Home Tech’s Doomsday Plots: How Your Favorite Tech Giants Could Lose Their Edge

Tech’s Doomsday Plots: How Your Favorite Tech Giants Could Lose Their Edge

When Steve Jobs unveiled the iPhone five years ago, it was a happy day for the Apple faithful. Less so for the folks at Palm, whose employer became a ticking time bomb. In one move, Apple leapfrogged its rivals in hardware and software and changed the mobile industry forever. And Palm — a touch computing pioneer that lost its way — was toast.

That’s just one example of how quickly a company’s fates can change in today’s fast-moving tech industry. Every company — even those as seemingly strong today as Apple and Google — have clear risks and weaknesses. The iPad could drive Microsoft’s decline. The government could smother Google’s growth efforts. And a mobile player that doesn’t even exist could be the one that takes down Facebook.


Of today’s tech giants, it’s actually Microsoft whose position seems the most precarious: Most of its business is still based on the idea that the vast majority of the world’s computers will run Windows and many of them will also run Office. During Microsoft’s last fiscal year, some 60% of Microsoft’s sales and even more of its profits came from its Windows and Office divisions.

But today’s computer industry is growing rapidly in areas where Microsoft is currently weak: Smartphones and tablets, primarily. If the iPad starts replacing Windows computers as the default home PC or even as business kiosks, that could be problematic. If today’s Windows Phones don’t catch on, Microsoft might have to spend big to buy its way into the smartphone market. And even if Microsoft-based tablets and smartphones do catch on, can its economics for Windows and Office licenses in those markets be as good as they are today? Maybe not.

Microsoft is massive and it is still very profitable. But for the first time in about 20 years, it looks vulnerable.


Google’s biggest risk isn’t competition from Facebook or Apple: It’s the government.

Today, almost all of Google’s revenue still comes from advertising, and the majority of it comes from advertising on Google’s own sites. Google continues to invest in its future through dozens of acquisitions per year, including some big ones, such as ITA (travel search) and Motorola (mobile phones). Some of these deals are designed to expand Google’s existing products, and some are designed to help diversify Google’s business into new areas.

But if the U.S. or E.U. ever decides that Google is finally getting too big, it could become a real headache. Microsoft’s monopoly status almost certainly hurt its ability to innovate as the Internet matured.

This isn’t as far-fetched as it seems, either. The U.S. government just made a big statement by blocking AT&T’s purchase of T-Mobile. It already has one eye on Google. And one wrong move, such as this week’s controversial decision to integrate Google+ social data — and only Google+ social data — into its market-dominating search product could be the first big slip.


Apple’s biggest strength — and, therefore its biggest risk — is its ability to dictate what’s fashionable in consumer electronics, particularly with the iPhone. Over the past year, the iPhone business has generated almost half of Apple’s sales, and likely even more of its profits. (Add the iPad, Mac, and iPod, and those gadgets combined generate about 90% of Apple’s revenue.)

Apple’s biggest weakness, then, would be a situation where its phones and other gadgets fell out of fashion, either because they stopped being very good, or another company stole the market’s interest with a different take, or something along those lines.

Apple has experienced this before, when Microsoft took control of the PC industry last century. (And it has recently been the one to upset industries, too, with the iPod, iPhone, and iPad.) This time, it looks like Android is the biggest threat to Apple’s position.

If Google and its partners can get their act together and create a product, service, or business model — free, ad-subsidized phones with incredibly cheap, proprietary service? — that makes the iPhone seem old-hat, then Apple might have to scramble. Given Apple’s continued lead in design, technology, apps, and fashion, it’s hard to see this happening. But Apple certainly can’t relax now.


Facebook knows firsthand how precarious the lead in social networking can be: It has only been a few years since it zoomed past MySpace, knocking its rival down and forcing its fire sale. And since then, Facebook has executed very well, building an extremely popular, addictive service that is tied into many of its users’ Internet activities.

But the Internet is changing from something you mostly do at a desk to something you’ll mostly access from a mobile device. Facebook’s biggest vulnerability, then, is that it will be replaced by a mobile-first or mobile-only social network that does magic on your phone that Facebook can’t imagine and can’t effectively copy.

So far, Facebook’s mobile presence looks great — on paper. The company says it has more than 350 million active mobile users. Its iOS app alone had some 98 million monthly active users before Facebook stopped publicizing this statistic. It will take any new competitor a long time to reach those numbers.

But new competitors are making Facebook look incredibly uninventive in mobile. Apps like Instagram and Path have made mobile photo sharing — one of Facebook’s main features — much more fun than Facebook has. Facebook’s apps hardly exude the sense of quality that its website did in comparison to MySpace. And Facebook’s mobile-only features, such as its “Places” ripoff of Foursquare, have been uninspiring.

Perhaps Facebook is saving its best work for its ambitious mobile platform, and maybe that will even be the phone that pops the iPhone off its pedestal. Who knows! But even with Facebook’s huge lead, its sustained dominance in mobile is far from certain.

Now, we’d love to hear the “top risks” you’d pick for companies we didn’t get to, such as Netflix, Twitter, Amazon, Comcast, and Samsung.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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