It is an interesting time for the IT industry. After two decades of convergence, we are finally at the point where pretty much all IT companies are realising that they are pretty much in the same markets. With almost full convergence of TV and PCs, and now tablets making the missing link, expanding into books and magazines as well as games, we now have direct and very open competition between players who were in very different markets just a year or two ago. Some players saw it coming before others though, and have stolen early advantages. Actually, there are few surprises, many IT futurists such as me were writing about such convergence since the early 1990s and it is playing out pretty much as we thought – it was always pretty obvious that it could and would happen. So there is little excuse for not seeing it coming. They are simply guilty of complacency. Nevertheless, we are where we are, and there is a raging battle for supremacy, with huge industry players scrabbling for the low hanging fruit and already making ladders for the higher fruit too, even while some are just arriving in the orchard.
There is no shortage of commentary about who might or might not win or even survive, and in which areas, but here is my take on the various players, their credentials for world domination, and what their advantages and failings are.
Google – Google of course has a very full hand of cards but it seems unable to fully capitalise on them. They are still leading in search of course, but they seem mostly to use other forays to make more advertising opportunities rather than direct revenue, which may be a slightly limited strategy. But they have the makings of an unbeatable platform now, with android (25.5% of the market, second only to Symbian with 36.6%), maps, youtube, Google TV, ipTV, a good suite of cloud based office tools , open source expertise, positioning, augmented reality, very detailed knowledge of customer profiles, and now even entering the pad market. Even this morning’s news is no big surprise that they are entering yet another sector, electronic payments, and I imagine they may well succeed where Paypal has failed to capitalise, and even where it has. But they are earning an increasingly tarnished record on privacy and arrogant attitude to rights. And they are fighting big battles on several fronts, especially with Facebook, Apple, Microsoft and the media companies. It is certainly tough at the top, and they will need a great deal of skill to pull of their expansion on so many fronts. I haven’t written a lot about Google, we all know who they are and how much of a threat they present. But of all the players, I think like many people that they are by far the best placed. Score: 84/100
Facebook is also doing pretty well right now, but is making lots of mistakes, especially on security and privacy issues. They can claim as much data as Google on personal profiling, but this is probably heavily skewed to the core of more sociable people who use it enthusiastically. Many people see no significant role for Facebook in their lives, even people who use Google many times a day. Many of its users (like myself) rarely bother to access their accounts so any estimate of worth based on sheer numbers of users is likely to be too high. I maintain a Facebook account mainly because it saves time having to reject friending requests, but I very rarely use it. For many of Facebook’s users, the novelty of interacting frequently and maintaining often superficial relationships will wear off, even if it takes two or three years. While new people are joining, there will be a steady stream of enthusiastic members, but it is unsustainable in that regard and one day everyone will be familiar with the various offerings and they won’t have much novelty value. Then Facebook and other intense social networking sites will go into terminal decline. Facebook will soon peak, and they must milk their position now to expand into area with better longevity, or they will not be a serious player in the long term battles. Currently, they simply have too few areas of expertise. Of course people can execute searches and other services from their Facebook page, but if it loses its strength as an anchor, it has no real advantage over any other site that also gives access to such functions, via Google for instance. Their latest venture to provide an email service in direct competition with gmail will be interesting. It might possibly help to add retrospective foundations that slow the drift away and help lock in new subscribers. It is a little too early to call its success but it is still only part of a suite, and comments by its CEO that email is too slow and informal betray a dangerous lack of understanding of why email is successful and why not everyone prefer instant messaging. Score: 65/100
ebay – ebay is a sad story of missed potential. It had so much promise, but underestimated the value and power of its resources until they became commoditised and devalued. When they bought Skype, and already owned Paypal, many of us in IT looked and were worried, especially given the enormous trust-based community they had cultivated so well. They were perfectly positioned to launch a world wide electronic payments system, making huge roads into retailing, travel, banking, telecomms, content distribution, renewable energy distribution, and even social structuring. At the time, the world was ripe for such a move but they totally missed it. They later offloaded Skype at a big loss – it should have multiplied in value under them when keyed in to their other assets. ebay a few years ago was in a better position than Google are now, if only they had had a good leadership team. But they hadn’t and they didn’t and now they are back to being just a pretty good auction company, with few other avenues for expansion. I love ebay, it is a great company, but it blew its chance of world domination badly. Score: down from 85/100 to 40/100
