Re-thinking Winners and Losers In Tech

There are narratives that circle the technology industry that are wearing out their welcome. The primary one, and the one where I wish more intelligent heads would prevail, is the narrative that there can only be one winner in this industry. Namely that for Google’s ecosystem to win, means that all the others must fail. Or that for Microsoft’s ecosystem to win it means that Apple’s and Google’s needs to lose. And of course that for Apple to win, Google and Microsoft need to lose.

As far as I can tell these narratives are rooted not only a limited view of the technology industy’s history but also a very short-sighted one. It seems as though since Microsoft’s Windows platform dominated much of computing for several decades, that it must mean that it is inevitable that this domination repeat itself. It seems the expectation from many is that we are simply waiting to see which platform wins. More specifically, which platform will dominate computing market share the way Microsoft did in the past. Let me explain why this is not going to happen.

Big Consumer Markets

The reason I say the one platform to rule them all narrative is deeply flawed is because when Microsoft dominated computing, the market was very small from a global standpoint. The market for PCs was so very small compared to the market for smartphones for example. Small markets favor fewer players who typically dominate the segment.

The global consumer market for technology is massive. Massive global consumer markets can sustain many players, competing for segments of markets, and all making money. Look at how many automobile companies the global consumer market can sustain. Look at how many clothing companies, types of aspirin, types of cereal, etc., the market can sustain. Believing that for Google to win Apple has to lose–or vice-versa–is like believing that for Pepsi to win Coca-Cola has to lose, for Burger King to win McDonald’s has to lose, or for BMW to win Mercedes-Benz has to lose. We all know how silly that sounds and that is the point.

Interestingly, even though a few major conglomerates own many of the underlying products that make up the variety I mention, its success often transcends the product, or company, itself but is wrapped into a larger experience. This larger experience is bound to something central which is key to that companies sustainability in the global consumer market–their brand.

Brands Rule the World

When you look at the global consumer market, you simply will not find a company succeeding and competing on the basis of a product who does not have a strong brand. A strong brand stands out. It is recognizable. It leads to continually high customer satisfaction, loyalty and trust. A strong brand continually re-creates an enjoyable and memorable experience for its customers.

When a company builds a brand that the global consumer market considers valuable, it puts itself in lasting position. Nike, BMW, Mercedes-Benz, Coke and Pepsi, McDonald’s, etc., are not in danger of going out of business any time soon. To predict their demise, is as ridiculous as predicting the demise of the strong global consumer brands in the technology industry.

A strong brand is not just sustainable it is also versatile. Brands compete well in the markets they play but a strong brand also allows a company the ability to compete in new markets with new products. A strong brand is one of the strongest, most defensible assets any company has. It is one of the foundational things that often gets overlooked in many analysis.

Its time to re-think winners and losers in the technology industry. Its time to take a more holistic look at who is well positioned to still exist in 20-30-50 or even 100 years. A strong brand today means a strong brand tomorrow. Products come and go, but brands can stand the test of time.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

16 thoughts on “Re-thinking Winners and Losers In Tech”

    1. Good question. Of course, not all brands are fallible and not all succeed or do stand the test of time. But my proposition is that a company who builds a strong global brand has the best chance to stand the test of time.

      I don’t feel Kodak’s demise was a result of their brand but rather their managements lack of speed and understanding of the big growth markets and how to leverage their IP to succeed in them.

      Brands are also not immune to disruption, but I believe that should a market disruption occur, a strong brand, well managed, who can move quick and efficiently, has a strong chance of surviving disruption.

      It all comes down to innovation. A brand with a strong innovation culture in particular is strong. A brand that is complacent is probably less so.

      1. I would argue that strong brand identity is necessary but not sufficient for long-term success.

        Eastman Kodak’s management made many, many mistakes. But its entirely possible that there was no successful transition plan available to them. The digital photography revolution didn’t transfer value trom Kodak to more nimble players; it just destroyed the value that resided in film, paper, and processing.

        Sometimes things go wrong in ways that all but preclude survival and I think EK was the victim of one of those. Its best chance might have been a move into medical imaging, like Fujifilm. In general, Kodak’s competitors, such as Ilford and Agfa, didn’t fare any better than it did.

