Lessons From The Big Four
“Which of the big four?” you may ask. Not the big accounting four. Not Manchester United, Manchester City, Chelsea and Arsenal. Not Big Oil. I am talking — Amazon, Facebook, Google and Apple. These four have come to demonstrate how important and invasive technology has become to our everyday life. You are reading this either on an Android or iOS operated device. You see what I mean.
These four companies have grown to become behemoths. These days, you cannot really define them though you know what made you to use them in the first place. Facebook is now a major force to be reckoned with in terms of news dissemination and advertising. You went there to re-connect with old friends. Google is not just a search company. Apple is not just a company that produces Mac Books and Mac Air. Amazon sells services and not just products.
The big four command gravitas and cannot be ignored.
Their total market capitalization is about $ 2.93 trillion (Apple is $880.59 billion, Facebook is $552.10 billion, Google is $ 820.99 billion and Amazon is $675.61 billion).
Let us put $2.93 trillion in context. The GDP of Africa as a continent is $1.51 trillion. Russian GDP is about $1.28 trillion. GDP of Canada is about $1.53 trillion. And the combined GDP of the six Gulf Cooperation Council (GCC — an organization of six oil-exporting countries comprising of Kuwait, UAE, Saudi Arabia, Oman, Bahrain & Qatar) is about $1.8 trillion. This gives context to what I am trying to talk about. Don’t forget we are talking of the Big 4 companies in tech without Microsoft, HP, IBM, Tesla et al. Again this is without its “offline” brethren, Big Oil (Mobil, Chevron etc), Walmart, GM etc.
What have they done to be relevant to a wide multitude of people? I will give you my postulations and they are not necessarily right.
1. Ecosystem — They have created an ecosystem around them. With this in place, consumers use multiple products and services on these platforms of engagement. Apple has the iTunes as a place to buy “every”. Google has its playstore, android environment, and the best real estate on the internet via search. Amazon is the market place and has rock bottom pricing for most of our essential needs. Intuitively most people think of Amazon for shopping online before considering other places. Facebook seems to be the numero uno for social networks and many businesses are going there first to advertise online.
2. Strengthened Core Competencies — These companies know what they are first known for (unique selling points and products) and continually do all that is in their powers to strengthen those competencies. We say “Google it” when we want to search and so Google has continued to make search better and easier while still trying to perfect its driverless cars. Facebook is known for its community effects. With about 2 billion users, FB is doing its very best to monitor fake news, remove hate speeches and violence from its network. Privacy is also a big deal. So while chasing that grand aim of being the biggest online social network, it is also trying its hands on artificial intelligence and virtual reality. Amazon is big on its selling of stuff to you. The bold acquisition of Whole Foods shows you that they want to sell everything to you both offline and online. It is strengthening that act while holding unto Amazon Web Services for your cloud computing needs. Apple releases a new version of its cash cows (iPhone, Mac Books & Watches) annually while keeping it real with its ambition for driverless cars.
3. Strategic & Complementary Acquisitions — Merger & Acquisitions are sometimes worked out through trial and error mechanism. They are not the easiest of things to do especially on the integration part. But somehow these four have managed to get it right most of the time. Amazon bought Zappos to cater for shoes and Diapers.com for baby needs. Apple has gone for Beats seeing that it seems to be a trendy headphone. Headphone for iPhone and iPods. Google bought Waze for its mapping competences and also YouTube to seize a starring role in online video engagement and revolution for teeming users. Facebook has bought WhatsApp and Instagram to penetrate the mobile phone market and compete in that environment.
4. Organic & Inorganic Growth — Amazon started by selling books and then it became a platform for selling other things and it saw that it could handle its web services and decided to spin it off as a separate unit. This was their organic growth. Along the line, they started making bolt on acquisitions to either complement its services and renderings or to compete on new turfs. You can say the same for Google that started mainly as a search engine and branched into Adwords. They have gone on to venture in phone operating systems (android) to SageTV et al. Facebook is not left out; from a social media company to now a news network. Its effect as you can imagine was profoundly felt during the last American election. It has branched out to virtual reality (Occulus) and took a big bet on mobile by buying WhatsApp. Finally Apple from its days as a hardware (Macintosh) manufacturer to the days of NeXT Computers to its foray into the music (iPod) and Phones (iPhones). Apple has gone on to purchase a number of companies to complement its main products (Siri, Beats etc). But again, it is venturing into personal health care management using the Apple Watch and other components in the ecosystem. So the acquisition of Gliimpse (a secured platform for personal management of medical records and information) is in place. According to Fast Company “The acquisition will bolster Apple’s efforts in digital health. In recent years, Apple has delved into the sector with a range of services (HealthKit, CareKit, and ResearchKit) that allow patients, clinicians, and researchers to access important health and wellness data via a range of mobile devices. That’s in line with Gliimpse’s mission of uniting disparate streams of health information”.
5. Continuous Improvement — These companies started out as start-ups in different generations (70s — Apple, 90s — Google and Amazon, 2000s — Facebook). They know the feeling of being toppled and do not want to see it happen to them. As such, they continue every day to experiment with projects and inventions that can help them to have that unique advantage in the market. Competitions these days come from many angles; within, without and outside your sector and also from different geographic location
6. Talent Acquisition — Need I say more ? These companies go round the world to recruit and retain the best and brightest in every field that pertains to their business.
As the Chinese and Asian markets develop, it is imperative to note that there will be a battle for the soul of the consumer. Great value proposition, low prices, faster delivery and quality service will be the differentiators. The big four are aware of that and they are also trying to make a foray into China. Whoever wins this battle will win the soul of business in the future.
How will it play out? I wish I knew. If I did, I will be in Davos right now instead of typing away in the middle of the night.
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Regards,
Gabriel.
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