From Tech Giants to Tech Zombies
Like everything else in this life, companies follow a certain lifecycle. Tech firms, no matter how successful they have become over time, are no exception! In fact, some argue that those companies that we have come to know as “tech giants” will not stay in the game for long. They are, according to Metz’s article on WIRED (2015) “the walking dead” of the tech industry.
According to the article, companies like CISCO, IBM, EMC or Oracle have already passed their best days. While they rose to fame for their innovative business models and offerings, time catches up to all of us, and whatever semi-monopoly they were able to build for themselves in the past, new companies are now catching up. An example used is that of EMC, a company which was able to achieve great success by offering companies large bundles for data storage. Today, however, companies such as PureStorage are offering similar (if not superior) offerings (Metz 2015). After all, the larger the scale of a company, the more problems in terms of flexibility it entails, which may be a source of advantage for new entrants.
So the question remains “why”. Looking at Geoffrey Moore’s process lifecycle might yield interesting findings. Tech companies such as the ones mentioned earlier rose to fame for offering other firms the opportunity to significantly improve the efficiency of their operations by using these third party applications (e.g. Oracle or EMC). As it is understandable, these services provided their clients with a revolutonary way or reorganizing its operational activities, and so these tech companies benefited from high revenues and monopolistic-like environments, since their services were not easily replicable. Nevertheless, as years have passed, these processes have become somewhat of a norm for all businesses, going from innovations to standardizations. This means that by now new entrants have found a way to replicate the services offered by these companies, sometimes even more effectively, reducing the competitive advantage of incumbents. What the article posted on WIRED may be referring to, is that tech giants are on the way to the final stage: commoditization. A point where their technology will be taken as a “given” in the business world, and moving away from being key success factors to becoming minimum success factors for their clients. Features that once seemed ground-breaking, become taken for granted through commoditation (Cabage and Zhang 2013).
As technology advances at a faster pace than ever, the life-cycles of technologies and companies are becoming shorter and shorter. Has the time arrived for today’s tech giants to pass on the torch to new firms?
Cabage N. and Zang S. 2013, When It Comes to Your Online Startup, Timing is everything, 20 March, Pitchpit <http://www.peachpit.com/articles/article.aspx?p=2027232>.
Metz, C 2015, Dell. EMC. HP. Cisco. These Tech Giants Are the Walking Dead, 12 October, Wired, viewed 15 October 2015, < http://www.wired.com/2015/10/meet-walking-dead-hp-cisco-dell-emc-ibm-oracle/?mbid=social_fb>.
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