An article recently criticized the growing dominance of Google. This may seem odd considering Google’s penchant for giving freebies to everyone. But the article correctly pointed out that the tech industry was increasingly being dominated by “stack” companies like Google, Amazon, Facebook, Apple and Microsoft which had a wide variety of integrated products. These companies were each others’ only real competitors with the arrival of a new disruptive player looking increasingly remote.
This does seem to be true and even more depressingly, it seems to follow a trend that has been seen in many other industries in the past. Every major technical revolution is followed by the entry of a slew of innovative people and products. Once the technology matures and major innovations become fewer, the economies of scale kick in and companies start merging into giants. Innovations are gradual and incremental but accumulate over time to make market entry very expensive for any newcomers. At this point, the technology reaches a saturation point.
Remember Wang Laboratories? DEC? The Thinking Machines Corporation? How about the brand Compaq? They all died or were eaten up in the 1990s and early 2000s as computer architectures and hardware matured and standardized.
The fallen of the computer wars, may they rest in peace
The car industry saw the same thing in the 1910s and 1920s. Who remembers Pierce Arrow or the Chandler?
Chandler and Pierce Arrow cars
Another wave came in the middle of the 20th century when surviving companies like Studebaker and DeSoto went bankrupt and Detroit’s Big Three took over the US market.
The aircraft industry also saw this in the 1960s when the French Aerospatiale, British Hawker, German Deutsche Airbus and Dutch Fokker combined to fight off American competition. Others like DeHavilland and Supermarine of World War 2 fame were forced to shut operations.
Supermarine Spitfire and the DeHavilland Comet
If the IT industry is facing the same, then the ramifications go beyond those in the industry to the economy as a whole. Over the past 150 years, a steady stream of innovation has driven economic growth and its attendant social benefits. In the absence of such innovation, we go back to the bad old days of rent seeking economy.
The other alternative is another revolution? Any ideas where that might come from?