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Businesses The Almighty Buck Technology

Established Players in Tech Industry Are Displaced By New Technologies and Companies Often When They Are Operating At Their Peak (learningbyshipping.com) 57

Posted by msmash from the history-lessons dept.
In a column, Steven Sinofsky, former President of the Windows Division at Microsoft, cites various examples from the past to suggest that it is often when incumbents in technology space have established market dominance that new startups rise and displace them: While the tech incumbents are clearly generating massive revenue and profits, nearly all of this comes from products developed long ago. In fact, as we now know in hindsight, it is exactly when conventional wisdom conflates today's economic success with forward-looking product innovation that seeds are being planted for the next massive wave of innovation. Google was formed at time when the incumbents of AOL and even Yahoo were stronger than ever. Facebook came just after the dot com bubble burst. Even the reincarnation of Apple took place after the bubble burst with products being developed as the bubble peaked. And for what it is worth, the PC ecosystem, particularly Windows, was relatively "flat" mired in Windows Vista while Firefox dominated and Google Chrome was appeared (Windows 7 wouldn't come out for a year after Chrome). In the infrastructure space, the seeds were planted for both AWS and VMWare in the shadow of the dot com bubble. In an historical context it is highly likely that the next wave of innovation in new technologies and new companies will happen right under the noses of big companies operating at what the public markets think of as peak (earnings) potential.
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Established Players in Tech Industry Are Displaced By New Technologies and Companies Often When They Are Operating At Their Peak More

Established Players in Tech Industry Are Displaced By New Technologies and Companies Often When They Are Operating At Their Peak

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  • Not displaced, the users change (Score:5, Interesting)

    by petes_PoV ( 912422 ) on Monday December 25, 2017 @04:09PM (#55805825)
    This isn't cause and effect thing. It is not because tech companies are at the top of their game when a newcomer comes along. It is because there is a cycle to these things. One that means that users wants, needs and even just fashions change regularly - and that this often coincides with when the previous "generation" of tech solutions have reached maturity.

    Google didn't displace AOL, they produced a search engine that was better than anything around. That gradually blew past the competition over a period of years. Facebook is only cited as an example because (coincidentally) it was successful. There were thousands of failures during the same time period. Any of them could have been used as an "example" here, but they failed, so they didn't make it into the article.

    If there is something in this, it is not one of cause and effect. It is down to timing and cherry-picking examples that support the author's thesis.

    • Re: (Score:3)

      by mikael ( 484 )

      Between 1996 and 2000, PC's began to displace UNIX workstations as 3D graphics boards became affordable as Windows NT/95 came out. Many workstation vendors buckled and just gave in to Windows NT. The height of the dot com boom in 2000 was when sales of sub $600 desktop PC's at Walmart and other department stores were also at their peak. As laptop, notebooks, netbooks and web-books became cheaper, the market adjusted Then around 2005, the mobile market took off when it was possible to use GPRS/GSM modems.

      PDA

    • Large companies at the top of their game are very risk averse. They have a lot to lose now, so play very conservatively. New startups have nothing to lose and take chances because of that. Most of them fail. But we only hear about the successes that took a wild chance with nothing to lose. And occasionally, one of those shots in the dark hits a bulls eye that redefines everything.

      • Like google moon shot budget is multiples of many startups that is public, Apple and amazon have multiple hope and a prayer projects or just in case. I am donâ(TM)t follow what you mean by scared of risk. Thats an insurance / bank thing

        • Like google moon shot budget is multiples of many startups that is public, Apple and amazon have multiple hope and a prayer projects or just in case. I am donâ(TM)t follow what you mean by scared of risk. Thats an insurance / bank thing

          Google will never do anything disruptive with search, because that is their bread and butter. Nor with advertising. Yes, they have moonshots, but only in new markets. and never anything that might hurt YouTube, for example.

          • Comment removed based on user account deletion

            • Re: (Score:2)

              by epine ( 68316 )

              Agreed. Established companies will never cannibalise their cash cows. Its a lot of friction that CEOs just don't need in thier life. Why take risks when the cash is rolling in? Human nature.

              "Human nature" is putting forward the tripe you just posted.

              Think for half a second. Google has a 730B market cap. That's a mighty large aggregation of stakeholders.

              Efficient frontier [wikipedia.org]

              Does it really make sense to have behemoths dabbling in high risk activities? Is Google going to make the star employee of some highly s

    • existing companies lose business when challenged by newer ones. uh, yeah, that's when their business slides. and that is when the peak ends. you've got to get up pretty early in the afternoon to fool me with that other reading of the data.

  • The rich and powerful learn (Score:5, Interesting)

    by rsilvergun ( 571051 ) on Monday December 25, 2017 @04:15PM (#55805843)
    unlike the working class. Once in a while things move faster than they can keep up, e.g. the dawn of the Internet. But for the most part they keep a lid on this kind of 'disruptive' tech. Right now the solution is to keep all the money for themselves (re:Apple and their $650 billion in cash) and then use it here and there to buy any and all potential start ups. The upcoming corporate tax cut in America is going to exacerbate this as companies have a ton of cash but not a lot worth spending it on. R&D, let us remember, is mostly done by the government.

    We shouldn't be surprised. This is the essence of what it means to be "conservative". It means to push back against change. It's just nobody ever seems to question the actual motive of that particular ideology. It's always simple time this and when things were better that. Never a word about how it just so happens the ideology favors the establishment over new players.

  • Duh - no one notices if they aren't (Score:4, Interesting)

    by gurps_npc ( 621217 ) on Monday December 25, 2017 @04:30PM (#55805901) Homepage

    Lets say your company is doing well, but has a slight pullback, losing 10% of your market share and you are now the #2 player, then a startup comes out of nowhere to take over the entire industry.

    People don't talk about how the startup beat the guy that USED to be #1 and is now #2. Instead they talk about the startup beating the guy that just made it to #1 spot after 10 years of hard work.

    In fact it's almost physically impossible for someone to create a disruptive technology without taking out the #1 player - it's just not disruptive if your tech only makes you #2. And if you are #1, then OF COURSE you are at your peak. Unless the economy is in a downward spiral, the #1 guy has to be at his peak.

    That's like saying the wow, the best scorer in the league is having a good year. He would not be the best scorer if he wasn't having a good year.

  • Innovator's Dilemma (Score:5, Interesting)

    by MonkeyTrial ( 713192 ) on Monday December 25, 2017 @04:40PM (#55805931)
    Sinofsky restates well-known book by Clayton Christensen written in 1997. News at 11:00?

  • ... Facebook, I'm OK with it.

  • Motorola and Nokia - milked their cash cows to long. Iridium helped sink Mot. Nokia still has infrastructure.

  • Is anyone surprised? (Score:4, Insightful)

    by PCM2 ( 4486 ) on Monday December 25, 2017 @07:03PM (#55806459) Homepage

    Court-declared monopolist declares that monopolies, in effect, do not exist, or are at least irrelevant. Stay tuned in the next half hour to hear prognostications about the color of the sky.

  • For big tech companies, acqui-hires and copying of start up tech something big conventional companies can't do. Changing a product lineup or adding features for physical products or other established services is difficult. For a tech company, introducing new features is second nature, see Snapchat and Facebook for example.

    Big tech companies leverage their market dominance such that new startups need an increasingly high bar to vault to complete.
  • I know there will be VB flames, but multi-year 10s of thousands of production code becomes #2 when idiots like Sinofsky delete the most popular programming language of its day to force you to rewrite/architect it in V0.0 of a new environment called .NET. The made sure I will never depend on Microsoft technology going forward. This is why they got overtaken.

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