It’s clear to see who the winners are in the technology and Internet industry. Google (NASDAQ:GOOG) is the undisputed king of search, claiming a 66.7 percent share in September 2012, and also produces the most popular mobile operating system. Apple (NASDAQ:AAPL) takes the consumer electronics crown with the unprecedented success of the iPhone and iPad leading a successful ecosystem of products and services. Amazon (NASDAQ:AMZN) is the world’s largest online retailer, and is increasingly successful in the tablet space. Facebook (NASDAQ:FB), despite its rocky IPO, is by far the world’s largest and most competently operated social network.
The role these titans have played in the industry is being scrutinized at Techonomy 2012, an annual conference designed to explore the relationship between technology and business. The conference hosted a panel moderated by Eric Svitz from Forbes, with Alec Ellison from Jefferies, Steve Haskar from Nielsen, and analyst Mark Mahaney participating.
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The experts covered topics up and down the isle and interesting themes developed throughout. Early on, the idea was brought up that these massive companies have grown so large that they suppress competition, either killing or absorbing start ups before they can realize their individual innovations. Beyond that, being acquired or bought out by an industry leader is the aspiration of many start ups who just want to sell a good idea. Aggregating up like this almost guarantees that the best ideas and the best talent will find their way to a few large, select companies.
That being said, the companies are not necessarily too big to fail. While Google does represent a massive, established advertising network and one of the world’s most popular mobile platforms, there is always the idea that a killer is just around the corner. The success of search is predicated on dominate technology. If the day ever comes where a technologically superior product surfaces, Google’s unshakable position may be jeopardized. The same holds true for Apple, Amazon, and Facebook — the proved that smart, innovative technology can reshape the industry and knock the establishment off its feet. Now, they are the establishment.
That’s one reason why Facebook’s nod to search is so interesting. Some see social search as a desirable alternative to the famous Google algorithm, but the panel of experts were quick to point out that Facebook’s mobile R&D hasn’t been up to par.
The domain of mobile advertisement and search is still anyone’s game, it seems. Mobile adoption is still more of a threat to the titans than an encouraging trend. The first company to successfully monetize mobile wins, and while it’s a good bet, there’s no promise that Google or Facebook will figure it out first.
The nature of the business means that technology companies are vulnerable to the “next big thing.” They each came to power by creating markets their predecessors were unable to imagine. It’s not unreasonable to expect the landscape of the Nasdaq to be substantially different in five or ten years, with new names making headlines and pummeling each other for market share in whatever new segment.
For its part, Apple faces a “star child” problem — as soon as it stops being the absolute, mind-blowingly best consumer products company, it could face a destructive upset. The iPhone accounts for such a huge part of their revenue that even one bad generation could produce lasting damage. The company is buoyed by its innovative edge, and that edge is dangerously difficult to keep sharp.
The technological landscape will continue to evolve at an increasingly rapid rate. Today’s top dogs will put their fingers into every new market that looks promising in order to try and keep their top spot, but history suggests that one day they will spread too thin. Companies like Microsoft (NASDAQ:MSFT) come to mind as a vision of the future. Ellison pointed at the examples of stores operated by IBM (NYSE:IBM) and Disney (NYSE:DIS) as a possible future of the Apple retail stores.
While companies like Google, Amazon, Apple, and Facebook are indisputably at the top of their game, there’s no reason to expect that their market position is immortal.
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