How Big Tech Became So Powerful

How Big Tech Became So Powerful

Apple, Google, Amazon, Facebook and Microsoft combined are worth about 9 trillion U.S Dollars, which is way more than the entire GDP of Japan. But how did these companies get so freaking big?

Let's have a quick look at how each one of these tech Titans grew to become a member of the industry's big five. Starting with Microsoft, the first of the companies to be formed.

Microsoft

Everyone knows Microsoft for Windows, but it was actually the earlier MS-DOS that really vaulted the company into international relevance, and here's why. Back in 1980, IBM needed an operating system for its new Intel based personal computer and got in touch with the company Digital Research to license an OS called CP/M. Which had been around for a while and was written specifically for Intel CPU's. But surprisingly, IBM and Digital Research couldn't work out a deal. So Big Blue asked Microsoft to create an OS instead.

Ironically, Microsoft didn't create one from scratch, but instead licensed an OS called 86-DOS, which was very similar to CP/M and tweaked it to create MS-DOS. And by the time IBM released its original PC in 1981, Microsoft had already written lots of software for MS-DOS.

The IBM PC took off in popularity quickly and as a result, so did Microsoft software. And as other computer companies created IBM compatibles, MS-DOS and later windows quickly spread to those PCs as well, setting the stage for Microsoft to dominate home computing to this day.

Apple

But there are plenty of Macs and MacBooks out there as well, So let's talk about Apple. Did you know, they very nearly went bankrupt as recently as 1996? Apple was selling overpriced products, and that hasn't changed. But back then, their overpriced products were underpowered and Apple had way too many of them, meaning consumers often didn't even know what they were buying.

Apple had to do something drastic to avoid going under. So Steve Jobs was brought back in 1997, and he made a crucial decision, to partner with Apple's old rival Microsoft.

 After Microsoft invested $150 million into Apple, Jobs simplified the product lineup and brought in Jony Ive to transform Apple into a design focused company.

The result was the original iMac in 1998, a simple attractive device that was extremely popular and kept Apple afloat.How Big Tech Became So Powerful Followed by the iPod in 2001, the iPod's practical design and clever marketing got the public to start thinking of Apple as a lifestyle brand, a perception that was cemented after the iPhone came out in 2007.

Amazon

Next up is Amazon, which started in 1994 as an online bookseller. Jeff Bezos chose books because they didn't cost much to buy wholesale. And he believed there was a demand for books people had a hard time finding in physical stores. Turns out, he did it.

As Amazon's online only model, let them sell a far wider selection of books than it's brick and mortar competitors. This initial success allowed Amazon to buy more warehouse space and sell products like DVDs and toys. Again, the low overhead meant Amazon could undercut traditional retailers, and before long Amazon had enough money to take chances on niceties like free shipping and one-click ordering.

With the latter giving Amazon insights into customer behavior, a relatively ahead of the curve idea at the time.

But perhaps the most consequential decision was to make Amazon Web Services available to the public, as it was originally a system aimed at making Amazon's internal IT more efficient. This happened in 2006, meaning Amazon got ahead of the game in terms of cloud computing. This earned Amazon so much money that the company kept extending its tentacles into everything from game streaming to movies, to home security.

Google

But you could possibly consider Google to be the OG cloud computing company. As its first product Google Search is all about asking a computer in some distant location to fetch you an answer. Although Google wasn't the first search engine when it launched in 1997, it did something really cool that other search engines weren't doing.

Instead of presenting results based on how many times your search string appears on a page. It looked at how many times other pages linked to a page in order to determine how relevant and important a search result was.

Although Google's algorithm today is much more complicated. This innovation made it much more accurate and popular than its rivals. This make Google an appealing platform to advertise on. And Google wisely kept its ads text-based for a cleaner look, meaning it could load results quickly, further boosting its popularity.

The money it made off of search, meant it could buy Android in 2005 and YouTube in 2006. And as important as smartphones and online video are now, the rest, as they say is history.

Facebook

But it was Facebook that perhaps had the fastest rise to becoming a global superpower as it was only founded in 2004. And even then it was a social network exclusively for Harvard students. After expanding to other colleges, investors saw the potential in the platform, which opened to the general public in 2006.

Because Facebook offered more features and less spam than its competitor, Myspace. It overtook the ladder in popularity in 2009. By this time, Facebook had already become a very valuable company through ad revenue, and it put that revenue to good use in 2012, when it bought Instagram for $1 billion, sound like a lot. Well, it actually spent another $19 billion on WhatsApp just two years later because the service already had around a half billion users and was growing at a rate of million new users per day.

Not only has WhatsApp since become extremely popular in huge swaths of the world, but it's allowed Facebook to expand the reach of its other services as well. So that's how the big five got so big. 

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