Last week at the 2015 DLD conference in Munich, I spoke about the four most dominant companies in digital and made predictions around who will increase and who will decrease in value and influence in 2015. “The Four Horsemen” Amazon/Apple/Facebook/Google, are the most dominant tech companies with a higher combined market cap than the GDP of South Korea. Insights below from my talk. Loser: Amazon Pure-play retail is going away, whether its pure e-commerce or brick-and-mortar without an online presence. Therefore companies like Fab, Gilt, and Net-a-porter are on their way out. True innovators are e-commerce players Rent the Runway and Warby Parker who are opening up stores, and traditional department stores that are expanding their e-commerce and omnichannel operations. While Amazon has a reputation of being the most innovative company in the past ten years, Macy’s has surpassed Amazon in the past five years from a shareholder perspective. And Amazon has had the lowest growth of all major retailers in the past year. Amazon’s Achilles heel likely to lead its downfall: shipping costs. The company received $3.1 billion in shipping fees and spent $6.6 billion on fulfillment last year. I believe Amazon will make a brick-and mortar acquisition in the next 12 months. Winner: Facebook The company that changed the nature of friendships also pulled off the biggest bait-and-switch in marketing history. After convincing brands to invest in building Facebook communities, it started charging for access. Organic reach on Facebook is at 6%, meaning brands can get virtually no access without spending. Facebook also made two of the best acquisitions in tech in the past decade: Instagram and Whatsapp. Instagram is growing faster than any other social platform in the world, except WeChat. Reports that say Facebook is declining in popularity are hogwash. It is still the platform people of all ages spend the most time on. Furthermore, Facebook has the ability to track users by their identity, something only Google is able to do through Gmail and Google+. Loser: Google Google is dominant in search, but other brands are chipping at Google’s share. Two-thirds of product searches – which are high-value searches – are happening on Amazon, and a billion searches a day are done on Facebook vs. 3 billion on Google. Furthermore, the mobile world is unfriendly to Google, which has resulted in a lower cost-per-click and revenues slowing down. Google failures: Google Glass and Google+. Winner: Apple Apple has the pillars of a luxury brand: craftsmanship, an iconic founder, an exceptional price point, vertical control of distribution, globally recognizable, and products with a self-expressive benefit. It’s on its way to becoming the world’s largest luxury brand with the help of former Burberry and YSL CEOs Angela Ahrendts and Paul Deneve. For proof look at a cellphone heat-map of New York, where red represents iOS, green represents Android, and purple represents Jurassic Park, or rather Blackberrys. The iOS operating system has become an indicator of wealth. Apple is completing its transition to luxury with the Apple Watch, predicted to have more sales than any other watch company in 2015. I believe Apple will become the first trillion dollar market cap company on the back of its successful transition to a luxury brand. For more of my updates and Winners & Losers subscribe to L2s newsletter.
Posted on: Tue, 27 Jan 2015 02:55:32 +0000
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