Any examples of this actually playing out with a company as established as Google? You can read comments like this on many companies... Microsoft (70B$ income), Meta (40B$), Oracle (8.5B$), IBM(7.5B$), SAP (6B$), yet none of them seem to ever actually enter the predicted death spiral.
And the internet isn't new anymore. There is no vast landscape of unexplored new technological possibilities, and no garage start up with an engineering mindset that will just offer a better solution.
IBM used to be bigger than MS, it's a 10th of it today.
But most importantly all the above listed companies with the exception of Meta are those that are heavily ingrained in large companies operations. IBM still provides mainframes, MS has Exchange and Windows domains and is successfully transitioning a lot of customers to Azure, Oracle has their databases and other products, SAP their ERP systems.
Once a non-IT company has their internal IT systems and some legacy working they're going to be very very slow in changing them out if it works, companies that provide those and get a critical are going to have very very long runways compared to regular b2c companies if a significant portion of their revenue comes from this.
Google has Chromebooks that are used in schools and some GCP usage but could that save Google long enough if search revenue was cut into a fraction? And GCP is kinda of an also-ran today, people looking at larger options usually look at AWS(nr 1) or Azure (Windows legacy).
In 2023 the revenues of Google Cloud, Youtube Ads and "Google Other" and Google Network Members Ads were 130B combined.
If they could reduce headcount and operating expenditures to 2019 levels without losing that, they would be roughly breaking even without any search. They also have 280B$ in equity to tide them over.
When Google actually sees its business failing, it will have many many many chances to turn things around.
Microsoft and Meta reinvented themselves a few times over. At this point Windows is just an legacy business unit for instance, and Meta literally changed name to mark the turn.
Oracle, IBM and SAP have the advantage(?) of being heavily business focused from the start, and I don't see them ever die a natural death in our lifetimes. As long as they have the money to outbribe the competition they'll be there, and it will require a small miracle to break that loop.
The one thing that has kept Microsoft afloat is their business oriented part. They are deeply entrenched in any company that needs to use Office and only ever hires Windows admins who won't even look beyond Windows. That is pretty much every non tech small to medium company. When things were shifting to the cloud they were smart enough to make sure it would be their cloud, locking customers even deeper into their own technology.
To add to this, Microsoft is really really good at understanding businesses, in a way Google will probably never be I think.
Having on premise hosting options for Exchange and all their core services is an example of that, even as they're also pushing for 365 in the cloud. I remember them being earlier than GCP to deal with GDPR and the in EU requirements as well but my memory might be failing.
People use Windows at home and at school and then employers use the same thing because they don't want to retrain people. But the home versions of Windows are becoming so malevolent that they're losing market share. Meanwhile all the things that used to require Windows are becoming web pages and phone apps. You go to a university and it's full of Macbooks and if you see a PC in the CS department there's a good chance it has Linux on it. These are the people who will be choosing what to buy in a few years.
But who cares about the clients anymore, right? They're making money from cloud services. Except their hook is getting people to use Active Directory and Microsoft accounts, which are the things for managing Windows client devices.
It's going to be a while before anybody convinces the accountants to stop using Excel, but for large swathes of employees Windows is no longer relevant, and if you don't need Windows then why do you need Azure instead of AWS or any of the others?
> if you don't need Windows then why do you need Azure instead of AWS or any of the others?
I don't have enough insight, but there's more to it than Windows/Microsoft services tie up. It's clearly not the ease of use for small customers, it could be the contract making, or something else that makes it better deal for businesses beyond just the cost bundling.
For instance I remember Apple hosting iCloud on Azure. And there's a few other big players going with Microsoft, especially retail chains who can't touch anything Amazon, and don't trust Google.
It's the ease of use for medium customers. Large customers have Linux servers with full-time staff to write custom code and do whatever they want because they have their own resources; Facebook doesn't use Azure. Small customers buy a Macbook or Chromebook or tablet and have a gmail address and host their website on WordPress or one of those awful (but easy to use) web host proprietary site builders.
