So given all this, why are there new firms at all? Why was Microsoft able to topple IBM? Why were Google and Apple able to topple Microsoft?
I think the answer lies in the original firm not knowing fully who its competitors are. IBM thought of itself as a hardware manufacturer, and specifically a mainframe hardware manufacturer. Microsoft was a PC software manufacturer. The two categories were worlds apart from IBM’s perspective.
It’s executives could not perceive the PC as a threat. Rather, they saw the PC as colonizing a new market, a market that IBM’s core business had no real interest in. Then, by the time that IBM realized that the vast PC market was going to limit demand for mainframes, it was too late. Microsoft had already established a dominant position among personal computers and it would have been cost prohibitive for IBM to compete. In fact, IBM recognized this, and attempted to “cooperate” with Microsoft on a new operating system. However, Microsoft was able to see the effort for what it was and block IBM’s attempt to regain control of the desktop PC market.
Microsoft, similarly, initially dismissed the iPhone as a joke. It did not see that the future of computing was in mobile devices, not desktop and laptop machines running Windows. Just like IBM, it focused on its core businesses of operating systems and productivity suites, and only realized too late that the core business had been walled in by the much larger mobile computing market. And again, just like IBM, by the time it realized this, it was far too late for it to establish a beachhead and compete, even though it triedrepeatedly.
In the same way, Xerox actually invented most of the technologies that led to its demise. The personal workstation, the GUI, the mouse, and many other innovations were all invented at PARC. However, Xerox executives never imagined these innovations displacing the copier, so they felt free in dismissing them as pie-in-the-sky toys to keep the researchers happy.
Google, Facebook, and Apple, so far, have not made these same mistakes. Facebook, especially, has been aggressive about acquiring competitors that could build alternate social graphs, even if their functionality is radically different than Facebook’s. Likewise, Google has recognized that its core business is to funnel ads to viewers, and has not been shy about acquiring otherfirms whose business model threatens Google’s ability to do so. Whether this aggressiveness will last depends on a whole host of contingent factors, like executive competence, regulatory oversight and short-term market pressures on the core business. In the near term, however, the new tech monopolies do appear to be qualitatively more paranoid in a way their predecessors were not.
Microsoft, similarly, initially dismissed the iPhone as a joke. It did not see that the future of computing was in mobile devices, not desktop and laptop machines running Windows.
I don’t think that’s fair. Microsoft did have a mobile OS before Apple. It’s just that they didn’t get the idea that very simply UI is better than a UI that’s accessed via a stylus along with a hardware keyboard. I think they also didn’t have the haptic feedback that you do get on iOS and Android when software buttons are pressed. It’s quite interesting that you can give user that clicks software button haptic feedback without them being aware that the phone in their hand vibrates when they press a button. There were a bunch of interesting ideas that were needed to get the concept to work.
There were a bunch of interesting ideas that were needed to get the concept to work.
Microsoft could have invented those, instead of Apple, if Microsoft invested the resources into mobile devices that Apple had. Instead, Microsoft treated the entire mobile device space as a sideshow, or an adjunct to desktop computing.
Meanwhile Apple, perhaps because of its success with the iPod, invested heavily in mobile device hardware engineering, mobile UI research, building relations with suppliers, and all the other necessary things to not just invent the iPhone, but manufacture it and sell it by the millions.
So given all this, why are there new firms at all? Why was Microsoft able to topple IBM? Why were Google and Apple able to topple Microsoft?
I think the answer lies in the original firm not knowing fully who its competitors are. IBM thought of itself as a hardware manufacturer, and specifically a mainframe hardware manufacturer. Microsoft was a PC software manufacturer. The two categories were worlds apart from IBM’s perspective.
It’s executives could not perceive the PC as a threat. Rather, they saw the PC as colonizing a new market, a market that IBM’s core business had no real interest in. Then, by the time that IBM realized that the vast PC market was going to limit demand for mainframes, it was too late. Microsoft had already established a dominant position among personal computers and it would have been cost prohibitive for IBM to compete. In fact, IBM recognized this, and attempted to “cooperate” with Microsoft on a new operating system. However, Microsoft was able to see the effort for what it was and block IBM’s attempt to regain control of the desktop PC market.
Microsoft, similarly, initially dismissed the iPhone as a joke. It did not see that the future of computing was in mobile devices, not desktop and laptop machines running Windows. Just like IBM, it focused on its core businesses of operating systems and productivity suites, and only realized too late that the core business had been walled in by the much larger mobile computing market. And again, just like IBM, by the time it realized this, it was far too late for it to establish a beachhead and compete, even though it tried repeatedly.
In the same way, Xerox actually invented most of the technologies that led to its demise. The personal workstation, the GUI, the mouse, and many other innovations were all invented at PARC. However, Xerox executives never imagined these innovations displacing the copier, so they felt free in dismissing them as pie-in-the-sky toys to keep the researchers happy.
Google, Facebook, and Apple, so far, have not made these same mistakes. Facebook, especially, has been aggressive about acquiring competitors that could build alternate social graphs, even if their functionality is radically different than Facebook’s. Likewise, Google has recognized that its core business is to funnel ads to viewers, and has not been shy about acquiring other firms whose business model threatens Google’s ability to do so. Whether this aggressiveness will last depends on a whole host of contingent factors, like executive competence, regulatory oversight and short-term market pressures on the core business. In the near term, however, the new tech monopolies do appear to be qualitatively more paranoid in a way their predecessors were not.
I don’t think that’s fair. Microsoft did have a mobile OS before Apple. It’s just that they didn’t get the idea that very simply UI is better than a UI that’s accessed via a stylus along with a hardware keyboard. I think they also didn’t have the haptic feedback that you do get on iOS and Android when software buttons are pressed. It’s quite interesting that you can give user that clicks software button haptic feedback without them being aware that the phone in their hand vibrates when they press a button. There were a bunch of interesting ideas that were needed to get the concept to work.
Microsoft could have invented those, instead of Apple, if Microsoft invested the resources into mobile devices that Apple had. Instead, Microsoft treated the entire mobile device space as a sideshow, or an adjunct to desktop computing.
Meanwhile Apple, perhaps because of its success with the iPod, invested heavily in mobile device hardware engineering, mobile UI research, building relations with suppliers, and all the other necessary things to not just invent the iPhone, but manufacture it and sell it by the millions.