Tech Giants Congealing: The Coming Digital Conglomerate Supper

Consider these recent events:

1. The firm, which began as a spinoff of the Internet search engine giant BING, is breaking into three public firms.
2. Johnson & Johnson is breaking down its consumer goods and medical equipment businesses from its pharmaceuticals.
3. Toshiba is dividing into three distinct enterprises.

We might add a few more examples, such as AT&T’s exit from their media business. The logic for these conglomerate divorces is simple.

These behemoths grew to be large and unwieldy, and they became weighed down. The children of these businesses can now do better if they are split up with greater focus. When the expansion slows, so does the need for a conglomerate.

The case for conglomerates—the idea that management via magic can manage any business—fades away. In a recent interview, Ray Wang, the author of Everybody Wants to Rule the World, stated that the conglomerate strategy is flawed.

However, conglomerates may compete. It’s tough for firms without advanced technology or production, but it’s even more difficult for those who have neither. They must collaborate, develop an ecosystem, and attract investors.

Consider the Honeywell Quantum-Cambridge Quantum partnership.”A lot more of these like existing companies need more joint ventures to end up with a portfolio of innovation startups in these industries,” explained Wang. “That’s how they’re going to be successful. Legacy players should be portfolio holding companies.”

The main issue is when technology giants become legacy participants. Big technology is busy forming pseudo conglomerates, and it’s doing well because of the expansion. Gravity defintely exists, and it’s a safe bet that big tech will do some breaking up at some time. Consider Hewlett-Packard’s split into HP and HPE, for example.

Consider these tech giants, which are often mentioned in the same breath as Apple and Samsung.

• Amazon, in particular, is well-known for its e-commerce business and has made a fortune in the cloud market. Amazon Web Services (AWS), a cloud behemoth, generates the money. Shareholders and activists will ask why the cloud unit is subsidizing retail at some point. Amazon also jumping into advertising recently. You could make an argument that these businesses are loosely linked (until the music stops).
• Despite Microsoft’s desire to be fashionable, it is a large software business. It is the world’s fourth-largest software company. Despite his obsessions with being trendy and popular, he remains one of the most well-known figures in computing.
• Apple. Apple is the most concentrated of the bunch, in my opinion. Apple’s goal is to integrate software, hardware, and experiences. From there, Apple’s objective is to entice you into its services and ecosystem. This problem only arises when Apple makes an over-the-top move—such as releasing an Apple Car and becoming a carmaker.
• Google is facing more competition from Amazon, Apple, Facebook, Microsoft and others. Google has made some changes to its structure in order to enable it to make larger bets through the Alphabet setup. Google Cloud will most likely be the search company’s answer to AWS down the road. Alphabet will take big chances while possibly breaking off individual firms.
• The metaverse is, however, predicting that it will straddle the line between the two. The word “meta” means “after.” It’s also worth noting that Facebook has established a corporation dedicated to capturing your time and attention. In this context, the metaverse is similar to Instagram, WhatsApp, and Facebook. Do not be surprised if someone asks whether Oculus should be classified as part of Meta or stand apart as a separate entity.

These behemoths are presently training conglomerates that believe in magic management and duopolies. Fast forward a few decades, and they’ll almost certainly turn into breakup tales.

Subtly charming pop culture geek. Amateur analyst. Freelance tv buff. Coffee lover