Tech’s ‘Frightful 5’ Will Dominate Digital Life for Foreseeable Future | Hacker News Reader

Tech’s ‘Frightful 5’ Will Dominate Digital Life for Foreseeable Future

nytimes.com

71 pointshvo84 comments

The title says it all. "Tech’s ‘Frightful 5’ Will Dominate Digital Life for Foreseeable Future." But since we're talking about technology, "foreseeable" translates to about two years. ;)

(Microsoft was dominant for 1-2 decades.)

I think it's more likely we'll see at least another 5-10 years of dominance of the "Frightful 5".

And IBM was dominant for at least 50 years ;-)

People expected the same for Nokia.

Exactly; it's really a sign of times when "much of the last half-decade" is considered significant when judging who owns a market.

Without good patent reform they can pretty much stymie any true threat. Then when the threat is mitigated they can snap up the technology increasing their buffer.

Two years? I was just wondering if that article was two years old..

What about Samsung, Foxconn, Baidu, Tencent, Alibaba, JD.com

How dominant are the frightful 5 outside of North America and Western Europe today?

Doubt it.

These companies are going to be around a while.

I'm doubtful that FB should be on that pedestal. Social is all about the hip new thing du jour and I wonder whether FB can keep up with buying everything new in the long run since their revenue is still not great. Their shady tactics when trying to take over new areas like video show a certain amount of desperation IMO.

If you had to cut the list, they'd clearly be first to go, but I still think they have a lock on a lot of people's attention that I don't see loosening any time soon.

Facebook has been around for 10 (or 12, depends how you look at it) years now. That counts for something (but what?). Not bad for the world's most complicated and featureless forum.

Instagram and Whatsapp are pretty compelling features these days.

There are hardly Facebook features. There aren't branded as such either. There are separate products.

Facebook is the most agile of the companies. Two years ago it was a desktop web company, now it is all mobile. With Instagram it arguably made the best tech acquisition of this tech generation - compare that to what Yahoo spent money on. So don't see Facebook as a social app, see them as a powerhouse capable of making big moves and being able to respond to trends better than any other player. Since it has a hard time accommodating new functionality under its Facebook brand, it's perfected the art of managing multiple consumer brands.

And let's not forget they own Oculus now. Facebook could be in a much different place in the next ten years depending on how that plays out.

It wasn't agility that kept them where they are, it was acquisitions. Facebook had to buy instagram and whatsapp because those to threatened its hegemony. Oculus on the other hand was a strategic bet on the future. When it's not agile enough, it has the cash to purchase those that are.

You could say this applies to all these "frightful 5"

It sounds like maybe you don't use Facebook. I don't either, but ONE FREAKING BILLION people do! To many people (non-tech-savvy, and/or in developing countries with less-developed infrastructure), Facebook is the internet. And they own WhatsApp (and Instagram, and presumably will continue to buy up any other social network that comes along and gains significant traction).

similar things were said about America Online in the 90s. where are they now?

Still profitably selling dial-up services to millions of people.

No, Verizon bought them last year....well, bought 2 million subscribers which is down from their peak in the 90's of 34 million.

“In the mainframe industry’s glory days of the 1960s, it was ‘IBM and the Seven Dwarfs’: Burroughs, Control Data, General Electric, Honeywell, NCR, RCA, and Univac. RCA and GE sold out early, and it was ‘IBM and the Bunch’ (Burroughs, Univac, NCR, Control Data, and Honeywell) for a while.”

http://www.catb.org/jargon/html/D/dinosaurs-mating.html

Sad to see Farhad Manjoo playing the click bait game.

That article is so utterly lacking in content that I would expect it to be on buzzfeed. He might as well have said #8 will surprise you.

>Sad to see Farhad Manjoo playing the click bait game.

It's an article in a mainstream newspaper for a mainstream audience.

>That article is so utterly lacking in content that I would expect it to be on buzzfeed.

The purpose is to explain how and why these "tech" companies are expanding into things that most people wouldn't associate with them, and the reason is the idea of the "platform". That's probably not familiar to the layman.

