_Apple doesn't believe that niche exists [the 7" tablet], but you can bet it
will if the Kindle Fire succeeds._

I hear this a lot, and I always think it discredits the authors analysis of
Apple. Apple doesn't think there is a product worth making at 7", which is far
different than there not being a market.

Apple also thought Netbooks weren't worth making (worst of both worlds). That
didn't mean there wasn't a market or a niche, but that Apple doesn't rush to
fill a void because other people have a product that is selling there.

Apple doesn't think about marketing like other companies. And they don't
create products to "counter" other products. They create the products that
they think are perfect.

That said, i do think there is a market. There are times I wish I had a 7"
iPad. Not often, but occasionally. I would probably buy two of them to keep
around the house for the kids to use.

~~~
0x12
> They create the products that they think are perfect.

They create those products that they believe will make them the most money.

No apple product ever built past or present was 'perfect' when it was
released, but it was more than good enough and typically a notch or two above
the competition with an associated price tag.

------
mikeryan
I'm I the only one who doesn't place Facebook in the class as
Amazon/Google/Apple?

Maybe, someday, but not quite yet.

~~~
johnyzee
Agreed. For all the hype, pre-IPO valuation and talent draining, Facebook has
done surprisingly little worthy of attention for several years now.

~~~
Silhouette
For all the hype etc, I'm not sure how much _any_ of these companies have
really done that is worthy of positive attention for several years now. They
obviously have a few big hits, but they all have at least as many failures
and/or obvious competitive weaknesses.

Apple have no doubt moved or effectively created entire markets and business
models over the years. The iPod, iPhone and iPad have changed consumption
patterns for a generation, and iTunes is right there in the background. But
how much of the future is down to inertia now, even before you consider the
impact of losing Steve Jobs? If the Big Four record labels suddenly got it and
built their own on-line all-you-can-eat music service at a sensible price
point, iTunes could be over in weeks. There are several hardware companies
that are close enough to the level of Apple's mobile tech (or already better,
in some aspects) that the "serious" segment could desert Apple within a mobile
contract cycle (about 18-24 months here in the UK) leaving only the "style"
segment. Finally, Apple's developer-hostile policies make them few friends,
and I think it's only a matter of time before their business models based on
exclusivity and taking huge cuts out of anything sold via their platform
become unsustainable in the face of competition.

Amazon have done very well to corner the market as the default on-line
retailer, and are the only company on the list I definitely wouldn't be
shorting if I were an investor in US stocks. They actually sell useful stuff
and have an obvious and sustainable business model, and the barrier to entry
for competitors is huge. I don't rate their chances of taking over any form of
home-grown content production or becoming a heavyweight on-line media provider
any time soon, though; they simply aren't good enough at this stuff or in a
position to offer enough value in return for exclusive rights to establish a
dominant position given the competition (and their position won't be
defensible against that competition if they lean too hard on the kinds of
small/independent outfit who could most benefit from working with them on such
projects).

Facebook have done incredibly well, but mostly driven by being in the right
place at the right time to achieve critical mass in a way that no previous
network ever did. That could be their Achilles' heel just as easily, though:
the moment everyone has enough friends not on Facebook that they can't just
use it as their default communications medium, Facebook is in trouble. And
that could happen any time a viable competitor network begins to establish
itself, just as Facebook once displaced a couple of formerly huge social
networks rather efficiently itself. I don't think Google+ is likely to be that
competitor in its current form, but there is no shortage of companies with the
will and the funding to do it, and Facebook has to be lucky every time while
the entire field of competitors only has to be lucky once. Also, Facebook's
advertising seems a very shaky proposition for long-term revenue; I know
plenty of people who have used it once or twice, but none who would use it
again given how pathetically ineffective it seems to have been in every single
case. Also also, before any of that happens, I think Facebook are going to
cross the privacy line once too often in one too many countries, and the
backlash is going to severely damage them in ways you can't fix just by
spending more money.

Google has a search engine, an e-mail service, a video sharing service, and a
much more successful advertising model built around them. It also has a mobile
OS and a browser to support the above. That at least gives it a strong
business model that works, making it the other company here I wouldn't
automatically short as a long-term investment. But then it has about 1,000,000
utter failures that would have sunk any other company years ago if it didn't
have the Big Three to cover the losses. This situation has not changed for
several years, except that the number of high profile failures has increased
dramatically. None of those three positions is easily defensible in the face
of determined competition, and I suspect it is more by luck (and inertia) than
judgement that they have avoided this fate so far. And they are also
vulnerable to a backlash against privacy. They're basically in the same
position as Facebook, but much better at the good stuff and much less bad at
the bad stuff.

In other words, while all of the "Big Four" are no doubt keen to eat a piece
of each other's pies, I don't think any of them is nearly as powerful as their
reputation (and market caps/claimed valuations) suggest right now. They get a
lot of press, but consider that, say, Netflix already make something like half
the money that Facebook do, in a much more sustainable way and with obvious
growth potential as Internet connections get faster and more content is
consumed via different kinds of devices rather than the classic TV+(physical
media) combination. A company like HTC moving into the tablet space could give
Apple serious competition there. If a quiet giant like IBM or Microsoft
decided to attack a consumer market again rather than focussing on big
business, they have both the talent and the resources to challenge anyone.

The high-tech world isn't nearly as small as the article suggests.

