The survivors (beta version)

In a network-centric world of relentless commoditization, there are only two ways to thrive for an extended period: Go small or go big. Small means building a defensible niche product that that doesn’t threaten anyone. Apple represents the upper bound for this strategy. It can be a comfortable life, but your upside is limited.

The big option is really, really hard. Any competitive advantage and source of profits today could be someone else’s free giveaway tomorrow. Just look at how Microsoft decimated Netscape. The only way to win is to develop a core asset that becomes a platform. As I wrote three years ago in the Harvard Business Review, that means providing that platform to others instead of holding it close to the vest.

So, who are likely to be the winners in converging worlds of communications and computing? I’m leaving out companies that primarily produce IT hardware (Cisco, Intel, Dell) or content (Disney, Vivendi, News Corp.).

  • Microsoft. An easy one. Windows is the premier example of a well-executed and rigorously pursued platform strategy.
  • Sony. I couldn’t even tell you what Sony’s primary product is today. Everything they do, someone else does… yet much of the time, they do it better.
  • Nokia. They make phones, right? Sure, and Microsoft makes keyboards and WiFi boxes. With the possible exception of NTT DoCoMo, Nokia is the only wireless company that understands the deep contingency of any network-oriented business, and is acting accordingly. One request: please buy Macromedia before Microsoft does.
  • IBM. It’s a good sign when, years after you perfected it, your major competitors are racing to embrace your model. It’s Switzerland with Japan’s technology and America’s army.
  • AT&T Comcast. Until fiber and wireless arrive, cable wins in broadband. These guys haven’t even started rolling out the good stuff — voice over IP, IP video programming, and home media networking. The big question is whether they make the platform play or take the easier, short-sighted course.
  • The jury is still out: Google, eBay, Amazon, Overture, Ticketmaster/Citysearch, Expedia, Verisign. The winners of the dotcom sweepstakes have earned the right to move on to the next round. Give them a couple years to bask in their glory. Then things get tougher.

I’ve left off several companies that I admire: Sun, AOL Time Warner, HP, Yahoo. I want to put them on the list, but I just can’t make the argument today. They may have many years of life — and good profits — left in them. On their current strategic path, though, they are all fighting the arc of history… and the fearsome competitors on my list.

I welcome your comments. Who should be on the list? Who shouldn’t? Just click on the "comments" link below this entry.