Technology’s Future: Bigger Firms and Smaller Products

What is new in the world of technology? Well, the big are growing bigger.

And the small? Just the opposite: they’re growing smaller.

Last week, for instance, Microsoft — the personal computer software giant that is one of America’s few surviving AAA rated non-financial firms — swallowed up Skype for a mammoth price tag of $8.5 billion. Meanwhile, industry titans Facebook and Google continued to escalate their battle in social media, with the embarrassing revelation that Facebook had hired a public relations firm to anonymously smear Google’s privacy policies.

At the same time, in the field of product development, a British foundation called Raspberry Pi in the Cambridge University cluster of technology firms announced the creation of a miniscule (and yet fully functional) $25 computer. Not to be outdone, Google unveiled its trim Chrome Book, designed to provide college students with a web based experience at a modest cost of $20 per month.

Indeed, it does appear that the growing concentration of market power is coinciding with the continuing miniaturization of consumer products. And, interestingly, this pair of trends is echoing throughout other global technology industries as well.

A Group of Goliaths

Every decade seems to produce an American information technology firm that appears to come out of nowhere with an astounding new technology that helps it leap into the ranks of the world’s largest corporations. During the 1980s, for instance, Microsoft and its desktop computer operating system took the world by storm. The 1990s, likewise, gave birth to Google and its internet search engine. And the 2000s witnessed the emergence of Facebook and its milieu of social media.

Like their predecessor Apple in the 1980s, these firms aren’t fading away in the face of emerging competition. Instead, they are expanding and encroaching onto each other’s natural lines of business. And as they do so, they are increasingly challenging each other for market supremacy.

Microsoft’s acquisition of Skype, for instance, has been characterized as a direct response to Google’s Voice and Talk web-based telephone services. Of course, Google initially launched these services as a direct challenge to the web-based phone offerings of cable television giants like Comcast and Time Warner. And those cable firms, in turn, had previously launched their online telephone services to counter the internet service plans of traditional phone companies like Verizon and AT&T.

What happens when huge and aggressive communication technology firms launch assaults on each other? Things tend to get ugly, as was the case last week when blogger Daniel Lyons, best known for his satirical Fake Steve Jobs web site, broke a news story about a recent Facebook initiative to smear Google’s reputation.

Apparently, Facebook hired the public relations firm Burson-Marsteller to plant anonymous stories in the public media about Google’s privacy policies. Burson-Marsteller’s failure to disclose that Facebook was sponsoring the campaign constituted a fundamental breach of professional ethics, one that was roundly condemned by industry experts. Burson-Marsteller eventually acknowledged that they failed to follow standard operating procedure, and Facebook agreed that it failed to present its case in a serious and transparent way.

A Pair of Tiny Products

Ironically, these industry titans are not focusing on creating larger products; instead, they’re intent on producing smaller ones. Google’s Chrome Book, for instance, promises to provide students with a streamlined notebook experience, one that delivers word processing and spreadsheet functionality via Google’s Docs program — itself a stripped-down version of Microsoft’s Office suite of programs.

On an even smaller scale, video game developer David Braben is collaborating with colleagues in the British technology region anchored by Cambridge University to create the world’s smallest computer. Their Raspberry Pi is a flash drive sized device, designed to connect to a keyboard on one end and a video monitor on the other, with the computer itself priced to sell at an incredibly low price of $25.

Is Google, with its corporate hub in America’s Silicon Valley region anchored by Stanford University, about to challenge Raspberry Pi and its industry partners in the Cambridge University Cluster of technology firms? Although the Chrome Book and the Raspberry Pi are not yet battling head-to-head, their common focus on providing highly mobile hardware and software to the education sector may lead to an eventual market clash.

This phenomenon of ever-larger technology firms developing ever-smaller products exists outside of the communication technology sector as well. Global automobile companies such as Mercedes Benz and Tata are designing ever smaller automobiles such as the Smart and the Nano. And power plant manufacturers from General Electric to Toshiba continue to develop miniature, and even portable, nuclear reactors.

Will communication technology firms like Google eventually challenge energy equipment manufacturers like Toshiba and GE? In a sense, they are already doing so; Google is heavily investing in wind farms and other producers of renewable energy. Given these trends, perhaps we can look forward to future showdowns like Google – GE or Google- Exxon, clashes that may make Google – Microsoft look like a minor skirmish!