Many people seem to think that the next big thing in tech will be artificial intelligence, and that Google is much better positioned to win than Apple. Other people think that VR/AR is the next big thing, and again, at least one of the companies that is currently announcing hot new VR/AR gadgets is going to win (and not Apple).
However, history has clearly shown that this discussion is without merit. In fact, when a next big thing does come along, the most unexpected company or a company that simply did not exist before, is the one that actually wins. Very rarely if ever, does the company that invests tons of money on the early stage research emerge as the victor.
Google did not exist yet when Yahoo, Lycos, Altavista and many others were first battling to become the telephone directory of the web. Apple was just a failed PC company that was finding success in music when Blackberry, Palm, Microsoft and Nokia were battling to bring smartphones to the masses. Again Apple was a company that was fighting a losing war against IBM when Steve Jobs visited Xerox PARC which had invested heavily in next generation computing research. Compaq did not exist when IBM introduced the IBM Personal Computer. Microsoft was not even in the OS market when IBM knocked on the door looking for an OS for the x86 CPU.
Time and time again, history has shown that when something really new comes along, the companies that seem to have the strongest position from both market and technical standpoints, are rarely the ones that win in the end. The companies that do win are those that we would not even think about, or the ones that didn’t exist. This is what Clayton Christensen’s Disruption Theory is all about.
Therefore from a historical standpoint, if AI or VR/AR succeeds in disrupting tech, it is actually very unlikely that Google, Microsoft of Facebook would win in the end. These companies are in the exact same positions regarding AI and VR/AR as were Blackberry and Palm prior to iPhone, or as were Yahoo, Lycos and others were prior to Google Search. They have invested heavily into research and also into developing the early market. However, they have not yet discovered the formula that would propel them into the mass market.
No matter how unlikely it may seem today, history is actually quite unequivocal on this. The large and established companies that pioneer an early market, do not reap the rewards when disruption happens and the market goes mainstream. The odds are against Google for winning in AI, and the odds are against Microsoft and Facebook for winning in AR/VR (assuming though that AI and AR/VR do end up being disruptive technologies and not simply sustaining).
Although it is almost impossible to predict what will happen, I will just end this post highlighting a couple scenarios under which the Google might find itself vulnerable for illustrative purposes only.
- What if privacy became a block for AI penetrating the mainstream? What if consumers started to feel uneasy with the suggestions that Google’s AI made. What if a data breach at a major internet advertising company made it clear to mainstream customers that far more information was being collected about them than they had ever imagined? What if the technology emerged that made machine learning possible without compromising privacy? Would Google invest in this technology, or would it try to improve the AI results with its current privacy compromising methods? It is likely that Google will invest in the latter, which might be a bet on the wrong horse.
- AI could actually become the biggest threat to Google’s business model. What would happen if somebody came along with a good enough AI service which made web search obsolete, and which was combined with a monetisation scheme that was far less profitable than Google’s search advertising? Would Google copy that scheme, or would it wait until it found something that was at least as lucrative as the search business that it was cannibalising? What if this service took off, while Google was still looking for ways to maintain profits?
Naofumi Kagami 
The subject is so vast and intertwined that I’m at a loss to voice anything but a series of disjointed questions.
1- Are those things really game changers, or just evolutions ? Is AI a brand new thing, or just an evolution of search and voice commands ? Is VR an entirely new medium, or just TV+console, better ? Is AR a revolution, or Pokemon and alerts on my glasses ? I’m sure in some verticals they are all are revolutions enabling brand new uses, but in the mainstream ? Is relaxing at home playing at being a fish that different from watching a documentary ? Visiting a virtual apartment, that different from a stack of photos ? Telling Google about an appointment, that different from keying it in ?
2- There is indeed often the issue of incumbents not getting all the way to the killer product, because of a focus on the larger picture, of the illusion of having time and/or a manifest destiny.. Still, I’m not sure we’re at that point yet. Google and Apple, and to a lesser degree MS, Sony and Amazon, have the huge advantage of controlling the endpoints and infrastructure. It would take a significantly better product/service to have us un-entangle from or duplicate our GApple devices and services. Plus what’s required for an upset to happen is probably not simply a better device/solution, but a better ecosystem (look at Windows: it took Mobile). That’s a complicated proposition.
3- Business models are not that many: expensive purchase, cheap and ad-funded, or cheap and content/recharges lock-in (Apple somehow manages to combine 2 of those, to the delight of their shareholders). The ad-funded mode is actually a lot less dubious than the lock-in one, which is the most open one since neither Apple nor Google target it very hard… maybe consumers could fall for it, say if Carriers pushed it ? That’s how Mobile still works in the US.
I agree that Security and Privacy (2 different things) might be game changers. Not sure how consumers, or even corps, will get to realize the value of those.
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I’ll give you my take on each of your questions below;
1. Game changers vs. evolutions:
Since I am talking about ultimate winners, we should focus on the magnitude of change that is sufficient to shake up the charts. We should look at the events that are significant enough to bring the dominant players down, and which allow newcomers to rise to the top.
Therefore, if you think that AI might be something that might bring Apple down from being the most prestigious brand in smartphones, then AI should be considered a potential game changer. Similarly, if you think that AR/VR might be something that will allow Microsoft to become a strong player in the the post-smartphone era, that should also be considered a potential game changer. Of course as I said, if AI and AR/VR really become game changers, then the winners will probably not be Google nor Microsoft.
Most pundits suggest that AI will be important enough to be a main feature of smartphones, and that since Apple is presumed to be weak in AI, this will bring down the Apple brand. This thinking assumes that AI is enough of a game changer.
2. How strong do you have to be to be immune to an upset?
Both IBM and Microsoft were dominant in their heyday and invested tons of money in the future. However, they did not emerge victorious from the Next Big Thing. I do not believe that the power and dominance of a large company has any direct correlation with the ability of it to survive the next wave. In fact, I think that the it might make them more vulnerable because they will be entrenched in their old business models.
On your last part about Security and Privacy, these are different but related in that a breach of security will potentially expose the private information that is stored in the cloud. Also, although consumers have not yet fully expressed their concern, the rise in cases where a large number of information was leaked, does suggest that this could quickly be a concern for the larger public. I wonder whether we are getting close to the last straw that breaks the camel’s back.
http://www.crn.com/slide-shows/security/300081491/the-10-biggest-data-breaches-of-2016-so-far.htm
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