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Sunday, July 09, 2017

Tech's Big Five

“Technology is anything that wasn’t around when you were born” is rightly quoted by Alan Kay (American Computer Scientist) but the Big Five came into existence after most of us were born. Alphabet (Google), Amazon, Apple, Facebook, and Microsoft are the tech giants that form the set of Big Five. They are pioneering in their own domains i.e. online search and ads high-end devices, e-commerce, cloud services, app store, digital content distribution, and productivity software.

Talking about Big Five:

Revenue Streams-
They are 5 US based tech companies are the most valuable stocks in the US market and in 2016 these companies combined for $555 Billion Dollars in revenue.

Four Cores-

Platform strength: Talking in terms of strength the Big Five companies have businesses based on all-presence around of their businesses eco systems & respective platforms, in other words, smaller companies networks are inclined towards them. This in turn has led them to gain in terms of revenue, cash flow, profits, and enterprise value and finally giving them platform strength.
Innovation reinvestment: Without innovation a company cannot move forward, keeping this in mind the Big Five’s focus is on ploughing back of their profits in their research and development divisions. As per the 2016 Global Innovation 1000 study by Strategy&, PwC’s strategy consulting business, the Big Five’s come among the top 11 Research &Development spenders across all industries.

Acquisition strategy: Alphabet, Apple, and Microsoft among The Big Five especially been active players in acquiring of companies due to availability of reserve funds. The Big Five’s main focus is on Merger & Acquisition of small and medium size firms getting catch hold of their technical expertise that will give an edge to them in areas like machine learning, virtual reality, artificial intelligence, and augmented reality.
Talent attraction: The Big Five aim to also to hire employs aggressively to complement new product development and capital deployment at their part. In terms of employment generation since 2011, the Big Five have led to creation of more than 418,000 net jobs and talking getting jobs their employs are eminently employable at other firms as well.  

Next 20: Following the Big Five based on enterprise value the largest U.S.-based technology companies are, Applied Materials Adobe, Broadcom, Analog Devices, Hewlett Packard Enterprise, HP Inc., Dell Technologies, Cisco Systems, Oracle, Qualcomm, Intel, Micron, Nvidia, Intuit, IBM, Western Digital, Symantec, VMware,, and Texas Instruments. All of them are focusing on shifting to software-defined hardware from existing pure hardware and from products to services, managed services, and solutions.
Chinese Challengers: The Chinese Challengers includes China based: Alibaba, Baidu (Web services company), Huawei, (Jing Dong, e- commerce company), and Tencent (Investment holding company).There companies are highly successful in their domestic market i.e. China and they also expanding their operations abroad as well. For example Huawei have had been operating overseas for more than 10 years.
Others: The Big Five are facing competition from sectors like healthcare, financial services & industrial operations as there are in for technologies like the IoT (Internet of things) and related fields. For example companies like AT&T and Verizon (Telecommunications firms) are making investments in fields like the IoT, 5G, content advertising, and emerging distribution technologies.

To conclude in present age dominance in the tech industry no longer depends upon only identifying & understanding customer needs and making use of new or innovation in existing technology to make a good or service to fulfill it. It can be said that clear strategic identity, Business models and a well-defined portfolio of platforms, products, and services gives the Big Five an edge over its competitors. But in long term if similar strategies are adopted by its competitors they may also gain similar competitiveness.

1) Technology trends: Report by PWC

Note: The views expressed here are those of the author's and do not necessarily represent or reflect the views of DOT as a whole.

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