~~~
redthrowaway
>Google has a search engine, an e-mail service, a video sharing service, and a
much more successful advertising model built around them.

You're forgetting Android. There are some other services I would include in
with their top-tier ones (maps being a good example), but the omission of
Android is fairly glaring.

~~~
johnyzee
GP also failed to mention Amazon's little side business, AWS. More than
anything else, AWS makes Amazon one of the most visionary and capable
companies in the world to me, before even getting into rolling out Kindle and
pretty much creating the e-book market overnight.

~~~
Silhouette
I didn't forget to mention Android; which other mobile OS did anyone think I
meant?

As for AWS, you hit the nail on the head: I think it's Amazon's little side
business. I haven't seen any detailed figures about where their income comes
from, but I'm guessing AWS is almost lost in the noise compared to what they
make on retail directly and via their marketplace.

Moreover, I think cloud services is a much easier market for others to attack,
and obviously some already do. In contrast, there isn't really any other
global retail giant on the Web today and the barrier to becoming one is
prohibitively high for just about anyone.

Finally, I'm not a great believer in everything-in-the-cloud anyway. Too many
people have made grand claims about how security/reliability/whatever is
improved if you use cloud services compared to doing things in house, how much
money you can save, how much faster you can be up and running, yada yada. And
yet, we've seen numerous major outages now from even the big players, and
plenty more complaints about pricing, lack of flexibility, etc. on top of
those.

Basically, the cloud services emperor might not be naked, but he's close to
indecent. My money is on the company that utterly dominates on-line retail,
and if its internal services architecture brings in a little on the side as
well, great.

~~~
rdl
Amazon's core business has huge revenue numbers but really crap margins.
They're walmart.

AWS, while a much smaller revenue number, has crazy margins compared to
retailing. That makes it interesting out of proportion to percentage of
revenue, especially if you believe the cloud will continue to grow.

Same thing with Kindle -- vertical integration, and capturing margin along the
way, using their huge retail footprint.

------
reemrevnivek
The vertical control of Apple (most notably) as well as Amazon and Google is
almost complete. The author noted that they don't have:

1\. Billing/banking control - Purchases on all three go through credit cards,
where a portion gets siphoned off.

2\. Internet access control - Apple has a lot of clout, and can do basically
whatever they want, but they're still limited by the ISPs and telecos.

I really hope to see these companies compete in these industries. However, he
left off one more space where they don't compete: at the bottom of the stack,
selling silicon. Companies like Samsung and Toshiba can build their own SoCs
for the devices they manufacture. If those manufacturers start doing more
internally, we might see some impressive and competitive new devices.

~~~
cube13
I don't think that any of the three are willing to try to integrate billing
directly instead of relying on Paypal, Visa, etc. It's a regulatory minefield
between all the world governments, and the % that the payment processors take
is probably very much worth the costs that would otherwise be taken from
keeping such a system working.

