“The failed history of Web 1.0 companies adapting to the world of social suggests that Facebook will be as woeful at adapting to social as Google has been with its “ghost town” Google+ initiative last year.
The organizational ecologists talked about the “liability of obsolescence” which is a growing mismatch between an organization’s inherent product strategy and its operating environment over time. This probably is a good explanation for what we’re seeing in the tech world today.
Are companies like Google, Amazon, and Yahoo! obsolete? They’re still growing. They still have enormous audiences. They also have very talented managers.
But with each new paradigm shift (first to social, now to mobile, and next to whatever else), the older generations get increasingly out of touch and likely closer to their significant decline. What’s more, the tech world in which we live in seems to be speeding up. Tim Cook had an interesting line about the velocity of change in his earnings call last week:
through the last quarter, I should say, which is just 2 years after we shipped the initial iPad, we’ve sold 67 million. And to put that in some context, it took us 24 years to sell that many Macs and 5 years for that many iPods and over 3 years for that many iPhones. And we were extremely happy with the trajectory on all of those products. And so I think iPad, it’s a profound product.
Yahoo is already a shell of its 2000 self. There is increasing chatter (including from me) about how Google’s facing a painful multiple contraction, once its desktop search business (still accounting for the vast majority of its revenues and profits) starts to fall off a cliff as users dramatically drop traditional search for new ways of getting information they want in a mobile world. Is Amazon destined to decline? There seem to be no signs of it today and people will still need to buy stuff in a mobile world, but the new mobile platform will certainly open the possibilities for new entrants that Amazon can’t even imagine today.
Facebook is also probably facing a tough road ahead as this shift to mobile happens. As Hamish McKenzie said last week, “I suspect that Facebook will try to address that issue [of the shift to mobile] by breaking up its various features into separate apps or HTML5 sites: one for messaging, one for the news feed, one for photos, and, perhaps, one for an address book. But that fragments the core product, probably to its detriment.”
Considering how long Facebook dragged its feet to get into mobile in the first place, the data suggests they will be exactly as slow to change as Google was to social. Does the Instagram acquisition change that? Not really, in my view. It shows they’re really fearful of being displaced by a mobile upstart. However, why would bolting on a mobile app to a Web 2.0 platform (and a very good one at that) change any of the underlying dynamics we’re discussing here? I doubt it.
What about Apple? Where does it fit in to this classification scheme?
Apple is really a hardware company, so it’s difficult to put it into a bucket related to web apps. It certainly seemed very Web 1.0 with its Ping social application. Yet it’s succeeded in mobile from making the best hardware and software ecosystem for apps to proliferate on. In some ways, as long as it has a successful iOS platform, it doesn’t care which Web 1.0, 2.0 and mobile companies fail or succeed on top of it. Maybe that’s why so many non-mobile companies seem to want to emulate Apple. Google bought Motorola Mobility (MMI) to get into the hardware business. Facebook and Baidu (BIDU) are rumored to be launching their own mobile OS.
The bottom line is that the next 5 – 8 years could be incredibly dynamic. It’s possible that both Google and Facebook could be shells of their current selves – or gone entirely.
They will have all the money in the world to try and adapt to the shift to mobile but history suggests they won’t be able to successfully do it. I often hear Google bulls point to the market share of Android or Eric Schmidt’s hypothesis that Google could one day charge all Android subscribers $10 a month for value-added services as proof of future profits. Yet, where are all the great social success stories by Web 1.0 companies? I imagine we’ll see as many great examples of social companies jumping horses mid-race to become great mobile companies.
It’s a lot easier to start asking Siri for information instead of typing search terms into a box compared to thousands of enterprises ceasing to upgrade to the next version of Windows. Google’s 76% market share. Facebook’s 900 million monthly users. They just aren’t as sticky as they seem.
And does anyone think the pace of change is going to increase in the next 5 years versus the last? That we’re going to see fewer innovations, fewer start-ups trying more stuff on cheaper and more powerful processing power? In all likelihood, we could have an entirely new way of gathering information and interacting with ads in a new mobile world than what we’re currently used to today.
The Googles and Facebooks of tomorrow might not even exist today. And several Web 1.0 and 2.0 companies might be completely wiped off the map by then.
Fortunes will be made by those who adapt to and invest in this complete greenfield.
Those who own the future are going to be the ones who create it. It’s all up for grabs. Web monopolies are not as sticky as the monopolies of old.”
By Eric Jackson, Forbes.com