By the way, BuzzFeed does decent work.

Interesting they didn't include Netflix. Morgan Stanley talks about the FANG stocks, meaning FB, Apple, Netflix, and Google, and I usually take issue with that for not including Amazon.

I don't consider them tech. The article even says "Netflix hosts their movies on Amazon".

I think you're right. I was thinking in terms of stocks and not raw tech. Thanks.

Yes, Netflix has pivoted themselves as a content company, a la HBO.

Then again, the line for "tech company" is beginning to blur, since every company is so heavily reliant on technology.

Netflix is an interesting study in this respect, because they demonstrate both the immense potential if you control a dominant tech platform, and how at the same time relying on platform ownership can become your Achilles heel because you're ultimately just a middle man.

With the likes of HBO launching their own services to distribute their own original content, they have relatively little need for Netflix. Netflix, on the other hand, is nothing without good content, and in the face of declining third party content it has little choice but to move into creating its own to remain relevant. And then suddenly it's "just another" content producer, instead of "the" platform.

FANG (as indicated by Morgan Stanley) is FB, Amazon, Netflix, and Google:

http://blogs.barrons.com/techtraderdaily/2015/12/22/still-a-...

baaaah you're right. i misremembered wondering why apple wasn't in the group.

The FANG businesses seem more server/networking intensive than Apple's does.

I have a very 'armchair' perspective, but when I think about Apple and networking I think about iMessage and iCloud photo storage and that's it

Apple is a hardware company, basically. The 4 companies in that grouping are all internet companies.

FANG is for growth stocks; AAPL is not considered by Wall Street to be a growth stock. On the contrary, the prevailing view seems to be that Apple is on the verge of collapse.

Looks like AAPL is #8 on the WSJ short list: http://online.wsj.com/mdc/public/page/2_3062-nasdaqshort-hig...

Netflix is there too, tho... Maybe some folks are betting the international thing won't work. hmm.

Biggest # of shares short is not all that useful IMHO. As % of float is probably a better sort for a short list:

http://online.wsj.com/mdc/public/page/2_3062-nasdaqshort-hig...

Netflixes current trejectory is to become another (or maybe a morne ubiquitous) HBO. I think in ten years it might just be one of many tv on the Internet "channels".

The problem, IMO, is that any new tech startup that may one day grow to be as these ones, get taken over (for exorbitant amounts) by these very parties once they're starting to gain some traction. In fact, that seems to be the business case for a lot of startups.

If you look at any massive company, in the history of business, they all grew and gained market dominance via acquisition.

But there is a difference between maintaining dominance through smart strategic investments (like Google acquiring DoubleClick, Android or Keyhole or Facebook acquiring Oculus) and defensive investments because you missed some boat in your segment of the market (Facebook acquiring Whatsapp or Instagram)

Honestly, I'd consider five entrenched players with frequent ups and downs to be the signs of a fairly competitive industry. Indeed, each of the five seems to offer roughly comparable products to at least two of the other four players, suggesting that consumers are getting a pretty good deal out of all this.

It's a bunch of different industries though.

Social: owned by Facebook.

Search: owned by Google

Advertisement: owned by Google.

Mobile platforms: owned by Apple and Google. Actual competition here. No wonder things have been moving quickly.

Shopping: owned by Amazon.

Cloud computing: owned by Amazon. Google and Microsoft are trying to break in, so there's competition and progress.

Facebook's revenue is through ads though.

Facebook is itself sustained by advertising, so how can Google own it?

Google's revenues are 4x larger than Facebook's. But sure, Facebook are probably getting there some time.

In the previous generation of competition, the industry structure changed from vertical (IBM, DEC, Wang etc) to horizontal (Microsoft, Intel, Cisco etc).

The new generation of competition is between ecosystems. These are both horizontal and vertical.

Would you view Intel/ARM, open-source software, network/telecom protocols and standardized connectors as horizontal components of these ecosystems?

