After the dot-com crash in 2001, the tech world needed a few years to regroup. But starting around 2004, the year Facebook was founded and Google went public, the winds of innovation in consumer- and business-facing technology began to pick up again. In 2007 or so, they reached hurricane speed, and minus a short lull for the Great Recession, we’ve been buffeted by continuous change ever since, with the biggest advances coming in the overlapping areas of mobile, social, and cloud computing.
But for all its power, this storm was initiated by a surprisingly small group of players. Just three companies—Google, Apple, and Facebook—generated most of the new ideas (at least the mainstream ones) and most of the business momentum. (If I had more room and time, I’d work Amazon into the argument, but as a technology company, it ranks well behind the other three.) It’s been this way for almost a decade now, meaning it’s becoming harder and harder to imagine change coming from any other source.
That’s why journalists hang on every word from Larry Page, Tim Cook, or Mark Zuckerberg, and it’s why there’s perennial hand-wringing in the media about whether the Next Big Thing from Google, Apple, or Facebook—be it Google Glass, or the seventh iteration of iOS, or a new Android home screen populated by chat heads—is really as big as the Last Big Thing. Any sign that the giants might be faltering sends psychological shock waves through the whole high-tech culture, from venture investors to startup employees to eager technology consumers.
Well, at the risk of making myself into a pariah around Silicon Valley, I have a prediction to make. The storm has just about run its course. We have passed peak Apple, peak Google, and peak Facebook.
By which I mean: Apple will never again come out with a product as transformative as the iPhone. Google will never build anything more useful than its existing search engine, and it will never discover another business model as lucrative as search-based advertising. And Facebook may keep growing until every person on Earth with a computing device is a member, but it won’t ever be anything more than a place we share photos and links.
In sum, the next major advances in technology—the ones that will power the next cycle of entrepreneurship in Silicon Valley and the nation’s other tech hubs—will have to come from somebody else. To switch metaphors, the car is already out of gas; we just think there’s still forward progress, because we haven’t coasted to a stop quite yet. But we will. Chances are we’ll locate another gas station eventually—we always do. But before that happens, we may spend some time stuck by the roadside with the hood up, as we did in 2001-2004.
I’ll explain the thinking behind this prediction in a second. But first, let me be clear: I don’t think the petering out of the Google-Apple-Facebook triumvirate is cause for panic. In fact, it’s probably a good thing. No one should be allowed to lead for too long, or they get lazy and selfish. And a healthy innovation ecosystem needs a broader base than the one we have now. (That’s why I’ve been on the record rooting for Microsoft in the mobile wars.)
A situation in which power is spread between three companies was a big improvement over previous eras of computing, when a single company tended to dominate (for decades it was IBM, then it was Microsoft). In the next era, we may see something more like a true republic of technology, with no single company or group of companies possessing enough power to push others around and set the whole agenda for growth, the way Apple and Google have done in the mobile business with iOS and Android. That would be a good thing.
Now to the core of my argument. Here are three reasons why it’s a bad bet to expect any more game-changing innovations from Google, Apple, or Facebook.
1. Regression to the mean. Compared to the other companies in their cohorts, Apple, Google, and Facebook are all extreme outliers—the richest of the rich. They are the 1 percent; they’ve performed several standard deviations above the mean. Plain old statistics dictates that performance this good is usually followed by a dropoff in the direction of mediocrity.
You don’t reach this level of success by coming up with just a single earthshaking innovation—it usually takes two or more. Let’s spell it out. Google’s two fundamental innovations—now long behind it—were 1) if you look at the Web as a network of trust, defined mainly by links, you can use math to surface the best content, and 2) if you put related ads next to that content, people will click on them.
Facebook’s innovations were 1) if you make it super-easy for people to post photos and status updates to their feeds or timelines, it will give their friends a convenient way to feel like they’re staying in touch, creating a network that grows virally, and 2) if you make your identity system into a platform—something resembling single sign-on for the whole Web—you’ll have endless fuel for the feed.
Apple’s innovations were 1) if you pay attention to style, design, and ease of use, you can build computers that people will love, because they make work feel a little bit like play, and 2) if you marry this design sensibility with wireless technology and digital content like music, movies, TV shows, books, and games, it’s like putting a match to a pile of paint-soaked rags; you get a true mobile-computing explosion.
The chances that any of these companies (or indeed any given company) will come up with a third, equally earthshaking insight in the future are low. We have a tendency to assume that preternaturally lucky people are preternaturally smart, and that their luck will continue, but those are errors built into … Next Page »
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