Microsoft – Microsoft has much in common with Google, they operate in many of the same areas, but they differ greatly in their approaches. When Microsoft sets its mind to it, as with the xbox360, it can do a wonderful job, and it makes acceptable products across a wide range, but all to often its other services and products leave users with a feeling that they don’t really understand networking or security, and consequently leave a lot of dangerous holes in their software. They are not as frantic as Google, preferring to take their time to identify and penetrate areas that they think are important, but although that sometimes leaves them follwoing rather than leading, it is also a safe strategy provided they can manage to gear up when need be. Their core strength has always been in PC operating systems, and they have had limited success trying to stretch it to other platforms such as mobiles, smart phones, or TV. There is no reason to suspect they will suddenly be able to get that sorted. However, games are likely to be a key convergence attractor over the next decade. Augmented reality will need maps and positioning technology, and good search, and they should be able to cope, but really key to making AR take off is the ability to use gesture recognition, fingertip tracking, and be able to manipulate 3d virtual environments, adding virtual characters and avatars to the everyday world. There are few players who can compete with them in that other than Sony, and Facebook and Google would take a long time to catch up. So at least in augmented reality, Microsoft starts out with a very strong position. Operating in 3d virtual environments should also give them a good position in the convergence with TV and film industry as it becomes more interactive. So even though they are an old company, Microsoft still holds a few aces, and with their cash cows in the background, will certainly be around for a good while yet, long enough to figure out how to do social networking, media distribution, and maybe even auctions. Score: 80/100
Apple – Apple is also doing very well at the moment, but perhaps too well. They are building a dangerous level of arrogance which may lead them to crash eventually and is certainly building a list of enemies, so I wouldn’t back them as a long term winner. They have made some excellent new products since their first ipod success, and their latest range of ipad, iphone, ipod, and airbook are very good indeed. But not unbeatable. They also have a strong record in media distribution with iTunes, which they hope to extend to ipTV. But like Google, they are fighting battles on several fronts already. With their content distribution, they seem to want to own a popular walled garden, but people generally don’t like those, they want to access whatever they want, so they will only use a walled garden as part of an overall package. Apple have also often been accused of being a high price option, and sometimes are certainly guilty of under-specification in their products, so their products are quite beatable too. Recently, they have also shown a willingness to censor, and to block other formats such as Flash media. Patent rows on other fronts add together to be quite a range of conflicts that will inevitably sap resources and impede their progress. Apple has also recently shown a complacency in security. They had a good history because their operating systems were quite well designed, but much of their success in avoiding viruses and other attacks is probably down to low market share compared to other PCs. You can’t become a monopoly without losing a minority position, so eventually they would become a prime target. So, they have a few things against them. But, they sell well for good reason and are unlikely to trip any time soon. They have a good chance of winning some battles, and have a core loyal group who will stick with them. So they will certainly survive, but their chances of world domination are only fair to middling. Score: 60/100
News Corporation – Rupert Murdoch established a great empire, and showed himself to be a shrewd and proficient businessman, but inevitably age forced a handover of control of the Empire to a younger but much less certain chief. The News Corp media and content empire has a lot of strengths, and in recent years has made some success in getting into adjacent areas such as telecomms. But it suffers from high pricing, an arrogant attitude to the marketplace, demonstrated belated understanding of the web, and slow adoption of new technologies. It also shows weak understanding of the future of the corporate relationship with customers, no doubt based on a long and successful history, but in the IT world, historical success can be an impediment. News Corp demonstrates a simplistic, capitalist exploitation model that is already dated and will soon become a barrier to their development. The world is changing fast, and in spite of keeping up in some areas such as HD and 3D, they seem stuck in the past in many ways. They seem still to believe that they can force the world back to old-time business models, but they are a big fish in a very big ocean, and will eventually have to accept that the market they dominated no longer really exists. The Myspace venture made a big loss, and their attempt to try to force the whole industry into charging for news online has failed miserably – they have a pitiful number of subscribers and have sold much of their influence and brand loyalty for pennies, hardly a shrewd move. They will use their existing size and momentum to attempt to penetrate new markets to some degree, but are not one of the stronger players now. Score 35/100
Virgin – Virgin plays in many diverse fields, from wedding dresses and space travel to banking, TV, broadband and telephony, holidays and airlines. For many years, it typically tried to play underdog but sometimes high price levels and cavalier attitudes to quality of service undermined that position. However, recently it has matured somewhat and competes just like any other company. Its current strategy seems to be sound and it shows good promise, hence increases in its share price. Its basket of phone/broadband and cable TV competes well and is growing fast in the UK. But in the whole IT space it still is a fairly small fish in just one pond, and its non-IT plays don’t link well so it has a lack of internal synergy between the various wings. It should be expected to do reasonably well and to survive, but although growing well in the UK, it isn’t a serious contender for worldwide IT world domination. Score 25/100
Other cable companies, content providers. Many cable companies are recovering from disastrous early plays, but there is massive competition within the sector and that will prevent most of them from entering other areas. There is also a lack of vision in the sector, with the exception of Virgin, perhaps because this internal conflict is keeping them focused too much on immediate threats. But whatever the cause, cable companies show little prospect of colonising other areas of IT than immediately adjacent offerings. Although there are very many companies in the cable sector, it is possible to link most together and give a combined score of 20/100
