Thursday, October 25, 2018

The Lockheed Martins, the Boeings, the Raytheons, etc., should beware of the Amazons, the Googles, the Microsofts, etc. [RAWDUMP]

  • When you cannot sync your Google contacts [which you built over the years] with a phone, that phone starts to seem pretty useless even if its hardware is excellent. And an otherwise inferior phone that can sync your Google contacts starts to seem more practical and useful. Switching costs basically.
  • Sony might build excellent hardware, but what's stopping you from switching to another company for your next buy? Nothing. Sony doesn't know how to create switching costs for its customers [obviously this doesn't apply to Sony's PlayStation business]. Software and online services make you invest your time, energy and information in their services and create switching costs for you. The more you use a service, the more "invested" and locked you get into that service. Sony, Toshiba, Panasonic, Sharp, etc., focus on and create great hardware, but there's nothing in their products that makes it difficult for you to switch to another provider. And now that these online companies are dominant [people are totally locked into these services], that if you don't support all of these, even your great hardware won't sell.
  • No one should be fooled that the Amazons/Googles/Microsofts don't salivate uncontrollably when they look at the limitless revenues and profits of the military-industrial complex. Heretofore it was isolated from these companies. Electronics, software and Internet have made it possible for these companies to enter the defense/military/weapons business.
  • For now, these software companies are touching only the Cloud storage business. But they already own and are developing many technologies for consumers that have full-fledged military applications - image recognition, object recognition, video analysis, and a whole spectrum of other stuff. Step-by-step these technologies will be offered to the military.
  • What stops the Googles from finally starting to build software and associated Cloud-based services to fly and operate a fighter jet in a fully-unmanned fashion [aided in no small manner by the various image/face/object/video recognition technologies that they already possess]? None of the Northrop Grummans or the General Dynamicss have any of these technologies [nor can they quickly build high-quality ones even if they decide to invest the required amount of money]. It would be foolish to wager that BAE's software - any software - would be better than Facebook's or IBM's.
  • Dassault Group is a notable exception in the military-industrial complex. It has a full-fledged software subsidiary, which it can far more easily expand into a Internet+Cloud division, compared to pure-military players.
  • As the importance of software, Internet and Cloud grows in defense products, expect a lot of acquisitions of software/Internet/Cloud players by defense giants.
  • Smaller Cloud players such as IBM, Oracle, and others shouldn't lose sleep if the Pentagon awards its Cloud contracts to Amazon [or a mix of Amazon, Google and Microsoft]. Defense contractors will need deep software+Internet+Cloud capabilities and expertise in the coming future, and they'll be forced to turn to these "other" players to fulfill vast capability gaps. Lucrative business is right on the horizon from contractors, if not from the government.
  • An American Chevrolet or Ford car of the future which quickly and properly syncs with and works with all your Google, Amazon, Kindle, Alexa, Apple, iCloud, MSN, Microsoft, Gmail, Facebook, Twitter, Instagram, Yahoo Mail, Netflix, Hotmail, Outlook, and other accounts and services is better from the customer's standpoint than a German Audi or BMW which is weak in software and online services [even if the latter's car hardware is somewhat better]. Pay a lot to these American online giants or else people won't buy your cars. This is loss of control for Germans.
  • Think of what Android has done to the smartphone industry. Dozens of so-called "manufacturers" [basically assemblers] running after crumbs, and dictated to by Google. The real power is with Google, with YouTube, Play Store, Chrome, etc. All of these phonemakers are "expendable assets". Replaceable assets. German cars could become the same. The car of the future could be such that the real value would be in the operating system, applications, data and online services attached to it. Buy [or rent] a car from anyone, and login to your Google account to transform it into your personalized vehicle. Later logout and the car is ready to be used by another fella.