Thursday, January 6, 2022

g-f(2)790 THE BIG PICTURE OF THE DIGITAL AGE (1/6/2022), HBR, Over the past decade leading tech companies dominate their respective segments

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"g-f" fishing of golden knowledge (GK) of the fabulous treasure of the digital ageThe New World, Leading Tech Companies (1/6/2022)  g-f(2)426 

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Leading tech companies dominate their respective segments

Over the past decade leading tech companies—notably Meta (Facebook), Alphabet (Google), Amazon, Apple, and Microsoft—have come to dominate their respective segments in most parts of the world.
  • Some stats: Meta, which also owns Instagram and WhatsApp, has 3.5 billion users across its networks. More than 50% of global online ad spending goes through Meta or Alphabet. In search, Google has more than a 60% share in the United States and more than 90% in Europe, Brazil, and India. Apple earns more in annual profit than Starbucks makes in revenue. Microsoft is a top-three vendor to 84% of businesses. And Amazon takes in more than 40% of online spending in the United States and runs nearly one-third of the internet through Amazon Web Services. Collectively, the Big Five earned income of about $197 billion on revenue of more than $1 trillion in 2020, while their market cap rose to $7.5 trillion by year’s end.

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Can Big Tech Be Disrupted?, Alison Beard, From the Magazine (January–February 2022), Harvard Business Review, HBR.


Jonathan Knee


Professor Knee teaches Media Mergers and Acquisitions, co-teaches The Media Industries: Public Policy and Business Strategy with Professor Tim Wu of Columbia Law School, and co-teaches Digital Investing with Adjunct Professor Jeremy Philips. He also serves as co-director of the Media & Technology Program with Professor Sarvary. Professor Knee is a Senior Advisor at Evercore Partners. Before joining Evercore as a Senior Managing Director in 2003, Professor Knee was a Managing Director and Co-head of Morgan Stanley's Media Group. He was previously Publishing Sector Head in the Communications, Media and Entertainment Group at Goldman Sachs. Prior to becoming an investment banker, he was Director of International Affairs at United Airlines and served as Adjunct Professor of Law at Northwestern University. His writing has appeared in The Atlantic, Wall Street Journal, New York Times and Washington Post and he is the author of Class Clowns: How the Smartest Investors Lost Billions in Education (2017), co-author of Curse of the Mogul (Portfolio:2009) and author of The Accidental Investment Banker: Inside the Decade that Transformed Wall Street (Oxford: 2006). 

Alison Beard

Alison Beard is a senior editor at Harvard Business Review.

Extra-condensed knowledge

Lessons learned, HBR

Some Golden Knowledge (GK) Juice on Strengths

  • Google: 
    • I’d argue that it’s the strongest of all the tech titans, in part because search was an entirely new market without an entrenched incumbent. Although Google wasn’t the first search engine, it was the first and only one to achieve massive scale.
    • It also has the best, most well-defended portfolio of reinforcing competitive advantages in that core franchise.
  • Facebook, now Meta?: 
    • It benefits from being the world’s largest social network and has for the most part invested wisely internally and managed its acquisitions well—for example, by snapping up Instagram early and keeping it as an independent platform—while still expanding its trove of user data and strengthening customer stickiness.
  • Amazon?
    • Did it disrupt Walmart? Absolutely. But Walmart is still a major competitor today, and Amazon is fighting against not only incumbents with established brick-and-mortar footprints and growing online sales (with free shipping to rival Prime) but also focused start-ups like Chewy and direct-to-consumer producers.
  • Why did you look at Netflix, too?
    • Netflix is a minor player relative to the rest of FAANG [Facebook, Amazon, Apple, Netflix, and Google] but is often mentioned alongside the others because it’s number one in a space—streaming media—that they all think they need to be in.
    • Netflix also has an intense culture of operating excellence. 
  • And what about the elder statesmen of the Big Five: Apple and Microsoft?: 
    • Personal technology was a thriving business before the Big Tech era. Apple did not and does not lead by market share in the key product categories. But in its primary business, smartphones, while it’s not the biggest, it is the biggest moneymaker—commanding more profits than the rest of the smartphone industry combined—and has the highest market cap, more than $2 trillion. The App Store and Apple ecosystem have created extraordinary shareholder value by monetizing its high-end niche.
    • Microsoft, unlike the other tech giants, has always concentrated on B2B rather than consumer markets.  After losing its way and ceding the mobile OS market to Google and Apple, it has refocused on improving its core software offerings and expanding its footprint within its corporate customer base while aggressively embracing the cloud. It has established credibility by using data from cloud-based applications to increase its responsiveness and continuously improve. 