Amazon – Amazon was one of the biggest early winners in the web and is still going very strong. Keeping its position and strength in its core business, it has gradually and cautiously expanded into area that form natural neighbours, such as other retailing, e-books, music and video distribution. It has also managed to keep a very good image, avoiding the arrogance of many other players, and has a high level of trust with customers.With its very successful Kindle device, it can proceed to attack many of the most lucrative parts of the pad market, and of course it also forms the ideal convergence point for the electronic magazine industry, which has been desperately looking for solutions to their otherwise imminent demise as people buy less paper. Although it is strong in selling computer games, and other retail, it is not becoming a producer of any of these, and seems content to leave many areas to other competitors. In other companies, this would be a strategic error and a major threat, but because it is so strong in an important sector, where it looks pretty unbeatable, Amazon needs not worry, and can afford to stay cosy. They seem content not to take over the world, provided they are left alone to run a significant part of it. But their core strengths, presence and unmatched ability to avoid making big errors in security, privacy or all-out war with competitors, that does however make them a good contender if ever they want to. Score 70/100
RIM – Research in Motion, source of the Blackberry, is of course renowned for dramatically changing countless lives by making it easy and intuitive to do email on the go. With web and mobile access generally, they are in a strong position, but they have many many competitors in that field and every small error is used by competitors to steal market share. But so far they are still there with good product offerings. It is very hard to see them going much beyond the mobile market for now. They might cope in pads, and might even manage once augmented reality come on stream, but they are currently heading downhill in terms of overall share of a rapidly growing pie. They are in real danger of being swallowed or simply left for dead as the bigger players mop up their bits of the market. Score 15/100
Nokia – phones. Nokia is the undisputed king of mobile history, but is now struggling to adapt to a new world that isn’t focused on mobile phones any more, that they didn’t appear to see coming till it was too late. The Symbian platform has 36.6% of the market so is still market leader, but that is down from 44.6% last year, with Google’s Android quickly growing to over 25% in the same period. They are right to be worried. Nokia has a reasonable strategy, cultivating good relationships and expensing core strengths, but they are not as fast to realise the potential as some of the others, and not as agile in responding either. They certainly are technically good and also have a very good understanding of the importance of good customer relationships, intuitive interfaces and social networks. But they are simply too late into new product areas such as pads, and really didn’t respond well as it became clear that IT fields were converging, so they will now be playing catch up from far too constrained current position, and look unlikely to ever recover their previous dominance. Symbian in particular is looking increasingly likely to be an historically important platform, in spite of being leader today. Quite simply, the aces are now held by other players and Nokia will have to be content with a reasonable share of a bit of the market. Score: 35/100
Tesco – Tesco is one example of a long list of other companies that have good relationships with large numbers of customers, and use that as a springboard to market themselves into other areas. Since there are so many companies trying just that, it means that the sector of the market that is open to such forays is already overpopulated. What it does guarantee though is a little bit of competition in the background to keep activity reasonably brisk. Each such company is local to a particular region, so there are no strong global players in this role. Where services are local too, they will offer significant but not major competition, but will remain largely irrelevant on the global scale across the whole convergence sector. Score: 10/100
Chip makers such as Intel, ARM, AMD, etc. These companies have a very good position supplying chips to many of the other key players and are unlikely to want to move too far away from this very cosy territory. But they could if they wanted to. It would be possible to eradicate conventional OS solutions for example, by incorporating them into chipsets, and the same with application software. A very low cost, very secure solution is enabled by using firmware for such things in place of disks or volatile memory. Using a cloud for data storage and provision of more frivolous apps would work well. So although there is no need for them to migrate yet, and no sign that any will make the move, this sector is actually in a very good position to rebuild the entire foundations of the industry, changing the whole business model structure for all the rest. So in spite of lack of any signs of current megalomania from this part of the industry, it poses a very strong potential risk, and should not be ignored. Score: 70/100
Sony, Ericsson, BT… There are many niche players in the market, some with strong regional presence, such as BT, who are weak internationally, and some such as Sony who are globally present in several market niches and have good customer loyalty, and yet other such as Ericsson who are present weakly in some markets and strong in others, such as Bluetooth chips. These all have in common that they are relatively small fish compared to many of the other players as far as domination of the information world goes. Some exist only because of their history giving them enough momentum and reserves to keep them going a while longer, and could not really have emerged otherwise as fresh companies in today’s world. They are not to be written off as companies, but equally cannot be considered serious competition for position of master of the universe. Collective score: 10/100
New entrants: Some of the players above didn’t even exist a decade ago. There are more people emerging from education every year with deep personal understanding of their information dominated world and lots of imagination and entrepreneurial drive. This race has no start line and no finish line, and new players will frequently emerge and take key positions. The biggest asset they will have by far is the size of the opposition, whihc makes them more entrenched and sluggish than a new entrant, which is free to identify any type of play, any weakness to target, and can catch the existing market by surprise. Of course, there are numerous potential roles and I will not speculate in this entry as to what they might be – I’ll leave that for another time. But of all the players likely to be emporer or empress in 10 years time, this one is towards the front of the pack. Score 80/100
All others: score 1/100
And I totally forgot: comments below
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