Om Malik in The New Yorker:
We are ever more dependent on digital connectivity. Want to get somewhere? Tap the Uber app or ask Siri to give you directions. Want to buy diapers? Order them on Amazon—maybe even ask Alexa to order them for you—and have them delivered the next day. Want to check up on friends and family? Open Facebook. Each of these conveniences was adopted with astonishing speed, and demand for products and platforms that enable connection will remain huge. The Big Five provide those platforms of the future.
A skeptic might point out that the Big Five are reminiscent of the “Four Horsemen of Tech,” a moniker for Microsoft, Intel, Dell, and Cisco Systems coined by the CNBC commentator and hedge-fund manager Jim Cramer during the first Internet boom, in 1999. They grew at breakneck speed as the commercial Internet weaved its way into our lives. Three of the four companies’ fortunes have faded, but I would argue that is because they weren’t platforms.
A platform is essentially a business model that thrives because of the participation and value added from third parties with only incremental effort from the owner of the platform. Take Apple. With the iPhone and iPad, the company has put its iOS in the hands of hundreds of millions of people. That has allowed its active App Store to thrive—Tim Cook, Apple’s chief executive, recently tweeted that Apple has given away about fifty billion dollars to its developers. Assuming a thirty-per-cent cut for Apple, that means more than twenty billion dollars to Apple for little effort.
Size clearly has its advantages. No one would award Apple a gold medal for its Internet services, but the revenues from those services—Apple Music, iCloud, and Apple Pay, among others—grew nineteen per cent during the last quarter, to six billion dollars, thanks in large part to hundreds of millions of iOS users. Today, services account for fourteen per cent of Apple’s quarterly revenues and, if Cook’s predictions are right, will be “the size of a Fortune 100 company next year.” This growth occurred despite the chorus of critics, including me, panning Apple Music as well as iCloud’s multiple outages.