    Condensed knowledge

    Lessons learned, HBR

    Some Golden Knowledge (GK) Juice on Weaknesses

    • Google: 
      • Yes, it has reorganized and instilled more operating discipline in other areas, but its list of failed launches, from the Nexus smartphone to Google Glass, is long. And its efforts to directly challenge the other tech giants have either collapsed completely or significantly lagged. Google+ was a short-lived challenge to Facebook, and Google Cloud remains far behind Microsoft’s Azure in taking on Amazon Web Services. I don’t think that’s a coincidence.
      • When you dominate one segment of the market so overwhelmingly, you’re less likely to build a culture that is optimized to find new ways to grow outside it.
    • Facebook, now Meta?: 
      • Recently exposed internal emails demonstrate that the company is nonetheless well aware of serious threats from competing “social mechanics.” We’re also still waiting to see any ROI on its $19 billion purchase of the messaging app WhatsApp, which almost a decade later remains unprofitable and lacks a real revenue model, and the $2 billion it spent on the virtual reality firm Oculus. And the company is increasingly under fire for its role in spreading misinformation and hate online, which could cause it to lose credibility among users, advertisers, and the next generation of social networkers.
    • Amazon?
      • Retail remains a difficult, highly competitive business where sustainable advantage is limited. The company has also made some questionable acquisitions: Whole Foods, when grocery is a structurally challenged category, and MGM, in an ill-advised bid to make Prime Video a real rival to Netflix. Investors may think MGM is worth it if only to halt Amazon’s relentless increases in wasteful spending on original content. Yet despite missteps Amazon has a culture of relentlessness and unlike the other tech titans has built some wildly successful unrelated businesses, such as Amazon Web Services, that do lend themselves to strong competitive advantage—in contrast to e-commerce. AWS generates a majority of the overall company’s profits and will probably continue to do so for the indefinite future.
    • Why did you look at Netflix, too?
      • Its business model is nowhere near as strong as the models that the traditional cable channels it is increasingly replacing used to enjoy. At one time those businesses had fabulous high margins because they benefited from long-term contracts and capacity constraints. Direct-to-consumer streamers like Netflix, by contrast, face relentless customer churn and constant competition from new entrants, including Apple and Amazon and old-timers like HBO, Disney, NBC (with Peacock), and CBS (with Paramount+).
    • And what about the elder statesmen of the Big Five: Apple and Microsoft?: 
      • Apple’s expertise lies in developing revolutionary, sleek devices, but the people who created the ones that define the company are gone. The fact that the company is trying to get into the health care and automotive industries—where it has no track record and innovative incumbents abound—suggests that it realizes it needs to plan for its next act. Though it’s had a terrific run, in the absence of the next generation of revolutionary gadgets, Apple’s continued financial dominance is by no means assured.
      • Microsoft faces new competitors that are both massive and nimble, such as Salesforce, whose acquisition of Slack threatens Microsoft’s ambitions in workforce productivity applications.

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    • Category 2: The Big Picture of the Digital Age
    • [genioux fact deduced or extracted from HBR]
    • This is a “genioux fact fast solution.”
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    • Type of essential knowledge of this “genioux fact”: Essential Analyzed Knowledge (EAK).
    • Type of validity of the "genioux fact". 

      • Inherited from sources + Supported by the knowledge of one or more experts.


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