Net results: Life is getting shorter for tech giants

As Blackberry found out, it can be hard to shift direction when technology changes

Turn on: Gone are the days when Blackberries were so addictive they were nicknamed “Crackberries”. Photograph: Anthony Devlin/PA Wire

Turn on: Gone are the days when Blackberries were so addictive they were nicknamed “Crackberries”. Photograph: Anthony Devlin/PA Wire

 

At the end of last month, Blackberry announced it would no longer design or make its own devices, instead contracting to third parties and focusing on distant, developing markets like Indonesia.

A generation of mobile device users is passing into young adulthood now and will shrug and perhaps even ask, “Who?” When is the last time you saw anyone – knew anyone – with a Blackberry?

Oh, I know there were still small pockets of resistance out there. It was only in the summer of 2011 that Blackberries were denounced by authorities as the messaging device of rioters in the UK. But long gone are the days when the devices were so addictive they were referred to as “Crackberries”.

Plenty of column inches have already been expended memorialising how groundbreaking Blackberries were. I can remember being given a trial device when they first came to the Irish market and it is hard today to appreciate how extraordinary it was to be able to get emails, easily, on the move, via a mobile signal. Prior to the Blackberry, you needed a computer and an internet connection.

Blackberry totally disrupted the mobile market by realising that many people, especially the corporate world, would value email anywhere – and a mini-qwerty keyboard for writing them – far more than a tiny mobile internet browser or slowly scrolling through letters on a keypad to text.

Quality of life

Now, email access by mobile phone is not just ubiquitous but infuriating, a direct challenge to having any quality of life when on holiday, or even just outside office hours. Most of us just can’t say no to the inbox (or texts, or our messaging app of choice).

I thought about Blackberry the other day while I was sitting on an Aircoach that drove past the old Swiftcall building, now a boarded-up eyesore covered in graffiti on the south side of Dublin. I know: “Who?”

Swiftcall was a fast-rising but shortlived company that was one of the first into the Irish market with callcards. You would load them with pay-as-you-go value and then could use them to make discount long-distance calls. They were a big disrupter of the landline and phonebox market in a time of initial market flux, when few had a mobile and calls were costly.

The common thread here is how fast a technology market, niche or otherwise, can change for a disrupter company, and how difficult it can be to change direction (or “pivot”, as the favourite buzzword goes) as your initial disruption is itself disrupted by further technological change. The tech landscape of the past three decades is littered with the corporate corpses – and a few other living zombies of the Blackberry ilk – of those who could not.

There are those that confound expectations now and then. Consider Apple, initially a red-hot start-up and disrupter with its easy-to-use computers, soon the exemplar zombie of the late 1980s and much of the 1990s. Apple “pivoted” – thanks to the return of older and wiser co-founder Steve Jobs in 1997 – towards sleek computers and must-have devices such as the iPod, iPhone and iPad to become vastly successful.

Dead companies

To be fair, though, the corporate landscape generally is littered with dead companies, collapsing at a much faster rate than ever before thanks to, yes, the disruption across all sectors created by technological innovation.

Consider this shift in longevity. Prof Richard Foster of Yale University has produced a study that indicates companies in the S&P 500 in 1958 had an average lifespan of 61 years, shrinking to about 18 years today, which, as some analysts have pointed out, would suggest that in another decade, 75 per cent of the S&P 500 will constitute companies that don’t exist now.

One could argue that some of the dead and gone companies actually are not really dead; they just went to another place – namely, an acquiring company. We certainly live in an age of consolidation across every business sector, and this is very much true of the technology industry.

Just look at Oracle, which has swallowed dozens upon dozens of companies to become the behemoth it is – some 60 just since 2008. According to Fortune, its global business unit now comprises seven divisions made up of 33 acquisitions, companies whose products and services very much live on under the Oracle banner.

One big consolidation

Go back further and technology’s history is really one big consolidation of once-giant industry players into a few huge companies. Gone are most of the names that seemed unassailable in the 1950s, 1960s, 1970s, 1980s and 1990s, many now buried in the acquisition stream of mammoths like IBM (a real outlier tech company that has hung in there for over 100 years, including a 60-year history in Ireland).

KPMG has predicted that technology will be the most active business sector for acquisitions this year. Good news, perhaps, for young companies seeking an exit, but a signal that corporate lifespans in the sector will only continue to contract.

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