Internet and Technology Industries Maturing
Internet and Technology Industries Maturing

News Analysis

For the better part of the last decade, society was inundated with news releases about the latest and greatest online services and apps.

Whether the news was from the giants—Apple, Google, Amazon, Microsoft—or their smaller competitors—Facebook, LinkedIn, Twitter—or even fast-expanding startups such as Dropbox and Pinterest, it seems that not a week went by without some major release, acquisition, or news event surrounding one of these companies.

All that frenzy around product announcements meant two things—a great funding environment for startups, and an ecosystem of news and blog sites devoted to technology.

But the last few months have been incredibly quiet.

No, this isn’t to say that there is no news coming out of the frenetic tech sector. The last big news on that front was the mid-February—Facebook acquisition of WhatsApp for a whopping $19 billion. That news got business analysts writing about why that acquisition made (or did not make) business sense, and the tech sector went into a passionate and detailed discussion about how WhatsApp used an obscure programming language called Erlang and whether the acquisition marked Erlang’s rise to popularity.

But outside of the WhatsApp deal, the tech industry has been relatively quiet so far in 2014.

Why would that be? My hypothesis is that the hyper-growth of the Internet industry of the past has turned into a steady state of maturity, and the incumbents and winners of the Internet war have completed most of their land grab for online services, along with the bounty of advertising and services revenues that come with such successes.

Consider online advertising. True, there are emerging competitors that are actually carving out a larger chunk of the pie for themselves (AppNexus and few others come to mind), but Google is still the $60-billion-a-year elephant in the room. And yes, Microsoft is trying to compete with its Bing product, but Google has most to fear from Facebook on this front, with the social networking giant already recording $10 billion a year in revenues, mostly from online advertising.

And then there are the operating systems. Microsoft was once the champion in this space—a much-reviled champion in the tech sector, but a dominant one nonetheless. And even though Microsoft still holds majority of the desktop and laptop market, Google and Apple have come to dominate the mobile and tablet marketplace with their Android and iOS operating systems, making this a multi-horse race.

The same can be said for other sectors. Amazon dominates the e-commerce sphere, Dropbox and Box are two names to watch in online storage, and Airbnb is giving hotel-booking platforms a run for their money. But the key point is, most of the incumbent and upcoming players are already established.

So does this mean that no more disruptions are expected in this market? Certainly not—the big players are flush with cash and, as Facebook demonstrated earlier this year, are willing to spend in the billions to acquire companies that have traction and are a good fit.

But with most of the industry served by mature players, it might be that we are entering a period of maturity with the tech and online services industry. While we may continue to see exciting news in the tech sector, they may not be as fast and furious as we’ve witnessed in the past.

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