Google spies digital future

02 June 2011

NEW YORK: Google believes it is among a small group of companies most likely to influence the technology sector's future.

Speaking at AllThingsD's D9 conference, Eric Schmidt, Google's executive chairman, suggested this "gang of four" - Google, Amazon, Apple and Facebook - currently dominate the category.

"If you look at the industry as a whole, there are four companies which are exploiting platform strategies, I think, very well," he said.

"Each of the companies ... has managed to use very modern concepts of computer science and very, very aggressive scaling approaches to get large fairly quickly in the area that they are focused on."

"We've never had four companies growing at the scale those are, in aggregate."

Schmidt claimed this exclusive club has in common characterise a major shift across the information technology category towards meeting customer needs.

"Each of [the companies] is a consumer brand that provides something that you can't do otherwise," Schmidt said.

"The extraordinary thing that has occurred in the last four or five years is that can see computer science now solving real consumer problems. What you're seeing is the death of IT as we know it."

One organisation absent from Schmidt's list was Microsoft, an operator he said is no longer leading the "consumer revolution", a mistake the "gang of four" must avoid.

"The question is fundamentally can each of the companies that I named maintain the ... product excellence that's required as the technology moves forward?"

While mergers and acquisitions have formed a key part of the tech industry's history, the financial strength of the new generation of firms means this cannot be considered an option.

"What's different now is that these are global companies with reach and economics that ten years ago or 20 years ago one company had," Schmidt said. "More likely is one begins to miss the mark."

Indeed, such is the inter-connected nature of the digital space that Google has just renewed a tie-up with Apple surrounding maps and search, despite being rivals in segments like mobile.

"We have a partnership with them, and we compete with them," Schmidt said.

Google's recently-unveiled "+1" tool, enabling web users to rank search results, is also seen by Schmidt as replicating the "Like" function created by Facebook.

"Facebook's done a number of things that I admire," Schmidt said. "We've tried very hard to partner with Facebook. Traditionally they've done deals with Microsoft."

But Schmidt expressed regret regarding not having leveraged this type of idea at an earlier stage.

"For years I said in the internet we missed something, which was identity," said Schmidt. "Identity is incredibly useful because in the online world you need to know who you are dealing with."

"I clearly knew that I had to do something, and I failed to do it … A ceo should take responsibility. I screwed up."

Google's latest initiatives include a new mobile payment service and daily deals platform, but efforts to build alliances with music studios around a cloud-based subscription model have failed to gain traction thus far.

Alongside concerns about piracy, the issue here illustrates a wider problem facing the media and entertainment sector - a shift from "scarcity" to "ubiquity".

"You have to go from a strategy where you ... charge a lot for a small number of copies to charging a little, in various other ways, for a large number of copies," said Schmidt.

"You also have the disintermediation ... that is now possible for people bypassing studies and going directly to digital rights."

Data sourced from AllThingsD/Wall Street Journal/BBC; additional content by Warc staff