The Fundamental Remaking of Several Industries

@parislemon neatly summarized today’s news about H-P getting out of the PC business:

HP To Apple: You Win.

I hope he meant more than tablets, because the victory of the Apple model is much broader.

Just a few days ago, Google caused a major earthquake with the announcement that it would acquire Motorola, one of its Android OS licensees, and thereby leave all other licensees out in the cold. It’s almost as if Microsoft was going to announce it was going to buy a PC maker, an idea that would have been ludicrous for the past 25+ years, ever since its original DOS deal with IBM. Except that it is not ludicrous any more as the Google/Motorola hookup shows.

This wave actually started earlier, with Oracle buying Sun. I remember Steve Ballmer being quoted, after being told the news by a reporter, saying “I have to think about that one.” All of a sudden, tightly combining hardware and software is the winning strategy. There are more and more data points: Oracle + Sun, Apple itself of course, Dell getting into the cloud business, Google + Motorola. And you know that everybody else, who is leading a bit less than these guys, are going to follow that model, as they always do.

So let’s have some fun speculating about what’s going to be next: (I have no facts on any of those, it’s just extrapolating from what we know)

  • One of the Android licensees that are now left in the cold, like LG or Samsung, will acquire HP/Palm’s WebOS. (What else would they do? They need an OS, and HP has one that it doesn’t want any more.)
  • Microsoft is going to make a major hardware purchase. They always follow what others are doing these days (Microsoft stores, anybody?…) and so I think they will look at both HP’s PC business, and obviously Nokia and possibly buy either one. Nokia is in the more interesting market, but its position is eroding rapidly, so it’s not obvious which of those would be the better choice. I don’t think they would buy a smaller one because for this to work, the acquired company would have to have a large market share.
  • Not only Samsung and LG, but also PC manufacturers like Dell all of a sudden will need some real good ideas real quick, to protect against the idea of Microsoft doing a Google on them with a Motorola-like PC maker. Not obvious what those ideas could be.

Sounds crazy? But I think it will get even more revolutionary because I happen to believe that it’s only a matter of time until the Four Horsemen are starting to acquire wireless carriers. That might be a few years out, but I don’t doubt it will happen. Even Jean-Louis Gassée, formerly top-exec at Apple, just this week penned a piece Please Steve, Buy Us A Carrier. Wireless connectivity has become a core feature, perhaps the core feature, of all modern electronics, and it’s the one feature most broken, technologically and business-wise. So sooner or later somebody like Apple is going bring that feature into the fold, just like hardware and software and design. And then everybody else is going to follow, at which point the industry structure is going to flip.

Now imagine, for a second, how an industry would look like and function in which there are a handful of mega-lords, say Apple/T-Mobile, Google/Sprint, Microsoft/Vodafone, Facebook/AT&T, and Amazon/Comcast or in whatever combinations. That’s the future towards which we are headed. I don’t know in which timeframe, but this week made it be within reach.

Welcome to the future, which calling “bewildering” would be an understatement.

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