Yes. In the horizontal industry organization, products ran across brands, or across different stacks. So, MS DOS and Windows ran on IBM, DEC, Compaq and many other PCs. Competition was between Microsoft and IBM etc (OS), Intel vs AMD, WD vs Seagate, OSI vs SNA vs TCP/IP etc. These battles usually ended up with one big winner, as you would expect from power laws.

Things don't have to be open source to be de facto standards, just openly licensed, eg Windows.

The use of proprietary connectors is a common feature of vertically integrated stacks. As I used to say, Apple is just DEC by other means.

Modern ecosystems are different from the old vertical stacks because (among other things) they're cross platform. For example, Microsoft has dozens of apps on Android and iOS.

Not to mention -- each of the five players are entrenched because they all solved much huger problems for consumers. As a result, they now have the ability to tackle new problems, whose own industry titans are woefully inept at fixing themselves.

Video in particular is a problem that the content creators, nor the video technology manufacturers, seem to have any interest in fixing, and it is frankly an industry ripe with idiotic flaws, infighting, and stagnation. I am quite happy that all of the listed companies are finally looking to help tackle problems such as those faced in the digital video realm.

I find it curious, because only of of them produces something I use everyday - Microsoft. It's more like the "Ubiquitous One and the Take Or Leave 'Em Four."

And even Microsoft doesn't "dominate" my digital life. I think it's about the choices you make. You're choosing to be dominated. Maybe you get some benefits using those companies (Prime looks good sometimes), but you don't have to be involved with any of them.

That's not domination.

I'd be very surprised if you weren't using an AWS server many times a day every day.

Indeed. When I was troubleshooting a DNS problem last year, I was astonished at how much of the web seems to run on AWS.

That's a good point I hadn't thought of - and you're right. I probably do unintentionally, inadvertently, or, I'm not sure how to say it, but I don't mind, I'm just not conscious of it.

So still, it just doesn't seem like "domination" to me. Yeah, so some of the services I use use AWS. They probably could choose one of a bucket load of web service services out there. Sure seems like there is a lot of choice in that market.

AWS has competitors to be sure, but they are definitely dominant in that space.

I'm the other way around- I have Apple devices (used to have something running Android), use Facebook, and doubtless send many requests to services on AWS every day. I can't say I really have any interaction with Microsoft other than Stackoverflow's .NET servers.

To be honest though, it's like saying "The train companies don't have any influence on my life because I never take the train anywhere." It's still there, in the background, affecting your life in some ways. If you are in the US, it's likely your state and local governments are using MS technologies for their IT infrastructure.

MS is still huge, and possibly on the decline for the average consumer, but government, and many business are very reliant and spend a lot of money as well as time on products and training.

I'm surprised, you don't Google everyday? Not even once?

I was actually discussing this the other day with friends. I use duckduckgo.com for searching, Firefox for a browser 95% of the time, I don't use my Gmail or G+ hardly at all anymore, and the one thing I really like from Google, the Picassa desktop app, I don't use every day, more like every couple of weeks (or longer) when I update my website.

It's not a conscious decision (well, except for the searching part - I like the no tracking on DDG) - Google just doesn't offer things I need.

Pretty interesting I must say. Maps? Oh my I'm just entrenched into Google products.

On the other hand, I use many Google's services (starting with search and mail), but not much from the other four.

However, we are not really representative of most people. One has to actively search for OS-es other than Windows or OSX, one has to actively for email providers other than Google or MS, and it's downright impossible to get a smartphone without any of them. The large majority of computer and internet users just (correctly) choose the most popular option.

The second thing is that you can often choose one of those five, but it's much harder to go without any of them. When you use Bing instead of Google, or AWS insteaf od Azure, or Android instead of iPhone, you're not really escaping their stranglehold. You're just shifting the balance of power between those five.

errm - badiu? tencent?

Also the Foreseeable Future is quite a short time in this context.

