Satya Nadella - CEO, Microsoft
As Malcolm Turnbull will no doubt attest following seven days of intense ‘Census-Gate’ scrutiny, a week is a long time in politics.
Likewise in the world of technology, when markets can flip overnight as new trends take over old and dominant players.
Yet bucking the trend is Microsoft, a longstanding figure at the top of the tech pile, illustrated this week through the vendor’s market cap heading to highs not seen since 1999.
In reaching a market valuation of $US450 billion, a nearly 260 percent surge in share price during the past seven years has catapulted Redmond’s market cap to the same all-time highs printed just before the dot-com bubble burst 17 years ago.
With a combined market capitalisation of $US2.3 trillion, Microsoft is joined at the top of the league table by Amazon, Apple, Google and Facebook, who collectively dominate many areas of the tech industry to boot.
Five years ago, in 2011, only Apple and Microsoft appeared in the “top 10” list, along with IBM (which today sits at position number 32).
“If a company’s market capitalisation is an indicator of its future prospects, then we must give some consideration as to what we want these companies to become,” Ovum research analyst, Richard Edwards, observed.
As Edwards puts it, in a variety of guises, and through a range of offerings, Amazon, Apple, Google, Facebook, and Microsoft influence business strategies, market opportunities, and human expectations.
“The global presence and product initiatives of these companies exert huge forces on businesses and institutions, multinational companies, and much of the world’s population,” he explained.
“So we have to ask ourselves the question: What do we want these companies to become?
“The answer to this question is likely to shape the decade ahead and impact everything these companies touch, including the world of work and everything we connect to it.”
Do empires last forever?
As the old saying goes however, empires don’t last forever, with the market both locally and globally witnessing the rise and fall of many tech sector companies over the years.
Not to mention along with a few “unicorns”, Edwards added - tech firms that have yet to come to the stock market but are valued at $US1 billion-plus - thrown in for good measure.
“But the new tech giants - Amazon, Google, and Facebook - have continued to grow at an impressive rate, challenging both Apple and Microsoft,” Edwards added.
For Edwards, Apple and Microsoft can best be described as a “pair of 40-year-old companies” that have both managed to reinvent themselves at least a couple of times already during their relatively short existence at their own game.
“Cloud services, custom silicon, and artificial intelligence are the key technologies that will shape the future growth of these five companies over the next 10 years, and although the application of these technologies is likely to come in many shapes and forms, there are sure to be similarities too,” he predicted.
While cloud services are operated from strategically positioned data centres, Edwards said much of what makes the cloud actually “work” is located under the sea in the form of cables that are capable of transmitting terabits of data per second.
“Undoubtedly, the location and routing of this cloud infrastructure will affect the lives of millions of people in the years ahead, just as having access to an electrical socket and telephone line did in the past,” he explained.
As a result, custom silicon, in the form of chips designed for specific uses, such as machine learning, holographic computing, and specialised computing devices, also features in the strategies of these companies.
“But it is artificial intelligence, powered by cloud-scale computing and custom silicon chips, that arguably presents the greatest opportunities,” he advised.
Therefore, as the market moves into the next era of technological innovation, the industry must ask another important question: What do we want these companies to do with that intelligence?
