Sunday, 27 November 2011

Why “Big Technology” is Running Scared

The technology world is rife with tremors and its very foundations are shifting as we watch. The last few months have seen some amazingly large and risky gambles by Big Technology, the companies who have dominated computing and personal technology for the last couple of decades.

Almost everyone’s shooting in the dark
Microsoft’s just bought Skype, Intel’s bought McAfee, HP is mulling selling its PC division, Google is acquiring Motorola Mobility, Samsung is looking at the HP computer division, Nokia is moving to Windows from Symbian.

And there’s more evidence of desperation amongst the Old Guard (like Blackberry, HP, Dell, Google, Sony, Nokia, Microsoft) beyond these billion dollar long shots. There is a high level of activity in the courts with litigation over alleged “intellectual property violations” and Apple, Microsoft, Google, Samsung and others suing each other over something or the other.

These veteran survivors of many technology battles are just realising that they’re completely blindsided and are being buffeted by one simple reality. Much to their collective discomfort, it is now individual buyers who are dictating technology trends. And because they have absolutely no clue what “we” want, their blind-spot is now killing them.
The tech war
The BIG tech war

From the power of many, to the power of one
The single biggest element driving this transformative change over the last decade has been the personal computing and electronics space. The new age of personal devices has come with the MP3 player or the smartphone – depending on who you ask – and has made the individual powerful again.

But for Big Tech, the realization of this sweeping shift in the power towards individual technology consumers has been recent and brutal. Who could have imagined that HPs tablet would need to be yanked in just 48 days after it was launched with amazing fanfare. HP seems so traumatised by this, that they are making serious noises about getting out of PCs completely even though they are pretty much the largest computer seller in the world. Then there is Blackberry throwing away a phone free with their Playbook.

Blackberry and Nokia who have been the darlings of business and personal communication for the last decade are struggling to explain how they and their products are still relevant to us.

Intel’s probably finding that they’ve gone from being the dictator of processing technology, to merely a strong player because they underestimated mobile and tablet markets. Sony has had so many failures in personal technology recently, that it’s almost difficult to remember that they invented the space. And Google+ is a catastrophe for the company that pretty much redefined the Internet for us over the last decade.

Apple is the remarkable exception to this, but the fundamental reason for this confidence crisis amongst Big Tech isn’t Apple. It’s what they don’t understand, but Apple does. You.

The successful strategy for Big Tech in the past has been to flood the market with an arsenal of many products/models, and watch them trickle down through the distribution channel to “some buyer”. In that “push-driven market”, this shotgun approach worked well enough and even less popular products might have found a business buyer or a developing market looking for a deal.

But in a global “pull-driven market” like the one for smart phones, the customers are evolved enough to know what they like and are much more picky. The decision to buy is made by an individual who is emotionally invested enough to not compromise on what appeals to her or him. Customers buy the iPhone because they get everything they want – cool, beautiful, reliable and simple – and Apple’s so good, that they don’t need to have 12 different models to deliver this to everyone all over the globe.

A disruptive changing of the guard
The business segment represented the market because that’s where the serious money in technology lay. They have been the biggest spenders on technology products and therefore always dictated what the Old Guard of technology offers. That’s why Microsoft, HP, Dell, Blackberry have assumed that what’s good enough for business customers is good enough for the individual.

The problem is that business buyers are no longer calling the shots, individuals buyers are. The cumulative sales from individual technology buyers are now the dominant part of the market. While the web/cloud apps space is testament to this change, the world of hardware is just waking up to it.

This rise of the individual customer (you and me) is creating a huge tsunami of disruptive change and the big boys are now scrambling for survival.

Obviously everyone is chasing Apple, but there is a lot more to this than the inspired moves of just one company. At the core of Apple’s philosophy and disruptive success is the conviction that the individual is the primary driver on all personal technology.

What’s next? Rise of OEMs (and some others)
Of course, there are several more problems looming for the Old Guard, which is adding to the pressure on them and prompting the need for big gambles.

The former OEMs turned consumer brands like Samsung, Lenovo, Asus and HTC are doing a much better job of creating products for the individual than they are. This is really affecting both the bottom lines and probably egos of the Tech majors too. Each of these has won some major battles in this space and has created innovative and successful products even while Apple is clearly winning the war so far. These nimble and innovative players are likely to play an increasing role as we move further into this decade and will be a real thorn in the side of Sony, HP, Blackberry and others as they find themselves edged off the top rung in personal technology products.

But looking ahead, the bigger danger will probably come from others who have been very successful in understanding and meeting our individual technology needs. The elephant in the room could be either Amazon or Facebook, who are already playing around with some serious ideas. The Amazon Kindle is an obvious example, but there is likely more to come. Facebook has been reported to have looked seriously at a “Facebook phone”. If the Cloud and the App are the future, it’s going to favour the folks who have some of the most amazing web apps, delivery infrastructure and social platforms out there. And both of them clearly “get you” better than most others do.

Things are just getting interesting, and it’s going to be a lot of fun for us. The Old Guard however, has a lot to fear.

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