Frightful Five: How Tech Giants Play Survival Games

Frightful Five: How Tech Giants Play Survival Games



We all know Apple as the most valuable company in the world. Its annual profit is the highest in corporate history: in 2015, the company’s revenue rose up to thirty percent (now it counts nearly $154 billion). It seems that Apple’s biggest problem is its own success. The company books more revenue from the iPhone than any tech giant from the Big Five generates from all its operations. Two-thirds of the world’s countries have gross domestic products smaller than annual sales of the iPhone.

However, many believe in the early death of the company arguing that Apple has lost some of its design appeal and innovative magic. Last year, it made a series of new introductions in both software and hardware that seemed amazing at first but were disappointing on closer inspection: the long-awaited Apple Watch appeared to be not so cool, Apple Music felt clumsy and was inferior to other music-streaming apps available in App Store,  Apple Pencil was a misunderstanding altogether.

But the fact is that people mostly like Apple products. A fellow at the Clayton Christensen Institute Horace Dediu is one of those analysts who argue that Apple is far from its peak. He thinks that people have short memories and forget that the first iPhone was also full of bugs.

The power of the Big Five platforms is not in their huge revenue and not even in their innovations. Their real strength is their inevitability: you can abandon using one or a few of them, but you are unlikely to avoid them all—together, this group of tech giants blankets the entire economy. The core idea lies in dividing the tech market in order to have full control of every aspect of the infrastructure. Microsoft rules the world of desktops, Apple controls mobile phone operating systems and app market, Amazon is the ruler of the shopping and shipping infrastructure, Facebook possesses human social relationships, and Alphabet covers web search and cloud infrastructure.

Apple managed to create such a sticky ecosystem that people tend to be bound to its products and services even if there are better analogs out there. And the figures speak for themselves: only Apple can attract ten million people to subscribe to Apple Music in the first six months.

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