I'm sure Apple and Google have explored it, but in the end, found that the
current payment processors provide both a level of service(Visa's payment
backend, as far as I can tell, has never suffered non-scheduled downtime) and
help avoid all the regulatory pitfalls that it's worth the price.

------
fleitz
And while these 4 duke it out a new competitor will emerge and change the game
completely.

~~~
revorad
And that's the reason, reading story after story about the big 4 on HN is
getting so boring to me. No doubt they make amazing products, but these are
giant corporations now. Siri, G+, Timeline, Kindle Fire are all fascinating
products, but they don't excite me nearly as much as a simple app made by a
fledgling two person startup.

~~~
Apocryphon
I'm not even sure if characterizing this is a four horse race is accurate. The
article acknowledges the existence of other giants such as Microsoft and HP,
but state they are behind the times and struggling to catch up. But are there
any other rising powerhouses out there besides the four horsemen? eBay?

------
evanjacobs
I'm really surprised that there was almost no mention about the competition
between these companies for hiring engineers. If there is indeed a "tech war"
coming (and I believe there is) then the company with the biggest and best
army of engineers will win and there is a fierce competition among these
companies to build those armies.

------
YetAnotherAlias
I guess it is not surprising anymore, but I couldn't help wondering about
Microsoft being left out of consideration. Would love to here thoughts about
how, and if, MS will compete among these companies.

~~~
tsotha
The xbox puts Microsoft in a better position than Apple for control of the
television. I don't think you can count them out at all.

------
algorithms
Guess the launch of Android 4.0 in two days will show us where we're going.

It basically decides the future for 3 major products: Smartphones Tablets
Google TV (this could be a LARGE market if they find the right partners)

Add to that the fact that big G will probably try to push Google+ even further
with this new generation and this makes the event more important than any
previous Google Keynote.

------
chris_dcosta
Most of what Facebook and Google do is thanks to advertising revenue, with
variations on the theme.

If something comes along to take that away, a start-up with a new business
model, then data becomes the thing that has value for them. Here, privacy
issues get racked up so both Google and Facebook would start to look shaky if
that happened too, and there are signs.

That's where Amazon and Apple are both superior. They've never been based
solely based on an advertising business model, if they get revenue with iAds
it's a bonus. It's the fact that they control their market places which is
important. And they have what people want to buy.

------
exit
> _Zuckerberg is even maturing into a capable presenter. Compared to Bezos,
> Cook, and Page, he's most adept at mimicking Jobs's singular skills, and
> comes off as infectiously visionary when unveiling a new product._

really?

~~~
redthrowaway
I had the same reaction, but you have to keep in mind the company he's in.
Cook's iPhone presentation struck me as fine but uninspiring, I've never seen
Bezos give a presentation, and Larry's... not good in public. I still can't
stand Zuck, but at least he hasn't had any more "hoody moments".

~~~
mediaman
I watched Bezos unveil the Fire, and I wasn't really impressed with his
presentation skills. Not nearly as good a story teller as Jobs.

------
ethank
More interesting than the holistic ecosystem/platform war is who among these
four will join efforts to counter the other two?

~~~
redthrowaway
Outside of _possibly_ Amazon-Google, I don't see anyone joining up. Google
hates Facebook, Apple hates Google, neither has integrated facebook into their
mobile OS, and everyone seems content to ignore Amazon. We'll see how that
changes with the introduction of the Fire, but I can't see facebook moving
beyond their niche, and there's too much direct competition between Apple-
Google and Apple-Amazon to allow for a partnership between anyone other than
Google and Amazon.

------
suivix
Why is Steve Jobs's face in the first pic? Sorry if this is too insensitive,
but he won't be involved in the 'Great Tech War of 2012'.

~~~
SoftwareMaven
To be fair, he is still pretty iconic as the guy who really ramped up the war.
I'll give them the benefit of that doubt.

~~~
hkmurakami
Furthermore, since Jobs is rumored to have stocked Apple's product pipeline
for the coming years, Apple's product vision will in essence be lead by the
specter of Steve Jobs.

