What it is: NYU Stern professor Scott Galloway explains the future of the top four big tech companies: Amazon, Google, Facebook, and Apple.
Everyone likes to predict the future of different companies, but few people use facts to back up their claims. In the above YouTube video, Scott Galloway explains the future of Amazon, Google, Facebook, and Apple.
The first two losers are Amazon and Google. According to Scott Galloway, Amazon’s shipping costs are rising, which is cutting into their profits. Scott Galloway predicts Amazon will eventually have to open retail stores and that what he calls “pure play” retailers who sell only online will eventually have to open a retail presence.
As evidence, Scott points out that retail stores are opening online e-commerce sites and using their stores as both warehouses to showcase products and to sell directly to customers. If shipping costs keep rising, then Amazon’s business model will need to change drastically.
Scott also thinks Google is in trouble because as dedicated apps appear on smartphones, people can access the Internet through the curated view of the app instead of using a general purpose browser. This cuts Google’s ad revenue, which is Google’s main source of income. While Google pursues wild projects like Google Glass and self-driving cars, their main source of income comes from search. Reduce search and you reduce Google’s income.
The two companies Scott favors are Facebook and Apple. Facebook continues growing and capturing users along with advertising revenue. Facebook is like a mini-version of the Internet that keeps growing.
Scott believes Apple could be the first trillion dollar company because they offer luxury products that rich people buy all over the world. Despite Google’s Android, it’s not really a competitor to Apple’s iOS ecosystem because Android users tend to be poorer, less educated, and less likely to browse the Internet or purchase products. Since Google depends on advertising revenue, capturing people least likely to buy online isn’t going to work in the long-term.
Watch Scott Galloway’s video and see what you think. The idea that Apple only makes luxury products doesn’t exactly make sense when you consider you can get a previous generation iPhone for free in America with a two-year contract, so there’s little reason for people to buy an Android smartphone to save money.
In the computer world, many people buy cheaper Windows PCs, but then have to suffer through problems like bloatware, outsourced technical support, and malware and maintenance issues like constant disk defragmenting that means you spend more time maintaining a Windows PC than a Macintosh. So you save money initially but pay for it over the long-term with a less satisfying user experience.
Scott Galloway lists several ways Apple dominates their market, which no other company can match. For that reason, Scott believes Apple could be the first trillion dollar company because they keep producing products that people keep buying. Even if sales of iPads are dropping, it’s because sales of tablets in general are dropping, not because people are buying a rival tablet instead of an iPad.
Macintosh sales keep rising as PC sales keep dropping. Sales of the iPhone keep rising as sales of Android smartphones drop. Now that the Apple Watch is available, Apple has a new product to sell along with their apps, e-books, and music.
Ironically as Scott Galloway talks about the top four big tech companies, one name is noticeably missing: Microsoft. When the discussion turns to the top tech companies in the world and Microsoft’s name goes missing, that’s a huge clue that Microsoft’s no longer considered a leader any more in the same way that nobody considers IBM to be a leader in the computer market either.
Microsoft will likely continue making money, but they’ll never be as influential as they once were in the past. Microsoft’s best days are behind them. Apple’s and Facebook’s best days are already here and likely to remain for a long time, at least according to Scott Galloway.