Picking Winners And Losers In The 'Uber Economy'

There have been three distinct trends within the tech sector since the 1990s that have left an indelible imprint. The first was the commodification of the PC, and that period was dominated by the likes of Gateway, Dell, Hewlett Packard and Microsoft. Then in the 2000s, search portals took over, as companies such as Yahoo and Google vaulted to prominence providing usefulness to the internet.

The third trend is ongoing and has been defined by the evolution of social media and smart devices. This stage combines the immediacy of mobile devices and the communication efficiency of social media. In this environment, Apple and Facebook not only reign supreme but seem to gather strength and get more innovative with each passing day.

As this latest shift has evolved, consumers have developed an appetite for having all their entertainment options in one place, from internet access, to video content, live sports, the ability to order food, shop or even hail a car, and the companies able bundle these services together have a distinct advantage in this emerging landscape. This helps explain much of the recent deal making, including Verizon’s recent bid to take over AOL, as well as AT&T’s attempt to hook up with DirecTV.

Even so, Verizon and AT&T – along with a laundry list of other companies that have engaged in acquisition activity – have work to do before they can lay claim to having an ecosystem of offerings that can deliver the 360-degree experience increasingly demanding consumers want. Many of these companies are just spinning in the wind looking for direction.


All of which leads us to the next big trend in tech: Service. Let’s call it the dawn of the ‘Uber’ economy – where based on the consumer’s desire to have everything in one place, more and more companies will begin to leverage existing technology to deliver faster, more reliable and easy-to-use services to the marketplace. It’s the one area that technology has ignored for so long, customer service and experience.

While this change of focus could result in fewer new devices hitting the market in coming years, it hardly means smart phones, tablets and now watches, will become an afterthought. Such devices will simply be a conduit through which the new service-dominated era will grow and thrive, rather than a focal point, as has been the case since the introduction of the iPhone. We’ve already seen how an emphasis on service has changed the retail space. Given Amazon’s scale and convenience, many small, local businesses can’t compete. As result, they have been forced to change their approach, focusing more on making the consumer experience easier and more enjoyable. It’s been the only way small business’ can survive and with consumer attitudes beginning to cool on large, big-box brands, many mom-and-pop local retailers have been able to carve out a nice niche.

There’s no question that a countless number of service-based companies will accomplish something similar in the tech world. But the competitive hurdles for the bigger players will be much steeper, in part because the companies best-positioned to take advantage of the next trend are the same ones that dominate the current one – Apple and Facebook. Apple’s devices and IOS operating system are tailored made to support access to information, video content, live sports viewing and a wide range of services. Facebook, meanwhile, has robust information delivery capabilities, while it also provides instant access to many serviced-based businesses. What’s more, every day it is streaming more and more content, having four billion daily video streams, according to its most recent earnings call.

In an attempt to make further inroads in this area, look for Facebook to seize upon the National Football League’s announcement earlier this year that it will distribute one game during the upcoming season on a yet-to-be-determined digital platform. Given that sports is one of the last pieces of content consumers view in real time – making it more attractive to advertisers – it would hardly be surprising to see Facebook make a huge run at winning streaming rights to the game. If such a move were successful, it would also blunt YouTube’s launch of a dedicated NFL channel later this year and possibly position Facebook as the exclusive digital video partner of the league should it migrate more of its content online in the future.

Ultimately, what makes Apple and Facebook most formidable is they never seem to run in place. They always adapt, constantly seeking new opportunities and venturing into high-growth areas in an effort to stay relevant – which is not something that can be said about all their potential challengers, including another tech giant, Google.

Indeed, while Google continues to enjoy a dominant search position and its digital ads rake in billions, the company’s future may not be as bright as it may seem on the surface. Android, the top operating system in the world for mobile, is losing ground to IOS with each passing quarter. Google Plus, its social media platform, is an afterthought. Even its subsidiary YouTube, an ingrained part of American culture, is falling behind the likes of Netflix and Hulu because it lacks original content and organization, a key attraction for an ever-growing number of ‘cord cutters.’

Knowing all this and considering that the shift away from the tradition browser experience is becoming more entrenched, it’s very possible Google could end up losing ground if the tech landscape becomes dominated by apps and services.

Another potential loser in this scenario is Yahoo. That’s no surprise. The company’s core offerings, like Yahoo Maps or the search engine, have been surpassed by others and ceased being relevant long ago, while many of its big investments, such as Tumblr, haven’t fared much better.
Perhaps the best way to view the future of the tech space is to think about Google Glass. Why did it fare so poorly with the public? Because as innovative as the technology was it failed in one key area – it didn’t make anyone’s life easier, so no one wanted it.

The future is best represented by Uber, making our lives easier through the sharing economy. The next big wave in technology will be the focus on services and making people’s lives easier. That’s the future, not more innovative devices, we have plenty!

By Ross Gerber
Ross Gerber is CEO and president of Santa Monica, Calif-based Gerber Kawasaki, an independent investment advisory and wealth management firm with approximately $350 million in assets under advisement. Gerber Kawasaki clients and employees may own positions in various companies mentioned in the article.

http://www.forbes.com/sites/greatspeculations/2015/05/26/picking-winners-and-losers-in-the-uber-economy/2/


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

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