Horrible article. It makes an arbitrary distinction between products and ideas. I'm sure if you asked Michael Dell, even 10 years ago, what his company is about at its core -- he'd probably say something more like delivering technology to consumers and businesses, customized to fit their individual needs, and using the best processes and efficiencies to deliver at the lowest price possible.
Don't bother wasting your time reading it. You'll have wasted two minutes, learned nothing, and have even less respect for the Economist.
The article illustrates the well-known mantra "to survive, you must adapt to your environment".
In the IT industry, incrementally developing your existing businesses will quickly lead to oblivion. IBM succeeded in the transition away from the mainframe business, and thus IBM can be seen as an example what all the companies in the industry need to do to stay afloat.
I did not find this article a waste of time. It reminds me of Thomas Kuhn's view on scientific revolutions. Most of the time people try to solve problems by using already known patterns. Every now and then somebody comes up with a completely new idea; the new idea allows its possessors to solve the problems orders of magnitude better (i.e. faster, cheaper, ...).
Agreed. Was expecting some kind of idea why information technology actually is a mega-trend and what possible game changers are around the corner. Just imagine only one patent on a working quantum computing device and all mentioned companies are out.
Looks like bashing Facebook leads to down votes, interesting.
But short run is not 100 years. And yes, Facebook will care from day one about QC, think data center and investors willing to burn money to foster old school technology.
As far as I know (and I haven't read too much about QC, so I might very well be totally off), QCs are only useful for a very specific set of problems. And none of those seem to map to FB problems right now.
Will that change? Sure. Will FB do internal research with QCs? Maybe, once they've progressed past the vaporware state. (Sidenote - if we observe QC less, will development work better? ;)
But a working QC will not put FB out of business any time soon. The hardware is only a tiny piece of the puzzle of quantum computing. Algorithms for QC are rare, hard to develop, and the field is in its absolute infancy.
"The hardware is only a tiny piece of the puzzle of quantum computing. Algorithms for QC are rare, hard to develop, and the field is in its absolute infancy."
Is that the description of computer technology as of 1911?
More ca. 1930 - precursors of the Church-Turing thesis showing up. And if anybody then had predicted that "one patent on computers, and IBM is out of business", they would've been wrong too.
I'm a fan of The Economist, but their big flaw is similar to Consumer Reports' problem: when they focus on their core competency (Economist: geopolitics and finance; CR: rating home appliances) they're the gold standard. But when they venture outside, such as this case of trying to give a quick overview of what makes a technology company successful over the long term, it's obvious that they're out of their depth. Similarly, when CR rates something like bicycles or even high tech gadgets, it can be a little embarrassing, because a lot of time they focus on the wrong attributes out of unfamiliarity.
On the other hand, I think we could put together a pretty august panel of experts on the topic of tech company success out of HR readers, and end up with no suitable conclusion, and ultimately do no better than this Economist article.
support for the Iraq war and George Bush, for instance
In what way was it sketchy? Was it just because you happen to disagree? I didn't agree with their endorsement of George Bush either, but I still think their argument for their stance was solid.
I'll have to agree with you there, the part about trashing MS is a little bit silly, Apple is at the top of it's game right now and MS is near the depths of it's game, yet the market cap of the companies are similar and MS just spent the last 10 years being harangued by the DOJ.
It's going to take a couple years to get out of that mindset and into the mobile mindset. It's a little bit silly to think that a company with a market cap of 199 B on a PE of 9 which is highly profitable cannot compete with a company worth 300 B on a PE of 15.
It's way too early to be calling the death of Microsoft, Windows might not be cool, but look around any office of an SMB. The idea that these companies are going to switch to Macs (or iPads) and retrain their entire staff is a little ludicrous.
Facebook has huge promise, but I think it is still too young to tell if it has legs on the order of a century. On the other hand, Google has already shown its ability to hop platforms again and again (Search to E-mail, Web to Mobile, Software to Automotive), and their head-start in artificial intelligence will make them an important force for at least two decades. I would bet Google is the company of this generation that is still around in 2050.
I would have thought that facebook single area of expertise (at this time anyway) makes it a company thats longevity is not guaranteed. When you consider the fact that we are seeing the monopoly that was (and still is to a large extent) Microsoft challenged very seriously on many fronts, and you look at the amount of area's they are involved in, similarily, the longevity of these companies depend on their ability to change their dynamic like IBM.
I agree about Google, but I don't think Facebook is even remotely in the same class. For all I know it could be gone in a couple of years. Apple and Amazon seem like two much more likely candidates, along with Google.
Mind you, back in its infancy you could very much have said the same thing about Google (search? how can you even begin to make money off that?) - and Facebook has been acquiring rather a lot of talented engineers.
Assuming that the core priority is to maintain and optimise their core business to a certain point of stability, they can then look at branching out into other areas that present attractive opportunities.
Of course Google has developed a very specific method to encourage this kind of behaviour (80/20) and Amazon has yet again quite a different process, so it would be very interesting to see how Facebook will go about this in the next few years.
I think there's a strong argument to be made for the case that anything based on social is ephemeral. Facebook may be hiring a lot of engineers, but it is also, really very young, and networks change over time. There's a reason the post office doesn't own telecoms, and there's a reason Ma Bell doesn't own facebook, and didn't own Myspace (aside from the fact that they got trust-busted).
