Something strange is happening to America’s titans of technology. At the precise moment when the economy is supposedly gaining strength, and at the very time when technology platforms are evolving in increasingly productive ways, many dominant firms are experiencing dramatic slow-downs (or even outright declines) in sales revenue.
Just last week, for instance, Amazon slashed its sales projections for the upcoming holiday season. Apple revealed that it was losing iTunes music volume to online streaming services. And IBM abandoned its $20 earnings per share “road map” target for 2015, while an analyst complained, “too much of its revenue comes from old-school business lines, and not from potential growth areas.”
But why are such admired firms suddenly struggling to attract customers? After all, IBM rescued itself from collapse by shifting from a hardware focus to a customer focus in the early 1990s. Amazon virtually invented the online sales industry in the late 1990s. And Apple’s iTunes, along with the iPod, revolutionized the music industry in the early 2000s.
All three firms, though, now appear to be struggling to maintain their competitive market positions. Amazon’s initial venture into mobile phones, for instance, flopped earlier this year. Apple is pinning its hopes on integrating its recently acquired Beats music streaming service with its own iTunes service. And IBM industry analysts are now referring to the firm’s predicament with expressions like “a sad national story.”
At first glance, these firms appear to be focused on different technology sectors. Nevertheless, they do seem to share a common problem. Namely, their customers are underwhelmed by their offerings, and they are taking their sales revenue elsewhere.
Unless these firms can rediscover the internal development capabilities that first drove them to prosperity, their days as industry titans may indeed be numbered.