Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

A bridge too far

Apple and Google are two of the companies I admire most. Apple is a medium sized player with superb margins on its products. Google’s products are superb which caused them to become market leader in several areas (e.g., its search engine, its browser). Recently, the flip side of market leadership has become clear as Google is now facing anti trust measures from the EU. This may create a lot of negative energy and may well affect its future innovative behaviour.

Apple does not face this situation yet. However, of my nearly 6,500 viewers only 25% uses Windows, 5% Android, 4% various and 66% uses Apple (Mac, iPad or iPhone). This could well be a meaningless statistic but I doubt it. Apple is slowly overtaking Windows on a global scale but it may take decades as Apple is perceived as expensive. Frankly it is indeed but I will never ever go back to Windows. My 2009 Apple MacBook is still faster than most modern Windows laptops. Yet, it’s slowish compared to my 2012 iMac.

Apple’s business model is clearly not in the “valley of death” which is typically associated with medium sized market players. The common business thought is that you need to be either a niche player or a market leader. Anything in between will have difficulty to survive. Even when you consider MicroSoft Windows and Apple iOS as a duopoly then it’s still remarkable that the much more expensive one is very slowly taking over the market dominance.

Market leadership brings power. Power typically brings abuse of power. The abuse of power removes a level playing field within industry. Abuse complaints from competitors are foremost seen as sulking by losers. Proof is hard to find without investigative powers. Usually, the winner takes it all.

Market dominance brings excessive scrutiny from regulators. Regulation limits entrepreneurial spirits, excessive regulation kills it. Future business models, based upon the strive for market dominance, may need to be rewritten due to what is happening today.

Companies were the first to go multinational (e.g, Dutch East India Company in 1602). It took nations centuries to follow (e.g., ECSC in 1951). The globalisation of industry is still hardly mirrored by a globalisation in politics, nations or regulation. The head start of industry is only slowly changing. A pivotal point was the 2007 anti trust case of the EU against Microsoft Corporation.

The USA has been evolving towards a hereditary meritocracy which could explain some fundamental flaws in its system. “MY BIG fear,” says Paul Ryan, an influential Republican congressman from Wisconsin, is that America is losing sight of the notion that “the condition of your birth does not determine the outcome of your life.” The emerging Bush-Clinton dynasties are reinforcing this trend towards a hereditary meritocracy. Hence, the EU will probably be leading when it comes to multinational regulation.

The strive for (market) dominance is human. The famous “a bridge too far” (Cornelius Ryan, 1974) must seem as a remote chance that can thus be ignored in strategic considerations. Yet, any “bridge too far” triggers strong counter mechanisms.

For centuries, China has been expanding its borders but so far it has never crossed the “bridge too far” despite its 1951 annexation of Tibet. Both Napoleon and Hitler learned the hard way that they were crossing this bridge. Russia is coming awfully close to its own version of “a bridge too far”.

When attempting to manage risk, big is almost never beautiful. (Source)


Framework Posts


Submit a Comment

Your email address will not be published. Required fields are marked *

Pin It on Pinterest