Erik Schmidt got some attention at the All Things Digital conference naming new horsemen in the tech industry. The old horsemen were commonly listed as Microsoft, Intel, Cisco, Dell. Schmidt rather self congratulatorily named Google, Amazon, Facebook and Apple as the new four. Sure things are changing, but a completely new field of horsemen, really?
What is it with the horsemen anyway? One must wonder how we got onto the horsemen thing in tech, it seems like we would want to stay as far away as possible from an allegory rooted in conquest, war, famine and death. If you have some time to kill, check out the Wikipedia entry for the Four Horsemen of the Apocalypse, for a not so brief introduction to the idea of horsemen.
Is there a new reality in tech and if so is this it?
With the possible exception of Dell, which specialized in advanced supply chain management, the old four developed technology and sold it to individuals and businesses and those customers employed the technology to achieve their ends. The old horsemen are in fact still in business, and will be for some time. IBM may not have liked being left off of the old list, but they have done pretty well for themselves in the last decade with their stock up 50% in the last decade compared to losses for the others.
With the possible exception of Apple, the new four don’t sell technology at all. I suspect they are often thought of as technology companies because of their use of the Internet in their business models. The wholesale switch is notable, and mostly for Microsoft. Indeed, Microsoft has not been performing well on the stock market over the last decade with a drop of over 50% while all of the others are up and Apple is up a whole bunch.
These new horsemen are going to drive the delivery of a new kind of computing services. Even if this shift only turns out to be half as big as Mr. Schmidt predicts, it is going to have a profound impact on how technology is sold. This is commonly referred to today as the migration to the cloud, and is so overhyped that often we forget to stop and think about what that actually means.
First a review, technology resellers used to make money marking up hardware and shrink wrapped software. Then they made money adding integration and support services to the sale of hardware and software, and next they will make money delivering innovation. Here are some examples of this phenomenon:
- DropBox (www.dropbox.com) is a file system in the cloud. You can get to your files from any device. It is Amazon’s infrastructure on the back end, but no one has to know that.
- WordPress or SquareSpace (www.wordpress.com; www.squarespace.com ) are content management systems in the cloud. Anyone can publish a website or blog on these sites and all of the hosing is handled. Although one step removed, these companies rely on Google for indexing and discovery. Google is also seeding the next wave of these companies with Picasa and Google voice. These may seem like birds of a different feather, but before you say so think about searching images or audio files. Google’s partners make money by helping their clients manage content and show up online in the right places.
- Security is making sure content does not show up in the wrong places like when credit card information is stolen, or weapons system blueprints land in Peking. Facebook has designs on knowing who you are and where you are and (soon) what you buy and what you have access to. Making sure the keys to the kingdom, your keys that is, remain in your own control is important and will be big business. Emerging in this field are upstarts like Reputation.com and Klout.com, and established firms like Symantec.
Before you think that this blog post has gone off of the rails, let me state plainly that I am not proposing DropBox, WordPress, SquareSpace, Reputation.com, and Klout.com as services that partners can mark up and resell. I am proposing that these are the new channel partners and that they exist in a sympathetic ecosystem with the new horsemen.
These forward thinking channel partners do not think of themselves as channel partners. They think of themselves as the inventors of a new wave of services. Nevertheless, they are channel partners because they make money packaging new technology into services that add value to consumers and business.