Having first moved to San Francisco in 1999, I can vividly recall the early days of Internet Marketing and Advertising. From the days of Amazon specializing in books, Google competing in the search engine space, Apple was a computer company and Facebook was kicking off at Harvard University. Those were the ‘old days’ and how far we have come in 2017. ( I even vividly recall Napster and the legendary ‘dot com’ website created in 2000 by Philip J. “Pud” Kaplan too!)
Today, Amazon primarily is an electronic commerce and cloud computing company, Apple and Google sell phones, consumer electronics, computer software, and online services AND, Facebook is now an American for-profit corporation and an online social media and social networking service
BUT, in 2017 we have all seen the BIG FOUR rapidly gravitating to deeper customer experiences besides, into the media business, TV, movies, books, the banking industry, politics, becoming part of the communications infrastructure and being the ‘conduit’ in all other parts of any transaction. (online or offline)
These giant four companies are trying to disrupt every other business in the US and Global economies today. I think what’s very interesting to watch today is how they all seem to be heading to a ‘massive collision ’ as they each encroach and invade each other’s traditional places and business. The ultimate showdown will be a fight to the death AND, the victor will control and dominate the most client databases, insights and customer experiences.
Importantly, these rich companies and the elite companies that have all accelerated to over a half-trillion market.
In the tech space today, here is the approximate value of the Titans:
1.Apple ($800 Billion),
2. Google/Alphabet ( $670 Billion),
3. Amazon and Facebook both in excess of $500 Billion now.
With Amazon recently acquiring WholeFoods and setting its sights on the grocery industry for $14 Billion – Wall Street sees Amazon as altering the way Americans shop and create massive turmoil with the entire brick-and-mortar industry too.
Observations on the Four Titans:
- All seem to be fascinated and pay huge amounts of time and effort to capture and grow the telephone market. All the titans are building bigger, deeper databases of clients/customers to better target users, create more impactful ads, sell you products and services more often, track you and appear more friendly and helpful.
- As Facebook now has over 1 billion plus monthly active Facebook users– they have a huge advantage simply because they have collected so much information since inception and everyone online has probably seen and used their ‘LIKE’ Buttons too. They also have vast information stored on all your interactions with your friends and family who you share stuff with, comment on, click on, forward posts, etc. Importantly, in recent years, Facebook has focused heavily on building an app for iPhone and Android phones that allow their customers to text-message with each other and bypass the cellphone text-messaging system. (this was a smart move!)
- These Titans collectively have a market capitalization of more than $800 billion and are increasingly viewed as the gateways to Internet traffic. Their impact on eBusiness ranges from interesting and innocuous forays into commerce to disruptive forces that must be approached with circumspection.
- In a recent Fortune magazine article, I even read that Barclays thinks Amazon may become one of the first trillion-dollar publicly traded companies, but not for at least another decade. By 2027, the analysts predict that Amazon may finally reach a market cap of about $910 billion; still about 10% shy $1 trillion.
- YES, I think the smart money is on Amazon to officially be the first $1 Trillion company (sneaking past Apple at the line), which has traditionally considered to be ‘top-seeded’ to reach $1 Trillion in market value soonest.
- The combined market cap of Alphabet and Apple is larger than the combined market cap of all Eurozone and Japanese banks.
- Amazon bigger than the GDP of Washington, D.C
- Just look at Titans respective gains this year to date – here are their gains, as measured from their respective 52-week lows:
- Apple: 56.63 percent
- Amazon: 44.61 percent
- Facebook: 44.55 percent
- Google/ Alphabet: 33.45 percent
These giant four companies all have some massive challenges ahead as I see it including:
- They are all ‘Titans” BUT, their size and its scrutiny by antitrust authorities in Europe and the US also limit its ability to make large acquisitions.
- The consolidation of the ‘Cloud’ is causing some HUGE issues today and more are on the horizon. Importantly, Cloud CRM, Desktop Apps, And Platforms Are Already Oligopolies
- Ignoring Geopolitical Risks At Your Risk – ensure your security and risk executives all understanding and grasp the Geopolitical conflict is one of the most talked about issues in politics, news outlets, and our daily lives.
- Businesses worldwide (even these Titans) continue to ignore and misinterpret the way such conflicts affect the cyber security risk landscape and threaten their survival. Failing to formally incorporate geopolitical considerations in your risk management processes could ultimately mean havoc for your international presence, global customer base, third-party relationships, and business continuity.
- I believe the biggest weaknesses of the Titans today is, they haven’t quite yet mastered the ability to compete in local markets. BUT, I believe there is more at stake: the ability to compete in local markets, on local terms, without running afoul of local governments and data protection regulations. I believe Amazon of the big four, best understands this today.
- All must focus on protecting their Brand By Balancing Automation, Audience, And Context (and no to fake news, censorship, demonetizing video’s or tampering with search and search requests)
- Since the US Elections in 2016, Google, Facebook, Apple have been censoring heavily with impunity. And, as owner of the The Washington Post, Jeff Bezos (Amazon) has been widely criticized for reporting and supporting #FakeNews in The Washington Post. Additionally, Amazon Web Services has a $600 Million project for the Central Intelligence Agency servicing all 17 agencies that make up the intelligence community too.
How the Titans make their Billions
Each of these tech companies is pretty unique in how they generate revenue, though there is some overlap:
- Facebook and Google/Alphabet each make the vast majority of their revenues from advertising (97% and 88%, respectively)
- Apple makes 63% of their revenue from the iPhone, and another 21% coming from the iPad and Mac lines
- Amazon makes 90% from its “Product” and “Media” categories, and 9% from AWS
Note: Software isn’t the ‘cash cow’ it used to be, but it does help serve as a means to an end. For example, Google’s Android doesn’t generate any revenue directly, but it does allow more users to buy apps in the Play Store and to search Google via their mobile devices. Likewise, Apple bundles in operating systems with each hardware purchase.
In conclusion, I would like to close with this thought – I believe closing the experience gaps, will separate these Titans as they all fight to be the first Trillion Dollar Business. I see a real urgency with all of them – I believe there is more at stake: the ability to compete in local markets, on local terms, without running afoul of local governments and data protection regulations.
AND, I clearly see the intensity of all FOUR in realizing Improving customer experience is now the No. 1 experience priority for success, growth and prosperity in 2017 and beyond. Apple, Facebook, Google and Amazon all get fast-moving customer teams in eBusiness, marketing, and customer experience plus, eagerly adopt software that closes the gaps. And, the battle is now primarily about building meaningful roles in customer experiences. May the best company win!
More about Geoff De Weaver:
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