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These are the three interdependent forces that power the biggest wave of growth, change, and destruction I’ve seen since I have been allowed to take part in the high-tech industry.
In the beginning (or mine, anyway), back in 1968 when I was, miraculously, offered a salary to be part of HP France there was the mainframe. IBM – “The Company” — reigned supreme, a dynasty that seemed unassailable. The IBMer wore a suit and tie when approaching the punch card feeder. Big Blue’s competitors, the BUNCH, were also called the Seven Dwarfs because their combined market share couldn’t compare to IBM’s dominance.
A few years later, the dress code relaxed a bit and Digital Equipment Corporation’s minicomputer displaced mainframes. IBM still exists, of course, although under a different guise, but DEC is no more. They were acquired by Compaq in 1998, killed by the Personal Computer.
The PC era lasted longest of all, more than 30 years, partly due to Moore’s Law: “The microprocessor shall double its power every 18 months”, and then repurposed as a transmission medium with the advent of the Internet. Thanks to the standardization enforced by the Wintel duopoly, the industry manufactured hundreds of millions of PCs, giving rise to an inexpensive clone organ bank that largely displaced higher lifeforms such as Sun servers (the company that once claimed to ‘put the dot in dot.com’). As an example, the five million servers deployed by Google use a combination of such parts — and private versions of Linux.
Referring to the PC era in the past tense is contentious. In a now famous post, Frank Shaw, the literate head of Microsoft’s Corporate Communications, contends that ‘the 30-year-old PC isn’t even middle aged yet, and about to take up snowboarding’. I’m writing this on an Intel-powered personal computer and don’t feel particularly necrophiliac. But the marketplace has spoken: The PC is, at best, stalled. Looking at last quarter’s Microsoft numbers, shipments to business customers are still growing, about 5% year-to-year, while the consumer market is flat. (From Gartner, more details on the PC sales slowdown here.)
Contrast this with the rise of Google’s Android smartphones, Facebook, Twitter, Apple’s iOS devices (iPhone, iPad, iPod Touch), Zynga, LinkedIn… And the fate of the incumbents, Nokia, Palm, RIM, Microsoft… They’ve all been displaced, ‘‘flummoxed” in Steve Jobs’ words.
We just got the latest Mary Meeker presentation, now on the Kleiner Perkins web site as she joined the grand Valley venture capital firm, a great combination of PR and talent acquisition. Mary Meeker’s opus is 66 slides long and covers so much ground it could become overwhelming, but it’s worth your time. The range of topics is impressive: e-commerce, the global race to adopt mobile devices and apps, on-line payments, social networking as a pervasive wave of opportunity spanning the online experience. She ‘posits that the mobile revolution is still in its infancy and poised for tremendous growth’.
Regarding the changing of the guard:
She then points to the new entrants clobbering the smartphone incumbents:
But, there’s more than clobbering, there’s location. When it comes to operating systems, ‘Made in USA’ – and, more specifically, Silicon Valley, the Detroit of computing – still means something:
As much as I like and admire her presentations, I’d take a slightly different angle.
First, as Horace Dediu meticulously points out in his Asymco blog, I’d emphasize the startling creation and destruction of value that has taken place in the past four years, since Apple and Google have entered the field. (For a slightly less analytical and more animated take, there is also Brian Hall’s Smartphone Wars, occasionally NSFW, never dull.)
Calling what’s taking place “the biggest wave of growth, change and destruction” is no hyperbole: One company, Apple, went from zero to $70B in mobile revenue in 4 years; another, Google, propelled its Android platform to the top of the smartphone class; Samsung ships more phones than anyone else; Nokia lost its crown, it sales went down 13% year-to-year last quarter; Palm is no more; and Microsoft Windows Mobile sales are so small the company omits them in its latest quarter release, merely mentioning ‘favorable reviews’, confirming Ballmer’s earlier statement: “In a year, we’ve gone from very small to … very small.” This from the man who once predicted Windows Phone would get a 40% market share in 2012. When Nokia finally starts shipping Windows Phone 7 devices, we’ll see how Microsoft manages in the unusual role of being number three in a race.
Second, the combination. While both mobile revenue displacement and growth are impressive, the real revolution is in the Mobile + Cloud + Social explosion.
Why does Google ‘‘give away’’ Android, both the OS and applications? Android is a Trojan Horse that protects Google’s one and only business model, advertising, on mobile devices: Cloud + Mobile.
Facebook, an interesting challenge to Google, isn’t just a Social company, it could only reach its current 800 million registered users by deploying a scalable Cloud infrastructure.
Apple, rightly described as focused on great devices (read “hardware”), could only succeed with the iPod because of its iTunes service in the Cloud. This is the same iTunes that gave birth to the iPhone App Store, the great game changer, the Cloud service that morphed smartphones into app phones. Apple’s Cloud maneuvers haven’t always been felicitous — the company struggled with MobileMe — but they never gave up. We’ll soon see if the newly available iCloud, with its original approach to local caching and synchronization finally ‘‘Just Works”.
Lastly, emphasizing Meeker’s point about geography, inside a tiny circle, ten miles in diameter, we have three cities: Mountain View, Palo Alto and Cupertino. Google, Facebook, and Apple. Three companies redefining the future of computing, the new Mobile + Cloud + Social wave.
In the history of computing, there’s never been so much power concentrated in such a small area.
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