Medium businesses are big enough to want to have their own email domain but not big enough to want to implement their own spam filter, so they turn to the likes of Amazon and Google and Microsoft. Then Microsoft's advantage is they can manage and integrate with your Windows devices. Otherwise they're just doing price competition with every other hosting company. People who aren't even using Active Directory start to wonder why they should pay extra for SQL Server instead of using Mariadb on Linux, and in turn why they shouldn't put that VM on AWS unless Microsoft cuts them a better deal. (Which is presumably what happened with Apple, but offering long-term discounts is not how you make a lot of money.)
Moreover, it's increasingly easy each year for companies to support BYOD and let employees procure whatever they want that meets IT requirements. My current employer gave all non-tech staff $2000 to buy themselves a laptop, which was then enrolled in some fleet management systems with almost a single click.
Frankly, I see very few people choosing Windows anymore.
Also, another point to add: Microsoft's Intune fleet management system is perfectly capable of managing Macs, and you can use AD as your IDM source of truth for just about anything, including SSO for Google Workspace & ChromeOS devices.
To your last point, Windows Server is a hard requirement in many enterprises because of legacy or procured software that requires it. That is entirely separate from end user computing.
(I used to run end user computing for an F500, and I also ran the Enterprise Apps org at the same time. This was from about 2008-2015, and initiatives including mass migrations aware from MS Office to Workspace, and replacing thousands of Windows laptops with Chromebooks.)
I think many of us are underestimating Microsoft because of how crappy Windows is and keeps being.
But as a business entity they've been ferocious from the start, and succeeded through sheer perseverance where Google gave up after some tepid tries.
Xbox would have been killed by Google in the first year. Exchange would have stayed in beta for a decade, and Office365 would have had no support if it was in GSuite.
If Google were to find a way, I think they'd need a radically different approach, as I don't see them ever fixing their focus problem.
I think that's a valid point. Maybe Google culturally will not be able to turn around. Not because crappy product, but because of lack of focus.
That said, Google is still printing money and increasing profits and revenues. Nothing like falling profits (or even losses) to create some pressure to focus. DEC would be the example of a company that failed to do so.
Reinventing yourself because you imploded your primary market is still an own-goal. If you can capture a new market then you could have had both. And what if the primary market collapses first?
AT&T, GE, AOL, Yahoo, Sony technology (they are a media company now, but they did used to make things that weren't a game console), Time Warner, SGI, Compaq, 3DFx, DEC...
Not only that, most of the other examples are just not at the end of their death spiral yet. Take a look at Windows market share, it's down 20% over the last 10 years:
And that's just desktop. Microsoft ceded the entire mobile market, which in turn now represents the majority of devices. The majority of the company's profits no longer come from selling Windows and Office. If they hadn't pivoted into a new line of business (Azure) they'd be on a trajectory to impact with the ground.
IBM has been bleeding customers -- and business units -- for decades. Their stock is flat, not even keeping up with inflation, compared to +300% over the last decade for the overall market. And they have no obvious path to redemption.
Oracle is kind of an outlier because of the nature of their business. Their product has an extraordinarily high transition cost, so once you're locked in, they can fleece you pretty hard and still not have it cost more than the cost of paying database admins high hourly rates for many hours to transition to a different database. Then they focus their efforts on getting naive MBAs to make a one-time mistake with a long-term cost. Or just literal bribery:
And even with that, their database market share has been declining and they're only making up the revenue in the same way as Microsoft through cloud services.
Meta isn't a great example because people just don't hate them that much. Facebook sucks but in mostly the same ways as their major competitors, they're still run by the founder and they do things people like, like releasing LLaMA for free.
All of the companies I cited are hugely profitable. They might not be as large as they once were, or as important, but a business that has non-declining net income in the billions is not in a death spiral. IBM has shrunk a lot, but except for the financial crisis in the 90s, they have been profitable every year, and profits are roughly flat since 2017.
This is certainly a completely different picture than Yahoo for example.
And your argument for Microsoft is that they are in a death spiral because they only have 70% of market share on the desktop, and are shrinking by 2% per year, so in, uh 15 Years they might only have 50% of the market share! Also, please ignore that they successfully diversified their revenue streams to other markets (Cloud).
And your evidence is that they failed to capture the mobile market. While you also argue that Google is in a death spiral when Google is actually the company that won the mobile market.
I think you might be using the term death spiral in an unconventional way here.
