Tuesday, 21 Aug 2018

Apple, Facebook and Google : Which Company Will Fall First?

Do you think all big companies like Apple, Facebook and Google will last forever? There are many companies who are giving competition to these giants and most importantly these giant companies are loosing the market value because of their own business decisions.  There have been many news about Facebook selling our data for political and financial gains. There were speculations about Apple’s data stolen by some hackers. That may be your data and my data. And, we all know that Google provides all services for free because it reads all our behaviors and uses for its business needs. So, which one will continue to have the trust of people? Is “Too Big to Fail” really true in these days or is that just a theory of paper?

If you think companies will not be dead because they are too big and innovating continuously, you may be wrong. Except IBM, who is called as the grand dad of technology companies, no current major tech company has ever hit 100 years and hitting 100 years is an achievement that no tech company is prepared for.

Even if a tech company hits 100 years, it becomes irrelevant and the new young population won’t like it.

First, let us now understand the business models of these big companies at a high level without boring you much with deeper details.

☞ Facebook and Google:

Facebook is the king of social media with Facebook, Instagram, WhatsApp, Oculus, and so much more. 92% of Facebook revenue comes from advertising.

Google has a lot of services. They’ve created an unrivaled ecosystem that almost everyone will find impossible to compete with. Google controls the search industry and 71% of revenue at Google comes from advertising.

Google and Facebook have a duopoly on the entire industry. 77% of every advertising dollar goes to Facebook and Google.

However, more and more companies are creating self-serve ad programs. Snapchat, Spotify, and even Quora does this. Up until now, this has been ineffective but it is becoming more effective than using Google Adsense.

Google and Facebook’s hold on the advertising industry could slip. This would not cause them to die obviously. Do you know many advertisers backed out from YouTube ads recently? YouTube is one of the highest revenue generating platforms for Google. It could not control the spam videos and hence it had loose majority of its revenue. The profits are dropping. This led youtube to take strict actions of spam videos. This has affected the revenue of the youtube video creators. They will slowly migrate to other platforms for making money. What about the cost of maintaining the servers for millions of spam videos ? Are you getting my point?

 

Facebook is loosing the trust of people becuase of its security breaches in the recent past. Also, if you think from a different perspective, Google is a daily need for people. Facebook is not. Facebook provides comfort – a comfort of casual networking with people. Do you remember Orkut? What happened to Orkut may happen to Facebook as well.

We all know that Google provides all services for free because it reads all our behaviors and uses for its business needs. If you are reading something on internet, you may see some ads related to the google searches you did earlier or yesterday. How is that possible? Because google stores all your searches. if you were trying to book a flight yesterday, they will make a note of that. The pages you read now will be filled up with relevant ads which brings them more money.

 

☞ Apple :

Apple is taking a very different route from every other tech company. The Apple Watch is not being advertised as a tech piece. It is not being called the next greatest gadget. It is being advertised as a fashion device. The Apple Watch is not a “gadget”. It is a luxury watch.

The iPhone X is not the best phone by any means. The S9 beats it in almost every way (except for iOS for some people). However, the iPhone X is way more popular than the S9 will ever be. The news cycle went crazy with the X release but only spent a day on the 9.

This is because the iPhone X is not marketed as a “smartphone”. It has become a status symbol and a fashion choice in a way

Instead of remaining a tech company, Apple is becoming a fashion company. They are the riskiest business ever to live. They increase prices. They make products more exclusive. They create a dedicated fanbase. They aren’t a generic tech company but, instead, a fashion company.

Risky but, if done well, they stay the richest company ever.

If Google and Facebook cannot keep the duopoly on the ad industry, they could suffer and eventually die off.

If Apple cannot succeed as a “social status and fashion” company, they could suffer and eventually die off.

If Microsoft cannot defend itself from competition, they could suffer and eventually die off.

 

☞ The Falling Order:

As per my understanding, this is the falling order of the companies
Facebook
Apple
Google

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