From time to time I have tracked what I call the “Internet Big Five” – the key platform technology companies that are driving the Internet economy. Nearly three years ago I wrote the first of this series – The Internet Big Five. I identified Apple, Google, Microsoft, Amazon, and Facebook as the “big five,” and compared their relative strengths in financials, consumer reach, and technology strengths. Some of the metrics were admittedly subjective – ranking relative offerings in “engagement” and “data,” for example.
It seems about time to take another look at the Big Five, and to consider a changeup – the introduction of Alibaba as a public company in the US certainly merits consideration. But before I do that, let’s quickly take a look at how the companies have fared over three short years.
The first thing to observe is this: The top five Internet companies had a combined market cap of nearly one trillion dollars three years ago, a very large base to be sure. But in those three short years, the group managed to almost double their market cap – to $1.8 trillion. That’s impressive growth, and a testament to how central the markets believe these companies to be in our economy. Also, in terms of relative market cap, the Big Five have stayed pretty constant, with Facebook lapping Amazon, but not reaching the heights of Google, Microsoft, or Apple. It’s interesting to see that the market still values Microsoft above Google, something I imagine might change over the next three years.
Stock prices show a similar trajectory. You’d have almost doubled your money if you had invested in these five companies back in late 2011:
Clearly these companies are killing it at a very large scale. And Alibaba, at a market cap of nearly $300 billion, can now claim its place comfortably on the list above both Facebook and Amazon.
But what about strategic strengths? This is the area I find fascinating. Two years ago I wrote The Internet Big Five By Product Strength , and featured this chart:
Pulling back, it strikes me that the chart needs a refresh – something I hope to do during the more reflective down time of the coming holidays. I’d also like to add in Alibaba. But a quick scan of this two year-old chart shows some interesting developments.
In Operating Systems, Social, and Entertainment, each company’s position has pretty much remained constant, but Facebook’s Oculus purchase bears watching in all three fronts. In Productivity Software, Google’s position has strengthened, as has Apple, but I’d give the edge to Google, whose Apps suite has gained serious traction. In Advertising, Facebook is now very strong, Amazon has also strengthened, and it seems Apple has determined that advertising is a necessary evil not worth pushing very hard. “Tablet” doesn’t feel like a category to break out separately anymore – in the next rev, I’ll probably just call it “mobile devices.” In that category, Microsoft keeps trying but not gaining traction, Amazon flopped with Fire Phone but holds steady with Kindle and Fire tablets, and Facebook seems uncertain if it wants to play. Google and Apple remain the kings. Search as a category that bears scrutiny – what is “search” in a post mobile world, anyway? This question is fundamental to the next five or so years in computing, I’d warrant – expect more posts on that over the holidays. In Payment, Apple has strengthened, And in Voice, almost all the players have improved as well.
All of these companies have shifted over the past three years, some in unpredictable ways. With Page back at Google, the company has broadened its scope to include wearables, transportation, health, and energy. It’s become what I’d call the world’s first information-first conglomerate. Apple has kept its narrow hardware focus, expanding slowly into wearables (the watch) and shying from bets outside its clear wheelhouse. The market seems to be rewarding this focus. Facebook has made some big bets with drones and VR, and its advertising business is on a tear. Amazon hasn’t have any breakaway hits over the past three years, and I sense the company is uncertain how to proceed given the maturity of its core market.
In fact, one way to think about these behemoths is to identify and explore their core cash cows, and then map their strategies to diversify from that core. To wit:
Apple ———> Hardware
Microsoft —–> Desktop, Enterprise SW
Google ——–> Search Advertising
Amazon ——-> eCommerce
Faecbook —–> Social Advertising
Perhaps that’ll be the fodder for another post.