The Great Tech War Of 2012

The Great Tech War Of 2012

Gilbert Wong, the mayor of Cupertino, California, calls his city council to order. “As you know, Cupertino is very famous for Apple Computer, and we’re very honored to have Mr. Steve Jobs come here tonight to give a special presentation,” the mayor says. “Mr. Jobs?” And there he is, in his black turtleneck and jeans, shuffling to the podium to the kind of uproarious applause absent from most city council meetings. It is a shock to see him here on ground level, a thin man amid other citizens, rather than on stage at San Francisco’s Moscone Center with a larger-than-life projection screen behind him. He seems out of place, like a lion ambling through the mall.

“Apple is growing like a weed,” Jobs begins, his voice quiet and sometimes shaky. But there’s nothing timorous about his plan: Apple, he says, would like to build a gargantuan new campus on a 150-acre parcel of land that it acquired from Hewlett-Packard in 2010. The company has commissioned architects–”some of the best in the world”–to design something extraordinary, a single building that will house 12,000 Apple employees. “It’s a pretty amazing building,” Jobs says, as he unveils images of the futuristic edifice on the screen. The stunning glass-and-concrete circle looks “a little like a spaceship landed,” he opines.

Nobody knew it at the time, but the Cupertino City Council meeting on June 7, 2011, was Jobs’s last public appearance before his resignation as Apple’s CEO in late August (and his passing in early October). It’s a fitting way to go out. When completed in 2015, Apple’s new campus will have a footprint slightly smaller than that of the Pentagon; its diameter will exceed the height of the Empire State Building. It will include its own natural-gas power plant and will use the grid only for backup power. This isn’t just a new corporate campus but a statement: Apple–which now jockeys daily with ExxonMobil for the title of the world’s most valuable company–plans to become a galactic force for the eons.

And as every sci-fi nerd knows, you totally need a tricked-out battleship if you’re about to engage in serious battle.

“Our development is guided by the idea that every year, the amount that people want to add, share, and express is increasing,” says Facebook CEO Mark Zuckerberg. “We can look into the future–and it’s going to be really, really good.”

To state this as clearly as possible: The four American companies that have come to define 21st-century information technology and entertainment are on the verge of war. Over the next two years, Amazon, Apple, Facebook, and Google will increasingly collide in the markets for mobile phones and tablets, mobile apps, social networking, and more. This competition will be intense. Each of the four has shown competitive excellence, strategic genius, and superb execution that have left the rest of the world in the dust. HP, for example, tried to take a run at Apple head-on, with its TouchPad, the product of its $1.2 billion acquisition of Palm. HP bailed out after an embarrassingly short 49-day run, and it cost CEO Léo Apotheker his job. Microsoft’s every move must be viewed as a reaction to the initiatives of these smarter, nimbler, and now, in the case of Apple, richer companies. When a company like Hulu goes on the block, these four companies are immediately seen as possible acquirers, and why not? They have the best weapons–weapons that will now be turned on one another as they seek more room to grow.

There was a time, not long ago, when you could sum up each company quite neatly: Apple made consumer electronics, Google ran a search engine, Amazon was a web store, and Facebook was a social network. How quaint that assessment seems today.

Jeff Bezos, who was ahead of the curve in creating a cloud data service, is pushing Amazon into digital media, book publishing, and, with his highly buzzed-about new line of Kindle tablets, including the $199 Fire, a direct assault on the iPad. Amazon almost doubled in size from 2008 to 2010, when it hit $34 billion in annual revenue; analysts expect it to reach $100 billion in annual revenue by 2015, faster than any company ever.

Remember when Google’s goal was to catalog all the world’s information? Guess that task was too tiny. In just a few months at the helm, CEO Larry Page has launched a social network (Google+) to challenge Facebook, and acquired Motorola Mobility for $12.5 billion, in part to compete more ferociously against Apple. Google’s YouTube video service is courting producers to make original programming. Page can afford these big swings (and others) in the years ahead, given the way his advertising business just keeps growing. It’s on pace to bring in more than $30 billion this year, almost double 2007′s revenue.

Facebook, meanwhile, is now more than just the world’s biggest social network; it is the world’s most expansive enabler of human communication. It has changed the ways in which we interact (witness its new Timeline interface); it has redefined the way we share–personal info, pictures (more than 250 million a day), and now news, music, TV, and movies. With access to the “Likes” of more than 800 million people, CEO Mark Zuckerberg has an unequaled trove of data on individual consumer behavior that he can use to personalize both media and advertising.