Anyhow, it could well the world's greatest computer engineers, but I doubt even that will allow it to survive the shifting sands of both fashion and technology over the next hundred years. Its not that facebook is bad, just that I very much doubt it'll be plugged into the technology that my children use to communicate in high school, twenty to thirty years from now. It may be telepathy.
Facebook has been acquiring rather a lot of talented engineers.
True, but staying relevant in the field is not an engineering problem, it is a managerial problem. Microsoft had (and still has) a lot of talented engineers, yet they missed out on some great opportunities because of poor managerial decisions. That's why in 2011 they are not as relevant as they were in the 90s.
This article is terrible. It is essentially taking the hottest tech companies of today and making a conjecture that because they have maneuvered well to get where they are, that 100 years from now their methodologies will still apply.
I realized this author had no clue when he/she explained that Microsoft isn't a safe bet while Facebook is. Um, last I checked MS had a $200 billion market cap. I don't think you can compare that to a website that has been in existence for 7 years and hasn't even shown profitability. I'd bet a week's pay that he/she hasn't ever used an Oracle product or could even explain how its database technology is used.
I think Facebook is really in the most danger of the whole group. I can't help but think something else will show up.
Apple has a good shot, but I think Dell is not going to be around. It just seems like the integrated model is going to last and Microsoft is going to do it own thing (ala XBox).
Google might have serious problems if something other than the web shows up and advertising is harder. I am really not convinced (despite the efforts of many) that the web is the endpoint.
I think Google's going after data (profiting on ads), commoditizing automotive, transport, energy, medical, computer hardware, telecommunications, software, and social.
Terrible Article, I am surprised to see the from The Economist. It seems like they just want to name drop the most popular tech companies of late.
Facebook has just as much chance of disappearing in 5 years as it does of being around in 100 year.
Google probably has a better chance than any of these companies of being around in 100 years, they are in the oldest industry of all time. Advertising. Plus they have shown they are willing to invest in new technologies to stay current, ala self driving cars.
Amazon has massive potential, but by no means are they guaranteed.
Apple, Google and Microsoft all have ridiculous piles of cash, provided they don't make any stupid big bets, all of these companies will easily be here for the next 100 years just on these cash piles alone.
Yes, Ai which is applied to advertising. They do advertising in a very unique way but I still feel it boils down to ads. I think they will be a huge force for Ai in the future, they should be more so now, but will the make money from Ai unrelated to ads in the future? Time will tell.
Even though I've seen people explain it as a story arc of communications technology, Nokia's progress through paper, cables, TVs and mobile phones doesn't really make a compelling single service vision that the article was aiming for.
Keep in mind that Verizon was also originally a baby bell. It began as the Bell Atlantic corporation, and through a series of mergers in the 90s gained its place next to AT&T as one of the largest wireless and long distance carrier.
That's right:
The two largest cell phone companies in the country are legacies of a monopoly attempting to reassert dominance in an era of little regulation. Do we really want to return to the days of Ma Bell...?
I bought Google shares simply to insure myself against the singularity. If AI emerges from Googles data centers, maybe it will have mercy on me because I helped fund it's creation.
A little surprised Cisco comes in for no love ... if your mission is to provide the best platform for routable network equipment, one would hope as long as there are routable networks they should do OK.
Of course, if you don't execute on your mission, dilute your franchise by buying tangentially related companies, gouge your customers, might turn out differently.
Are routers and network equipment going to be a commodity, or is a good platform going to keep providing a moat and competitive advantage?
We're still defining IT. The building blocks are the same from card-punching days but what we've built on top of that foundation is light years ahead and evolving faster. Information technology has the most potential to displace or swallow other industries and even redefine the human race. The survival of Google or Apple as a going concern seems pretty immaterial in that context.
There seems to be a lot of focus on a company disappearing by dying, but it's far more likely that any of these companies will disappear via merger or acquisition.
When you look at it from that perspective, any of them could go through a downturn in the next 80+ years that leads to some hot new company just buying them outright.
The article was aiming to explain the characteristics of a company likely to make it, not exactly to say which companies will.
What is nearly certain is that there will be major technological shifts in the next hundred years. What they are is impossible to say. But the less married a core business idea of a company is to the current technologies, the more likely they can make the jump to whatever comes first.
Facebook lasting a hundred years? WHAT?! I hardly see Facebook as being in the same league as technology companies like Google, Apple, and Amazon. In fact, I don't really see Facebook as much of a technology company at all, at least in comparison to those I mentioned.
I wonder if the author would have said the same thing about Myspace 5 years ago. I bet he would have.
Hardware (Apple, Amazon)
OS (Apple, Google)
Cloud services (Google, Amazon, Apple)
Web services like email, maps, search (Google)
Facebook has a very large user base. Whoopee. But does that mean staying power? Nope. Just ask Myspace, Yahoo, and countless dot bomb companies. You need to invest in R&D, become a technology provider, and succeed in more than one market. Beyond social networking, what does Facebook have?
This is a horrible article, especially by the Economist's standards.
The company was founded in 1911 as the Computing
Tabulating Recording Corporation through a merger of four
companies: the Tabulating Machine Company, the
International Time Recording Company, the Computing Scale
Corporation, and the Bundy Manufacturing Company.
http://en.wikipedia.org/wiki/IBM
The reason why IBM still exists to this day while most of its competitors have vanished is because they have been able to redefine what IT means for IBM. That and some of the world's best managers.
Don't bother wasting your time reading it. You'll have wasted two minutes, learned nothing, and have even less respect for the Economist.