In tech things always move quickly. In my career I have talked at length in many business meetings and marketing presentations of the hockey stick curve and when a particular product or technology hits the inflection point and begins to take off. At that particular point as a company you are either in the game or left in the dust. It’s a moment that is hard to predict but in hindsight always easy to identify. A good example would be the launch of the Apple iPhone in June 2007. Smartphones were a known and growing commodity before the iPhone launch, but ownership was not very high. After the launch the old flip phones and dove bar phones began to fade away very quickly as they were replaced with a much more useful device. Only one company , outside of Apple had the vision to see this change: Google. Everyone else faded into the distance Nokia, Microsoft, and RIM. Companies that were dominant players relegated to footnotes in history. With all the industry players having recent developer conferences it seems we are marching to new inflection points. Not a single inflection point, but multiple points which will change the corporate landscape. Points that will have a greater influence on society and how we will live in the coming decades.
Amazon has been vocal this past year, and it is not just Jeff Bezos’ spat with Donald Trump. Beyond the cloud we have heard a lot about the voice of Alexa and the Echo device. The idea that the device can earn your behavior and respond to your questions. Not that any of this is new, but it is one of those moments where its time has come. Voice is one of those technologies that may be reaching its inflection point and be ready to take off. Their cloud business will continue to grow. As they focus on more enterprises they are poised to continue to be the leader in this growing space. Bezos was recently asked about their failed foray into mobile with the Amazon Fire, He simply responded with “If you thought that was a big failure we have way bigger failures ahead of us”. Taking risks is essential in this industry, you must have a few misses.
Google recently held its Google I/O conference for developers. In reading about the event I came away with the impression they have a lot in the fire working on thongs like AI and Virtual Reality. I find it amazing that we are really talking about AI and the impact is far-ranging. It will impact the current trend if web bots and down the road will impact robotics, in fact it already is. Today’s robots are simple and tasked oriented (think of iRobots Rumba), but down the road will be self learning and perhaps even able to reason. Virtual Reality is still in the “dork” phase but as it improves it will lead to new ways to communicate and interact. As of today we are still wearing ugly head-gear, similar to the early mobile phones which were big bricks (watch Michael Douglas in the movie “Wall St). Driverless cars are also starting to take off. Google is leading but Uber is making noise and there has even been discussion of Apple. This inflection point may happen sooner than expected as competition is like wind feeding the flames, when that happens the flames spread quickly. We have not even broached the Internet of Things (IoT), which is happening, with Google’s NeST group. This will alter our households and every other structure as we implement smart devices.
Apple at the moment seems stuck in the success of the iPhone, which will be a cash cow for years to come, but has left many wondering “What’s Next”? Apple suffers from its success and excessively high expectations. It is competing in voice with Siri, who is still the most famous voice on the planet, Rumors of automotive. Apple TV is there but certainly not redefining our television viewing experience yet. The good news is Apple has by far more cash on hand than any company on the planet with over $200 billion in its coffers, but I have yet to see any company with lots of cash on hand make any aggressive commitment with it. They seem to spend more time complaining about US corporate tax policies and parking money off shore.
Facebook is that company we are learning not to doubt. They continue to blow out earning quarter after quarter and were one of the first in on Virtual Reality, buying Oculus Rift. As mentioned this is still early and rather dorky looking, but Facebook bet early and may reap the rewards, though Google and Microsoft are keeping a close eye an are not far behind. Facebook to its credit has proved disruptive and I find Mark Zuckerberg a calm and steady visionary at the helm. The idea of using solar-powered wings to provide internet access to remote areas of Africa was an interesting new take on an old idea. In the nineties Craig McCaw and Bill Gates teamed up to create Teledesic, which was going to use low-level orbiting satellites to provide access to remote regions. What Facebook is proposing will be far cheaper and ultimately may prove a more financially successful model.
Microsoft is in the process of reinventing itself and knows it needs to do so in a hurry. Past mistakes will hurt them, such as Mobility, GPS etc..But they are showing a new willingness to take risks and are competing in voice with Cortana, Working on Virtual Reality, with Hololens. They stumbled out of the block with the Microsoft bot Tay (it was taught racism), but have not blinked and remain committed. They have a big ship to turn, as changing a culture takes time (with contractors Microsoft has over 200,000 employees) but the noise coming out of Redmond is improving and there seems to be a new spring in their step. They are also admitting mistakes and cutting their losses, Windows Mobile being the prime example. It’s best to cut losses and forge ahead in areas you can succeed, rather than pour money down the drain that you may never recover, no matter how had you try.
I think in the current industry landscape you need to take the attitude that no matter how far off in the future you think a technology is, it happens to be a lot closer than you believe. Invest big now, thinking you will profit in ten years, when in fact it may only take five or seven years. Beyond the companies mentioned there will be other players who could make an impact, I briefly mentioned Uber as one. There are other small startups like Otto, which seeks to use driver less vehicles to change the transportation and shipping industry. When I look at many of these emerging technologies I see intense competition as many of the old and new players realize if you miss the inflection point you will cost yourselves billions in future revenues. The bets will be big. They have to be. Taking risks will be imperative. A desire to fail in order learn so you can achieve success. Do not cut corners, if you are too concerned about costs best not to play. There is a lot ahead of us: IoT, Robotics, AI, Alternative Energies, Building a new Grid, and as always something unexpected. Each of these new technologies will span across industries and will generate billions, if not trillions in net new revenue. Catch the wave or be pulled under, but do not get out of the water otherwise all will be lost.
Good Night and Good Luck
Hans Henrik Hoffmann May 25, 2016