Venture capitalist Fred Wilson from Union Square Ventures made waves recently when he told TechCrunch’s Ingrid Lunden that by 2020, (that’s less than 6 years, folks), Apple won’t be a top-3 tech company–and Google and Facebook would be.
Wilson argued that Apple’s lack of understanding of the cloud would eventually do it in, while Google and Facebook, which are inherently more cloud friendly, would survive. He left the door open for a third company we haven’t heard of for the remaining top spot.
It’s an interesting theory, but I’m here to tell you that each of these companies has a profound weakness by which any one of them could be undone. It’s also important to note that in spite of these weaknesses, each company is so wealthy that they can find ways to buy their way out of trouble for many years to come and maintain their market dominance through brute force, if not through innovation.
Let’s start by looking at Apple. Wilson is spot-on, of course. In spite of opening an expensive data center in North Carolina several years ago, it never really seemed to understand the cloud. There have been fits and starts, of course, with iCloud being the latest iteration in a line of failed attempts, but even as someone who uses cloud products on a daily basis and who writes about the industry, I find iCloud obtuse and difficult to understand. I’ve talked to tech-savvy friends who have similar feelings.
For Microsoft, its big weakness is mobile. As hard as it has tried to make headway in the mobile space, marketshare remains mired worldwide around 3 percent. This after years of trying different ways to encourage more adoption. Microsoft has tried paying developers. They have bought Nokia, their best brand, and nothing seems to work.
Up until recently, you could have said Facebook didn’t get mobile either, and you would have been right, but they are adjusting and over the last several months, they’ve done better. They have numbers in their favor of course in terms of users, but that user base is not fixed to them, and if they continue to abuse users around data and privacy issues, not to mention constant interface changes and a complete lack of transparency about data usage, their hold on that audience is not guaranteed.
Facebook is also a closed system meaning that beyond ads, that many of us ignore, it doesn’t have meaningful linkage out to the open web. If I want to buy something, I’m going to go to Amazon or other shopping site for that. If I want to watch a video, I’m going to YouTube. If I want to make travel plans I’m going to Kayak or Airbnb. Facebook is great for sharing stuff and asking what my friends like, but when I actually want to do something, I’m leaving, and that could hurt Facebook eventually.
Finally, we have Google which in spite of having its fingers in all kinds of pies, is ultimately a one-trick pony when it comes to actual profits. It makes the vast amount of its money to this day on Internet searches. That’s all well and good, but as my friend Jeff Rutherford, a public relations and marketing professional pointed out to me, they lack a social sense. That is, you can search for restaurants in Brooklyn and all the companies that bought keywords or which people clicked on most frequently will surface to the top, but so far at least, the ones my friends like aren’t part of the results.
“I define social search as when I go onto Facebook and ask, ‘Hey everybody, I’m headed to NYC tonight, what new restaurants should I definitely eat at this weekend in Brooklyn?’ That’s a search that will not flow through Google,” Rutherford told me. And he believes that lack of social savvy could haunt Google in the long run. I agree.
Will any of these companies fade by 2020 or will it be just Apple as Wilson suggested? Nobody knows of course, but any of these weaknesses could eventually undermine any one of these companies, and then there is the unknown entity, that third company Wilson suggested that will swoop in and become a force. That is in fact very likely to happen.
But what impact that will have on the market is hard for any of us to gauge. It’s fun to speculate and it makes great headlines, but none of us knows what the future brings. We only know that we have a handful of powerful, extremely well-heeled companies battling it out.
But Wilson is probably right about one thing, the market is going to shift in some significant way in the next 5 or 6 years and for at least one of these mega brands, their weakness will be their undoing. How that plays out though is anyone’s guess.
PHOTO CREDIT: (c) Can Stock Photo