Photo: By lynxman on Flickr
Over the weekend I was reading an interesting article in Forbes Tech, “Why Your Company Must Become a Tech Company,” that pointed to a number of powerful brands and businesses ( Apple, Amazon, Facebook to name a few) are increasingly positioning themselves as tech companies. The piece notes that this positioning is important to the evolution of wealth and future company value. Looking back, wealth creation largely stems from control. During the Agrarian Age, for example, land owners (mostly czars and kings) were wealthy because they owned the land that produced food for the masses, which gave them power and earning potential far beyond regular folks like the blacksmith or shoemaker.
Wealth control during the Industrial Age was held by companies like Ford, General Electric and General Dynamics who were modernizing the process of building products in mass and required large capital investments in machinery, innovation and materials. Industrialists like Henry Ford, Andrew Carnegie and Cyrus McCormick became extremely wealthy during this time, more so than the land owners before them. This industrialism also led to the loss of value in the family farm (land owner), often requiring subsidies and in many cases the liquidation of the farms to larger corporations, where they turned the land into either home developments or gigantic food production facilities.
Finally we come upon wealth and control in the Information Age, where we currently reside and have been for the last 15 years or so since the dawn of the Internet. We are seeing the impact of control of information and how it is creating super valuable companies like Apple, Google and Facebook, that each control massive amounts of data on consumers; create products that leverage that information; and deliver services that are therefore irresistible. This control and wealth puts each of them in an extremely powerful position. These companies have made many people, like Gates, Ellison, Jobs, Brin &Page extremely wealthy. Each of their companies have market caps larger than the combined companies that led in the Industrial Age.
So you are probably thinking “Duh! That is obvious”. However, not many of us anticipated the power and wealth these companies would come to obtain. Who expected Apple to be more valuable than ExxonMobile? Or Google to be more valuable than GE? Or Facebook to be valued at $100 Billion? Or that a little company like Instagram could be bought for $1 Billion dollars just 3 years ago?
We are living in a connected society, where nearly everyone has an internet connected device on their person at all times, whether it is a PC, Phone, Tablet or TV. The services that are accessible on these devices largely require a login, enabling the services (and therefore their providers) to better understand your habits, determine where you are and likely what state of mind you are in. Just imagine a day in the life of a typical consumer:
- Waking up via the phone’s alarm clock
- Streaming the morning news on your iPad
- Listening to Pandora or Songza music during your commute
- Using your PC at the office
- Out to lunch checking in on Facebook or FourSquare
- Back to work checking your Gmail or quickly buying something from Gilt or Groupon at that flash sale
- Out for drinks and dinner, checking Yelp or CitySearch on your phone for the best place to meet up
- Back home (listening to music, playing Words With Friends)
- Checking out Hulu or Netflix on your TV
- Off to bed to read a book on your Kindle (or iPad app)
- Finally, a quick post on Twitter to let everyone know you are an insomniac
- Rinse and repeat…
All of this activity is making each of the power companies of our age much smarter about how to service the consumer better. It has also created the ‘big data’ challenge that we’ve been hearing about. When you start taking location and interaction data into account, the impact on storage, processing and analysis is mind numbing.
It’s not hard to grasp that many of these companies became so powerful simply by doing a better job at processing the data on their consumers. This ability gives companies a massive market advantage as well as the ability to create value for its target audience. We are seeing multiple companies tap into this enormous stream of data to build unique and interesting applications — from data visualisation and conversation discovery to photo-sharing. Not to mention the ad related services that provide marketers with insight, segmentation and action against this valuable information.
What do you think the next wealth creation phase will be? Will it be another 50 years or could it be just around the corner?
The views expressed here reflect the views of the author alone, and do not necessarily reflect the views of 24/7 Media, its affiliates, subsidiaries or its parent company, WPP plc.
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