Benedict Evan’s latest post on Microsoft, IBM, and anti-trust is excellent. In it he argues (reminds us) that market power during one generation of tech, doesn’t necessarily guarantee market power in the next. And that anti-trust intervention isn’t actually responsible for Microsoft missing out on, among other things, mobile. The rules of engagement simply changed. The PC is now a smartphone accessory.

Here is an excerpt:

The tech industry loves to talk about ‘moats’ around a business - some mechanic of the product or market that forms a fundamental structural barrier to competition, so that just having a better product isn‘t enough to break in. But there are several ways that a moat can stop working. Sometimes the King orders you to fill in the moat and knock down the walls. This is the deus ex machina of state intervention - of anti-trust investigations and trials. But sometimes the river changes course, or the harbour silts up, or someone opens a new pass over the mountains, or the trade routes move, and the castle is still there and still impregnable but slowly stops being important. This is what happened to IBM and Microsoft. The competition isn’t another mainframe company or another PC operating system - it’s something that solves the same underlying user needs in very different ways, or creates new ones that matter more. The web didn’t bridge Microsoft’s moat - it went around, and made it irrelevant. Of course, this isn’t limited to tech - railway and ocean liner companies didn’t make the jump into airlines either. But those companies had a run of a century - IBM and Microsoft each only got 20 years.

For the full post, click here.

Benedict Evan's most recent blog post, called "Amazon as experiment," draws some interesting parallels between what Amazon is doing today (and experimenting with) and the beginning of mass retail, namely the invention of the department store. He also talks about some of the shortcomings of Amazon's model, which isn't at all focused on (or good at) things such as "pleasure" and product discovery. Here are a couple of excerpts:

On the other hand, it’s interesting that Amazon seems to be doing as much experimentation as possible around the logistics model—from stores to drones to warehouse robots of every kind—but much less around the buying experience, other than small-scale tests of the Four-Star stores. After all, historically, department stores were about pleasure as much as they were about convenience or price. They changed what it meant to "go shopping" and helped turn retail into a leisure activity.

This has always been the gap in the Amazon model. It’s ever more efficient at finding what you already know you want and shipping it to you, but bad at suggesting things you don’t already know about, and terrible whenever a product needs something specific—just try finding children’s shoes by size.

This is probably inherent in the model. For Amazon to scale indefinitely to unlimited kinds of products, it needs to have more or less the same commodity logistics model for all of them. That’s the line it’s never been willing to cross. Amazon doesn’t do "unscalable." And yet, while we now know there is nothing that people won’t happily buy online, not everything will fit that commodity model. So maybe that’s the real test of Amazon’s pride: can it work out how to let us shop, rather than just buy?

Benedict Evan’s latest post on Microsoft, IBM, and anti-trust is excellent. In it he argues (reminds us) that market power during one generation of tech, doesn’t necessarily guarantee market power in the next. And that anti-trust intervention isn’t actually responsible for Microsoft missing out on, among other things, mobile. The rules of engagement simply changed. The PC is now a smartphone accessory.

Here is an excerpt:

The tech industry loves to talk about ‘moats’ around a business - some mechanic of the product or market that forms a fundamental structural barrier to competition, so that just having a better product isn‘t enough to break in. But there are several ways that a moat can stop working. Sometimes the King orders you to fill in the moat and knock down the walls. This is the deus ex machina of state intervention - of anti-trust investigations and trials. But sometimes the river changes course, or the harbour silts up, or someone opens a new pass over the mountains, or the trade routes move, and the castle is still there and still impregnable but slowly stops being important. This is what happened to IBM and Microsoft. The competition isn’t another mainframe company or another PC operating system - it’s something that solves the same underlying user needs in very different ways, or creates new ones that matter more. The web didn’t bridge Microsoft’s moat - it went around, and made it irrelevant. Of course, this isn’t limited to tech - railway and ocean liner companies didn’t make the jump into airlines either. But those companies had a run of a century - IBM and Microsoft each only got 20 years.

For the full post, click here.

Benedict Evan's most recent blog post, called "Amazon as experiment," draws some interesting parallels between what Amazon is doing today (and experimenting with) and the beginning of mass retail, namely the invention of the department store. He also talks about some of the shortcomings of Amazon's model, which isn't at all focused on (or good at) things such as "pleasure" and product discovery. Here are a couple of excerpts:

On the other hand, it’s interesting that Amazon seems to be doing as much experimentation as possible around the logistics model—from stores to drones to warehouse robots of every kind—but much less around the buying experience, other than small-scale tests of the Four-Star stores. After all, historically, department stores were about pleasure as much as they were about convenience or price. They changed what it meant to "go shopping" and helped turn retail into a leisure activity.

This has always been the gap in the Amazon model. It’s ever more efficient at finding what you already know you want and shipping it to you, but bad at suggesting things you don’t already know about, and terrible whenever a product needs something specific—just try finding children’s shoes by size.

This is probably inherent in the model. For Amazon to scale indefinitely to unlimited kinds of products, it needs to have more or less the same commodity logistics model for all of them. That’s the line it’s never been willing to cross. Amazon doesn’t do "unscalable." And yet, while we now know there is nothing that people won’t happily buy online, not everything will fit that commodity model. So maybe that’s the real test of Amazon’s pride: can it work out how to let us shop, rather than just buy?