        1. It’s not like Kodak didn’t try to go digital:

          “Once Kodak got its product development machine started, it released a wide range of products which made it easy to share photos via PCs. One of their key innovations was a printer dock, where consumers could insert their cameras into this compact device, press a button, and watch their photos roll out. By 2005, Kodak ranked No. 1 in the U.S. in digital camera sales that surged 40% to $5.7 billion.

          “CEO Antonio Perez shut down film factories and invested heavily in digital technologies.”

          (From Wikipedia.)

          1. The business model in film photography was simple: You sold the customer a camera (or someone else did) and then made money for years off film, paper, and processing. Even for expensive pro gear, the cost of film and processing far exceeded the cost of the hardware.

            With digital, you sell the customer a camera and then … what? Memory cards cost less than a roll of film, hold orders of magnitude more pictures, and don;t wear out. For a while, Kodak did OK printing digital pictures, but people stopped printing. It’s hard to see how, with the smartest moves in the world, Kodak could have succeeded as a digital photo company except as a much smaller business. But it had to milk as much as it could out of conventional photography because of its enormous capital investment (For years, it was a popular, if bittersweet, form of entertainment in Rochester to watch Kodak blow up buildings.)

          2. Hello again, Mr. Wildstrom, nice to see you. I think Kodak actually did have a very strong opportunity not only to survive the digital wave, but to take advantage of it, to thrive in the historic technological change they saw to come. Remember that Kodak developed the first digital camera (or at least, one of the first), it was a little complicated but they already had the idea, they already knew what it was going to happen, they knew it, but… they just didn’t know the size of that wave. In Kodak’s discharge I’d argue that nobody could imagine a change so big and so quick. The very day somebody put a camera in a cell phone, that day Kodak was death. Sad but true. Greetings

          3. Everyone misses the problem of scale. Even if Kodak had been fabulously successful in digital, the company would have had to shrink drastically. In 1993, when film was still king, Kodak had revenues of almost $13 billion from its imaging businesses. Last year, the total revenues of Nikon were about $4.7 billion at today’s exchange rate and without adjustment for inflation. There just wasn’t enough money in digital imaging to support a company of EK’s size. Camera phones administered the coup de grace, but Kodak was doomed before that.

          4. The very day somebody put a music player (linked to a digital music store) in a cell phone, that day iPod would’ve been death. But Apple saw it coming in 2005, even as iPod was still increasing sales revenues, and moved into cell phones. And iPhone has created an Apple that is more six times larger than the iPod business was at its peak.

            Kodak (and its peers) needed to realize that a camera was as much software computing as it was optics, lenses, and film, and either acquire the competencies needed, or merge. Once that happened, maybe Kodak could’ve grown from computing devices into cell phones and photo-based services, and maybe found additional opportunities like Flickr and Instagram.

  1. Refreshingly welcome take on the WARS of Whoopy. Whoopy my framitz has this whoopy. Oh no!!!! But mine doesn’t need whoopy it has a dinkledorf, so there, I win you loose. All the flame and fail talk makes me feel like I’m in a political argument all the time. This internet chat has loosed on us the troublers from all camps. Yesterday I read a quote by Winston Churchill that I loved and says a lot about some of the spewers on the internet.
    “A fanatic is one who can’t change his mind and won’t change the subject” – Winston Churchill

  2. Or, to put it another way, the network effect stopped working. I see this as essentially the same argument from a different point of view. Any thoughts?

  3. Nokia had a top 10 global brand in the featurephone and early smartphone ages. But they were disrupted first on the high-end, then mid-tier, and now the low-end. Motorola and Blackberry also had good global brands that have gone downhill pretty quickly. (Motorola was going nowhere before the Google buyout, and so far, has gone nowhere after. Of course, the Google subsidy gives it time to return to glory.)

    Unlike brands in other categories, tech/consumer electronics brands cannot afford to miss (or react too slowly to) a revolution. (One can also argue these three brands have fallen due to a rapid series of cascading Apple innovations – Apple Store, iTunes Store, iPhone (spawning Android), App Store, iPad – instead of a single iPhone revolution.) To not quickly address the “revolution” can put even a strong brand to death.

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