Amazon, Apple, Facebook, and Google don’t recognize any borders; they feel no qualms about marching beyond the walls of tech into retailing, advertising, publishing, movies, TV, communications, and even finance. Across the economy, these four companies are increasingly setting the agenda. Bezos, Jobs, Zuckerberg, and Page look at the business world and justifiably imagine all of it funneling through their servers. Why not go for everything? And in their competition, each combatant is getting stronger, separating the quartet further from the rest of the pack.

Everyone reading this article is a customer of Amazon, Apple, Facebook, or Google, and most probably count on all four. This passion for the Fab Four of business is reflected in the blogosphere’s panting coverage of their every move. ExxonMobil may sometimes be the world’s most valuable company, but can you name its CEO? Do you scour the Internet for rumors about its next product? As the four companies encroach further and further into one another’s space, consumers look forward to cooler and cooler products. The coming years will be fascinating to watch because this is a competition that might reinvent our daily lives even more than the four have changed our habits in the past decade. And that, dear reader, is why you need a program guide to the battle ahead.

1. The Road Map

Amazon, Apple, Facebook, and Google do not talk about their plans. Coca-Cola would tweet its secret formula before any of them would even hint at what’s next. “That is a part of the magic of Apple,” says new CEO Tim Cook.

That secrecy only fuels the zeal of those bent on sussing out their next moves. And it is certainly possible to decode the Fab Four’s big-picture strategic ambitions: Over the next few years, each will infiltrate, digitize, and revolutionize every corner of your life, taking a slice out of each transaction that results. This is a vision shared by all four, and it hinges on three interrelated ideas.

First, each company has embraced what Jobs has branded the “post-PC world”–a vision of daily life that is enabled by, and comes to depend on, smartphones, tablets, and other small, mobile, easy-to-use computers. Each of these companies has already benefited more than others from this proliferation of mobile, a shift that underlies their extraordinary gains in revenue, cash reserves, and market cap.

The second idea is a function of the fact that these post-PC devices encourage and facilitate consumption, in just about every form. So each of these giants will deepen their efforts to serve up media–books, music, movies, TV shows, games, and anything else that might brighten your lonely hours (they’re also socializing everything, so you can enjoy it with friends or meet new ones). But it’s not just digital media; they will also make the consumption of everything easier. The new $79 Kindle, for example, isn’t just a better reading device; it integrates Amazon’s local-offers product. The Fire will be accompanied by a tablet-friendly redesign of Amazon.com that will make it easier for you to buy the physical goods that the company sells, from pet food to lawn mowers. Wherever and whenever you are online, they want to be there to assist you in your transaction.

All of our activity on these devices produces a wealth of data, which leads to the third big idea underpinning their vision. Data is like mother’s milk for Amazon, Apple, Facebook, and Google. Data not only fuels new and better advertising systems (which Google and Facebook depend on) but better insights into what you’d like to buy next (which Amazon and Apple want to know). Data also powers new inventions: Google’s voice-recognition system, its traffic maps, and its spell-checker are all based on large-scale, anonymous customer tracking. These three ideas feed one another in a continuous (and often virtuous) loop. Post-PC devices are intimately connected to individual users. Think of this: You have a family desktop computer, but you probably don’t have a family Kindle. E-books are tied to a single Amazon account and can be read by one person at a time. The same for phones and apps. For the Fab Four, this is a beautiful thing because it means that everything done on your phone, tablet, or e-reader can be associated with you. Your likes, dislikes, and preferences feed new products and creative ways to market them to you. Collectively, the Fab Four have all registered credit-card info on a vast cross-section of Americans. They collect payments (Apple through iTunes, Google with Checkout, Amazon with Amazon Payments, Facebook with in-house credits). Both Google and Amazon recently launched Groupon-like daily-deals services, and Facebook is pursuing deals through its check-in service (after publicly retreating from its own offers product).

It would be a mistake to see their ambitions as simply a grab for territory (and money). These four companies firmly believe that they possess the ability to enhance rather than merely replace our current products and services. They want to apply server power and software code to make every transaction more efficient for you and more profitable for them.

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