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.
> 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.
Agreed. Facebook may have momentum (700M+ users), but it has terrible ratings from users[1] and developers[2] alike. I will be very surprised if they are a major contender five years from now.
For almost 4 months it looked like Facebook might unseat google as the #1 site on the web, in spite of their claimed growth in 'active users' Facebook has not been able to take the top spot, and the weekend swap (when google and facebook would temporarily exchange places as #1 and #2) is no longer happening.
They haven't figured out how to use it to make anywhere near the kind of money that would justify their valuation, and any attempts to exploit it in any meaningful and profitable manner would likely be met with a huge backlash.
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.
I disagree with your assessment that "not one of [Google's] 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." There has been vigorous competition for search, including many billions spent by Microsoft on Bing. Microsoft literally tried to pay people to use their search. Microsoft continues to lose hundreds of millions of dollars per quarter in their attempt to gain search share. I don't know how much more proof you need to see that Google's position in search is easily defensible.
Of course, Google also literally try to pay people to use their search, to the tune of many millions in Mozilla's bank account.
Still, I think Google's main risk with search is that they have become victims of their own success: when you dominate the market as heavily as they have done for several years, everyone wants to be high up in your rankings, and people are constantly finding new ways to game the system. Even with all they've done about pseudo-legitimate but probably unwelcome sites like content farms and shopping comparison services, there has definitely been an increase for the past year or two in the frequency with which I try to look something up on Google and give up because what they're giving me back is completely unhelpful.
When you're stagnating like that, keeping up in the race against SEO blackhats but not really pulling away from them, the market is ripe for disruption by someone who does things in a different and (to users) more helpful way, just as Google basically wiped out everyone else with PageRank and the related ideas a few years ago. I'm not disputing that Google are still dominant today and no-one else is really giving them serious competition right now, but as I said before, I think that's more by luck than judgement on Google's part.
>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.
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.
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.
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.
> In some ways, it's unfair to compare Facebook to Amazon, Apple, and Google. While Facebook's growth is impressive, its actual numbers barely register next to the other three: Facebook is reported to have made $1.6 billion during the first half of 2011 (about double what it made in the first half of 2010), but Apple makes that much in nine days.
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.
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.
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.
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?
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.
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.
Agreed. While clearly not leaders in hardware, Microsoft's entrenched position in the enterprise means you can never count them out. They have a history of arriving very late to a game, getting it wrong a few times, but finally getting it right to gain the #1 position. I guess it's just hard to see now given some of the recent high profile failures like Zune and the meager gains in Bing market share after spending so many billions. But what about expanding upon their strong foothold in the living room with Xbox and Kinect?
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.
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.
> 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.
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".
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.
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.
quite a bit of the article reads like it was written before his death, and then only hastily revised (mentions of Steve Jobs doing things in future tense, etc)
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.