Second that, Baidu(perhaps) and Tencent(certainly), and maybe Alibaba holdings as well. These companies are operating in a country where massive investments are being thrown around, and a product might go from 0 to 90% market penetration in half a year, mobile payments work, and massive fulfilment infrastructure. Wouldn't be surprised if they weren't already eyeing the American market, and suddenly decide to go on a massive acquisition spree. Only that many more C2C startups in China they can buy up or invest into.

So I am wondering if "this time it's different" when it comes to market entrenchment because these 5 companies have so much cash that they buy any potential competitor before they get out of hatchling phase.

I mean when you look at the range of capabilities, like the article states, they pretty much have a finger if not a whole hand in what any analyst predicts as future technology: Augmented Reality, Self Driving cars, Radical Life extension, AI, Advanced Logistics etc...

It's hard to see a future when they are unseated.

"the giants are among the top 10 most valuable American companies of any kind."

Depends what you mean by "value". If current price Mr Market is willing to pay = "value" then yes. If value is a measure of long term return based on another set of measures like profitability etc then basing the future dominance of these companies on their current stock price seems a little speculative.

Foreseeable future, unless .. black swan. And so on.

Fore-see-able, indeed. Void where unforeseen ;)

s/unless/until/

Dominant market players don't become irrelevant by themselves. Something else makes them irrelevant.

So the thesis of the article is that these 5 are permanently entrenched; that none will be run out of business (in the medium term I agree just because of size) and that no new ones will arise (really?).

The explanation is that these ones each control a network-effect-driven platform (and that network-effect-driven platforms arose only during a certain time period).

They list the network-effect-driven platforms: desktop (MS), web search (Goog), mobile OS (Goog, Application), online advertising (FB, Goog), cloud (Amzn, MS, Goog), shipping (Amzn), and "human relationships" (FB).

This thesis is absurd. By that theory, Google is fully dominant and Apple is about to fall out of the club. The idea that no new network-effect platforms can arise is unstated and unsupported.

I usually expect better work from the Times.

I am not particularly frightened. I'm not even clear why I should be.

Interested to see how this pans out in the next 3 yrs. I see Facebook changing

Yet more clickbaity article titles with little to no real content.

serious question, since I'm confused, why is the word "frightful" used here?

Given how many times the phrase "foreseeable future" was discussed in this comment thread, maybe they should rename them the "Foreseeable Five".

seriously. and what is the threshold of "foreseeable"? like 18 months, tops?

Yes, probably until one of them invents strong AI.

Is it speculation time again? Slow news day?

Amazon over Microsoft?

Who's losing? The users are.

How?

Monopolies and oligopolies are always bad for users. Not to mention that many of these companies are in the business of things which directly harms users: Advertisements, Cloud computing, Software-as-a-Service, etc.

Advertisements are controversial, but this is the first assertion I've heard that SaaS and Cloud computing directly harm users.

Clearly you haven't read the religious tracts from the free software believers.

The harm comes from users who treat third-party servers as if it was equal safe and private as a server standing inside the company walls.

How many lawyers use SaaS or cloud computing and put information trusted by their clients in the hands of third-party (without ever informing their clients). How many hospitals has data flying around, in plain text, about people very sensitive situations that they entrusted to their doctors? How many political parties and government institution has databases being sent to third-party organization because they move their internal servers to the cloud and didn't consider the impact?

There are laws, and the laws governing how sensitive data did never get enforced before it became to late. Now we are in the situation that enforcing a strict control would paralyze governments and organizations all over the world, and as a result nothing is being done.

When three more consumer technology giants exist (perhaps oriented towards the dreadful Internet of Things), can we start to call them The Hateful Eight?

There's one issue that can severely damage two of them: Facebook and Google's business value come completely from taking away privacy. Apple, Microsoft, and Amazon also do so of course, but they can offer strong business models that doesn't should the need arise. They won't be as profitable, but they won't die either.

At the moment Americans don't care about this issue, because they balance the lack of privacy against their fear of terrorism. But if they start to care things could turn around in a hurry for those two and we would see an interesting scramble.

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