Whatever Became of Tyrannosaurus Rex?

In terms of market capitalization Apple, Google, and Microsoft are the largest companies in the world. As I read this article about the bump in the road that Apple has hit:

Apple’s second-quarter earnings are out, and finally, it’s happened – Apple’s 13-year growth streak has come to an end.

Here’s exactly how it happened.

First, since everyone’s talking about it, let’s look at the iPhone.

Apple shipped 51.1 million units, which isn’t as bad as was expected (the figure to beat was 50.7 million units). That’s a unit drop of 32 percent since the previous quarter, and 16 percent down year-on-year. Notice though how it’s a sharper decline between first and second quarter unit sales than Apple has previously seen.

along with this one from Bloomberg on Carl Icahn’s decision to sell all of his Apple stock:

Icahn held 45.8 million shares in Apple by the end of 2015, about 0.83 percent of the total shares outstanding, worth $4.8 billion at the time. It was the second-biggest holding in his portfolio after Icahn Enterprises LP, his diversified conglomerate. Now, according to Icahn himself, he’s out of the stock he has repeatedly called undervalued.

In October, 2014, when Apple shares traded at about $100, he wrote the company’s chief executive Tim Cook that his analysis showed it should trade at $203. In May, 2015, with the market price at $130, he said a share should be worth $240. These prices, of course, have never materialized: At the end of the first quarter of 2016, when Icahn liquidated the position, the stock traded at less than $110. It has dropped to $95 since, so Icahn has made a sizable profit.

Icahn would have held on to his Apple stake, had he still believed in his previous valuations. The reason he doesn’t anymore, he says, is that he’s worried about the company’s exposure to China because of the unpredictable nature of the Chinese political system…

I had a thought. Will Apple, Google, and Microsoft exist in more or less their present forms in 10 years? In 20?

I think the answer to the second question at the very least is “no” and the reason is something I’ve been predicting for some time. We’re going to see large companies created, skyrocket, and fizzle out at an increasing pace. More, I think we’re going to see whole new industries and business models rise and fall at an increasingly dizzying rate.

There are multiple reasons for that and I’ll just name a few. First, that’s the nature of tech companies. They’re built on the brains and creativity of a few individuals. When those individuals leave or die or just get tired, the businesses just aren’t the same.

The people who built the companies colored outside the lines. Their successors don’t.

There’s a generational difference.

They have lots of leaves but shallow roots.

That’s the reason that Google, for example, is in the frenzy of acquisition it’s been in. It can see the handwriting on the wall—the search business isn’t what it used to be. They’re looking for another direction in which to jump. Right now the CEO seems to think that’s AI. Maybe and maybe not.

7 comments… add one
  • ... Link

    From the folio entitled, “No shit, Sherlock”:

    “Exposure to import competition is bad for centrists,” Mr. Hanson said. “We’ve known that political polarization and income inequality track each other, but that pattern is simply a correlation. We’ve now found a mechanism for how economic changes create further political divisions.”

  • ... Link

    Another way of putting it would be, “When the leaders of a country fuck it all up, the people decide to get new leaders.”

  • Ben Wolf Link

    Yeah, Alphabet is betting on AI research from a man who thought regular plasmapheresis was a better idea than diet and exercise, who doesn’t get it’s the double chin and beer gut that will keep him from living forever after being downloaded into his Galaxy Note 5.

  • Just for a start autonomous vehicles will run into several problems. Based on the way they’re implementing them bandwidth will be a killer. There will probably be 100 capable autonomous vehicles here and there around the world within 10 years. The bandwidth for 100 million of them? No way.

    Power. Security. Privacy.

    The real impediment will be liability. Will any plaintiff’s attorney not go gunning for Google?

  • Gustopher Link

    Apple and Microsoft will fade — they make products which are vulnerable to being outpaced. Desktop computers replaced giant mainframes, tablets are replacing desktops for many people, etc.

    Google has a lock on search. It won’t grow at phenomenal rates, and has started slowing, but it’s a very hard business to break into because you need a massive infrastructure to do it as well as Google. You don’t find that infrastructure in someone’s garage. It becomes a boring utility. eBay, Amazon (retail, digital and cloud) and a host of others have similar characteristics.

    Amazon may be the wave of the future for tech — take dominance in one area, and use that to fund a large number of risky projects of which one in ten might take off. Google is trying to do that, but they really haven’t found their second breakout success.

  • steve Link

    Agree with Drew about Google. We will need a good search engine for a long time. They can mismanage themselves out of existence, but assuming they don’t and keep up with everyone else should last. Apple is only as good as its latest product and its stores. Microsoft is probably in between. It is well entrenched with a lot of businesses and legacy/compatibility issues will keep it around for a while, so I think in 10 years it is still around. 20 years? Not with major changes. (significant input on this from boy genius.)

    Steve

  • steve Link

    Oops, I meant Gustopher.

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