Author Topic: Competitive advantages for top tech companies?  (Read 580 times)

MustacheAndaHalf

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Competitive advantages for top tech companies?
« on: January 17, 2020, 11:51:32 AM »
Will the top tech companies really change over the next 10 years?  I heard this claimed by someone on TV, and strongly disagreed with them, even though their premise is sound.  I hope I'm not falling victim to "this time it's different" - feel free to point it out if I am.

Warren Buffet likes companies with "moats", which are significant obstacles to competitors.  I suspect the biggest U.S. tech companies have big moats for competitors to cross.

Microsoft has Windows, which in turn has software everyone uses.  Sometimes I try out games I like on Linux, hit bugs, and return to Windows.  But businesses like the cost and reliability of Linux, and most users prefer phones over laptops.  So maybe Microsoft will become a cloud company ultimately.

For Apple, they have an integrated phone / services setup that works well.  A competitor's phone can't connect to iCloud and related services, which are Apple's moat.  Their brand has really strong worldwide recognition, and others would have to scale up an operating system and cloud services to match what Apple offers.

Google has the largest ad market, and best search engine.  Years ago Microsoft poured money, computers and software engineers into making a competing search engine, and failed.  The refinements built into their software are their "moat" in the search engine space.  Their ads have the most reach, so there's more profit using Google's ad network.  Maybe that could change?

Maybe Amazon is the weakest of the group?  Besides the largest pool of buyers and sellers, you get low prices and the ability to find even obscure items.  Their cloud service may turn into a commodity business, but Amazon is #1 right now.


Given the many hurdles to beat these companies, will there be changes to the top companies in the next decade?  Will a new form of search replace Google?  Will Huawei 5G phones beat Apple on features and overall look and feel?
« Last Edit: January 17, 2020, 11:55:22 AM by MustacheAndaHalf »

celerystalks

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Re: Competitive advantages for top tech companies?
« Reply #1 on: January 17, 2020, 03:12:10 PM »
Yes, I think you are falling for "this time it's different" reasoning.  You are also suffering from home country bias.

I doubt the top tech companies of next decade are unlikely to be the same as those today.

My belief is that the American tech companies will likely hold and edge domestically for the foreseeable future, but that the big growth tech companies of the 2020s will emerge as the Chinese tech companies the likes of of Alibaba, Tencent, JD.com, etc.

FIRE 20/20

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Re: Competitive advantages for top tech companies?
« Reply #2 on: January 17, 2020, 09:02:19 PM »
My guess is that something similar will happen to what happened with all of the companies you mentioned, as well as with Facebook and some others.  In each case first mover (or the first to gain a dominant position in something almost new) was the one to dominate and then hold on. None took over an existing market leader in the same space.  I remember computers before windows, and they generally were really difficult to use without training.  Yes, Apple did a lot of things first, but Microsoft did enough with their Intel tie ins and DOS market share to dominate.  Apple did something similar with the Mac, iPod and Iphone - they didn't take market share from a dominant company, they created a new market.  They did something new enough to take a small market item and make it good and cheap enough to dominate early.  Amazon, Facebook, and Google did something similar in their spaces - none overtook an existing dominant leader.  So the question is not who will overtake them, but what new markets and products will exist that we're not thinking about now?  The companies building those products will be the new big tech companies.  Someone might make a vast leap in AI like Google did with search - that would be one guess.  Or maybe in clean energy production?  Or maybe something more futuristic like implantable devices or nanotech.
« Last Edit: January 17, 2020, 09:04:19 PM by FIRE 20/20 »

MustacheAndaHalf

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Re: Competitive advantages for top tech companies?
« Reply #3 on: January 18, 2020, 05:36:51 AM »
Regarding the home country bias, I agree - I didn't realize that Apple has a tiny market share (7-12%) in China over the past few years.  The main competition happens in Europe: Samsung is #1, Apple #2, and Huawei #3.  China will have 5G before the U.S., which could mean Huawei leaps ahead of Apple in Europe.  So Apple is in a more precarious situation that I originally thought.

Facebook displaced Myspace, and was getting replaced by Instagram - so they bought them up.  If regulators wise up to the fact that Facebook is a social media monopoly, they might not allow them to buy out another social media competitor.  Then that competitor takes on the next generation of users, and leaves Facebook more and more behind over time.  At least, that's the trend with Myspace / Facebook / Instagram / Snap.

I suspect Google has the strongest position, but maybe I'm biased from liking their search engine.  Would anyone trust Chinese censorship to deliver them accurate results?  That's what Baidu offers, the #1 search engine in China.  That seems like a huge disadvantage when they try to gain market share outside China.  Google probably has a significant advantage here, over it's Chinese rival.  Has anyone heard of Yandex?  Probably not - it's Russia's #1 search engine.  I just don't think heavily censored versions will compete well with the likes of Google.  Am I missing an angle, there?

MaaS

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Re: Competitive advantages for top tech companies?
« Reply #4 on: January 18, 2020, 09:19:20 AM »
Yes, I think you are falling for "this time it's different" reasoning.  You are also suffering from home country bias.

I doubt the top tech companies of next decade are unlikely to be the same as those today.

My belief is that the American tech companies will likely hold and edge domestically for the foreseeable future, but that the big growth tech companies of the 2020s will emerge as the Chinese tech companies the likes of of Alibaba, Tencent, JD.com, etc.

I agree that China's tech companies are some of the best in the world, but I believe international growth will continue to underwhelm due to the relationship between Chinese companies and their government. Ex: Any business outside of China that has data on the Alibaba cloud is insane IMO.

Each of the companies listed has a huge moat. But, we're at a point where moats are increasingly being viewed as "unfair." Anti-trust regulation is the biggest threat in the 20's.

On Google - the biggest threat to its search engine is Amazon. A lot of people misunderstand Alexa (IMHO) as a voice search system. It's an entirely new type of operating system that will, and already is, return information on a whole host of screens or other visual interfaces.