Eric Schmidt's 'Gang of Four' tech giants: past, present and future
Google's Executive Chairman Eric Schmidt says the web is now ruled by Amazon, Google, Apple and Facebook - but who are their predecessors and heirs?
It wasn’t that long ago IBM was the biggest name in technology; later on it was Microsoft, the behemoth that ran the operating system on practically every PC on the planet.
Now, however, it’s Google, Amazon, Facebook and Apple that are ruling the roost in terms of financial and consumer impact.
Indeed, Google Executive Chairman Eric Schmidt himself said as much himself at the recent All Things D conference, D9 in California.
He said the new “Gang of Four” had grown, thanks to the web, at an unprecedented speed. The globe has “never had companies growing that fast at that scale”, he said.
Perhaps more intriguingly, however, Schmidt also acknowledged that each major company has a shorter shelf-life and that there was a race on to see “who would stumble first”.
Peter Cochrane, the former chief scientist at BT and now an influential investor, has said that “the time it takes for companies to become evil halves with every generation”.
He cited, tongue in cheek, the 40 years it took IBM, the 20 for Microsoft, ten for Google and then, coming soon, Twitter’s five will be up. But what unites these companies and what divides them? And what about Microsoft? Is the giant on the wane or the comeback trail?
The original giants of technology included companies such as IBM, HP, Motorola. What these companies all did, however, was to build hardware.
So IBM was the company behind the mainframe – computers where low-powered terminals were connected by cables to enormous machines that filled entire rooms, but it was also the company that invented the barcode.
These were, for their different eras, the building blocks on which other major innovations were built. Motorola, meanwhile, invented huge swathes of the telecommunications technology we live with today: that means the mobile phone, the radios that helped put man on the moon and arguably the first PDA, the forerunner of the smartphone.
HP, of course, is known best to consumers for its printers but is in fact a software and networking giant too.
It was only with Microsoft’s arrival on the mainstream in the early Eighties that the age of software took over. The Windows operating system, developed with IBM, changed how people interact with computers forever.
Most notably, however, all these major brands are still very much with us: their technology is embedded in so many of today’s machines that reports of their death are somewhat exaggerated. Even Nokia remains dominant in the developing world.
Google, Facebook, Amazon and Apple are huge companies, all with multi-billion pound valuations. Yet in sharp contrast to their predecessors only Apple really makes anything.
And while Amazon sells goods and increasingly services too, there is of course no charge for using Amazon itself.
That shift, from buying objects to using services, is the defining characteristic of the current crop of super companies.
And even Apple’s dominance has been powered by iTunes, a portal for buying music, TV and film, rather than purely by the iPod and iPhone themselves.
All this innovation, of course, is built on the web; invented by Sir Tim Berners-Lee and knowingly given away rather than patented, that platform has created the massive advertising business that Google continues to be able to use to fund all its other projects, from driverless cars to a prize for space exploration or even remote controlled light bulbs.
It also allows Facebook to connect people, Amazon to offer a shop bigger than any on Earth and Apple to sell downloads, from apps to movies.
Eric Schmidt, the Google Executive Chairman, said his company “rules in information”, but increasingly it is also making software that it asks people to pay for.
Google Apps, such as gmail, documents and spreadsheets, are challenging Microsoft’s dominance in business software because, using the web, they can be delivered much more cheaply and at a vast scale.
That indicates a shift to online that is still in progress, however: making people pay for something with no physical component remains a battle in many areas.
Facebook, too, may have more than 500 million users, but it constantly emphasises that it is at the “beginning of a journey” to make the web more about individual users and their friends and tastes, rather than simply about information.
For many, indeed, Facebook is set to be their first contact with the internet and increasingly, that means friends rather than websites will be a new lens for information.
It’s Apple, however, whose resurgence has been the most vigorous, in short because it’s been the only brand to marry hardware and software with real success.
That underlines the importance of user experience rather than innovation for its own sake. So it’s a combination of timing, innovation and engineering that has taken Apple from near bankruptcy to being the biggest technology company in the world.
Twitter, for all its influence in the Arab Spring, new photo-sharing features and its recent spending spree on new companies, is still used by relatively few people. Although over 200 million accounts exist, just five per cent of users account for over 90 per cent of traffic.
The new companies that are set to dominate, however, are likely to build on the success of Twitter, Facebook, Google and more, and it’s likely to be via the mobile phone and the tablet that they will become ubiquitous.
Google talks of using a 'mobile first’ strategy, and deals site Groupon is likely to be most interesting when it can effectively tell phone users that the shop they’re in, for instance, will offer them a small discount, say, in exchange for their email address.
Twitter itself is looking to be integrated more deeply into other programmes so that it becomes the default choice for certain types of communication.
But technology predictions are risky because of the pace at which innovation occurs. For all we know, the company that displaces the current giants might be no more than a start-up today.