> All of the companies I cited are hugely profitable.
You cited them because they are hugely profitable, ignoring the ones that are already defunct. And the entire premise is that a company can simultaneously be posting profits while doing the thing that will ultimately destroy them.
> And your argument for Microsoft is that they are in a death spiral because they only have 70% of market share on the desktop, and are shrinking by 2% per year, so in, uh 15 Years they might only have 50% of the market share!
Platforms have a network effect. They're doing so poorly that the network effect from having 90% market share isn't enough to prevent them from losing market share. But now they only have the network effect from 70% market share, which makes it even easier for customers to switch. That's how you get a death spiral.
> Also, please ignore that they successfully diversified their revenue streams to other markets (Cloud).
Which are in turn dependent on customers using Windows so they need Active Directory etc. See also:
> And your evidence is that they failed to capture the mobile market. While you also argue that Google is in a death spiral when Google is actually the company that won the mobile market.
It is unquestionably the case that Microsoft lost the mobile market, which is the larger market. Android has the most worldwide market share, but Android is free to use and generates revenue for Google only to the extent that people want their services. If people stop wanting their services and switch to e.g. another search engine, how does it save Google from this even if they're using Android?
Yeah, it's a pain in the butt. It often shows you the graph and then you try to show the link to someone else and it tries to get them to swipe their card as if anybody is going to do that. Meanwhile it ranks highly in Google search results instead of some other site that contains the same information without the bait and switch, because Google has completely lost the ability to produce quality search results.
AT&T: 15B$ net income, world largest telecom company. #13.0n Fortune 500.
GE, while a reasonable example of a company that declined severely from its peak, was still generating 9B$ in income on 2023 before being split in better focused and profitable successors.
AOL/Yahoo were never dominant in a mature market. They were early to the Internet, but this was an uncharacteristically volatile time with an exponentially growing market.
Sony is also a leading manufacturer in several tech sectors (second largest camera, largest premium TVs). 6B$ net income and rising.
3DFx was never dominant in a mature field but, again, early in a nascent one. They collapsed quickly, not through some highly profitable extended death spiral.
Compaq was never dominant in a highly profitable field. Their market share peaked at 14%.
DEC might be a genuine example, they were never the top of the field, but they did not manage to adapt and turn things around when the world moved in a different direction. Compare to IBM who _were_ in a dominant position in the same field, and have leveraged that position into a sustainable and steady, if smaller and less groundbreaking, business.
Google might be in trouble (relatively speaking) if LLMs disrupt search, but they are not close to being in trouble from being outcompeted in search itself.
AT&T: today is not AT&T. The name was bought. It used to be Cingular.
GE: so your point is that it is a good example.
AOL/Yahoo: A 'mature market'? Are you making up rules so you can disqualify them?
Sony today only innovates in image sensors. They are a financial and entertainment company. Who cares if they sell the most 'premium TVs', this is the company created (off the top of my head) Betamax, CDs, DVDs, Minidiscs, Trinitrons, and made the best consumer tech in the world -- consistently.
3Dfx was the leader of an industry that is now lead by nVidia. That industry wasn't as big then, but everyone knew it would be and it was theirs to lose.
Compaq was the market leader in PC sales in the 90s.
I used the term "as established as google". In my mind this certainly meant the market has to be established. As long as an industry is brand new and rapidly developing, things are obviously different. Many early market leaders didn't make it in the internet. But in the last ten years, market leaders haven't been failing in the same way.
So no, not changing the rules, but maybe clarifying the point. Situations such as the rise of the internet in the late 90s and early 2000s are the anomaly, not the rule.
Operating Systems and Internet search are roughly the same they were ten years ago. 3d accelerator cards changed immensely in the years when 3dfx failed. Microsoft and Google are not in businesses where younger agile companies that read the changing tides better can quickly supplant them.
And that's why they get a thousand chances to turn things around while printing money with their "death spiralling" business.
Your question is effectively answerable as 'no' if you want to limit it to exactly google like market positions, because they haven't existed before. I was answering with examples of market leaders that fell due to bad top-down decisions.
And the internet isn't new anymore. There is no vast landscape of unexplored new technological possibilities, and no garage start up with an engineering mindset that will just offer a better solution.