Saturday, February 02, 2008

Changing perception about some of the big Technology firms

Technology business has been the target of criticism of monopoly by one or the other company for many years. Microsoft has been the biggest victim (in terms of cost it has to pay to lawyers and fine to anti competition commission in Europe) of this accusation. To a certain extent that is correct and the in recent years Microsoft has gone out of any big innovation (they say that they need to recover cost on innovation and need money to fund future innovation for the benefit of the customers). Well, I don’t want to discuss about Microsoft here, it can be find my other newspapers and magazines. I want to talk about the two most admired technologies companies, Google and Apple.
Google is one of the most admired companies of recent time. Every computer science engineer and MBAs want to work for Google. It worth the praise for what it had done by revolutionising the internet. Google search has remained ad free on the front page and that is one of the biggest advantages for this. But in recent years, it has been accused of its monopoly in the internet search and internet advertising. I see there is a problem. Some of the biggest purchasers of online ad space with Google are blaming it for charging too much because of virtual monopoly in the online advertising. And these same customers are supporting a deal of Microsoft and Yahoo. (Microsoft Makes Grab for Yahoo).
Google needs to understand who the strategic customers are for this business. I understand that the internet users are the end users for the Google ads but the strategic customers are the advertisers who pay to Google for purchasing online ad space (based on keyword search). Though the ultimate responsibility of Google is to serve the end customers but if the strategic customers are not happy and move to another rival for any reason (high price, poor personal attention etc) then Google will not be able to run its business model.
Similarly Apple is also being blamed by the entertainment suppliers (Disney, Sony etc) of its monopoly in online music world. They don’t like the similar price scheme for all the songs and movies. They want to sell the new album songs for higher price than the 99c but Apple is not listening to them. These same music companies who are supplying music to Apple are not pushing and supporting Amazon for the online same of music on Amazon. They know that Amazon has very large customer base and it is willing to listen and negotiate the terms for the differential cost/price structure for the songs.
The point I want to make is that in technology business if the customers are listened properly they start finding another business to serve them. It is true for any business but it matter a lot in the technology business because the amount be talk about is multi billion dollars. Hundreds of billions of dollars will be lost in revenue for these companies if they fail to respond the changing demands of the customers.

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