In 2011 IBM celebrated its 100th Anniversary with a bang. The company was a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company, and since then it has gone through many changes from high tech product manufacturing to a service-based company. But despite all these ups and downs, company survived and now employs over 450k employees, has a 100bn turnover and operates in over 170 countries!
In hindsight, two reasons stand out for IBM’s success. First, their ability to reinvent themselves time and again, and that includes change in the business model, new products and services, geographical expansion and becoming a more agile firm by cutting resources or selling off their business units, such as selling their hardware business to Lenovo. Second, focusing more on the enterprise market than business to consumer, as the enterprise market is more long lasting and cash rich.
Now the question is, will tech giants from the current age such as Google, Facebook, Apple, and Microsoft exist 100 years after their inception, like IBM?
And like IBM, the answer will lie in their ability to reinvent themselves and rebound at every tipping point they will have in their 100-year voyage. In fact, these giants have already gone through some rough patches and managed to negotiate them so far.
However competition is getting bigger and stiffer day by day, and the reduced price of infrastructure has levelled the playing field between big players and start-ups such as Dropbox and WhatsApp, which have recently disrupted and created their own space in the already established cloud and private messaging industries.
We have looked into some factors these companies are focusing on to survive longer.
Buy Start-ups with a huge user base or serious IPs
The big cash companies are not shying away from buying start-ups and already are on a spending spree. Microsoft bought Yammer, Skype and Nokia; Google bought Next, YouTube and Motorola ( which it then resold); Apple bought Topsy; Facebook bought Instagram, WhatsApp and Opus. However this is a very high-risk policy. Recently Google took a hit when it sold Motorola Mobility at half the buying price.
Keep innovating and launch new products and services
Another proven theory is innovate to keep going i.e. keep launching new products and services to remain ahead of the competition. Google and Apple are really ahead in this game and have huge future product pipelines ranging from wearable technology to renewable energy products to space programs. Microsoft and Facebook are more focused around mobile and cloud friendly technologies.
Expand aggressively into rapidly growing BRICS countries
Expanding business into emerging markets (Far East or BRICS countries) is a very popular option these days, as consumer spending is increasing in these markets and so is a craze for products and services from tech giants. This is therefore a great opportunity for these companies to leverage that market.
But there is problem with proven methods:
I am not sure if buyouts, geographical expansions and new products and services are enough to keep big companies going for another century, as product life cycles are shrinking. These days people discard their new phone in months, change cars in year or two, change jobs every three years and homes every five or six years. In this environment people don’t often remain loyal to one company’s products and services. Plus, in order to maintain cash flow sustainability, Google, Apple and Facebook, and to a certain extent Microsoft, have no serious products or services like CRM, ERP, DB servers or Cloud computing with which to break into the enterprise market. Finally, companies like Alibaba and Samsung from the Far East are also making inroads into the Western market and presenting very stiff competition.
Perhaps only the guardian of crowdsourcing might survive
I think, if Google, Apple, Facebook, and Microsoft really want to survive that long, they have to create a worldwide cross platform ecosystem (not like their existing vertical App stores) to crowdsource any future product and service, so nothing slips under their radar. Otherwise they will perish simply because easy access to high speed internet, software infrastructure (e.g. cloud computing), and technical talent abundance far beyond their labs means new product and service creation won’t be limited to these giants.