Tech companies are trying to become self-sufficient. No longer will they rely on others. They'll build their own hardware, write their own software, and sell their own products. The question is, who can be successful at it? And who will lose out?
Welcome to the new world of tech, where control over entire operations is valued above all else.
Living on their own
As for Google, the company recently came out with its own tablet, the Nexus 7, to complement its Samsung-made Galaxy Nexus smartphone. In addition, the company has its own Chrome operating system, Google Docs word-processing software, and Chromebook laptops.
There are also constant rumors of new phones from Facebook and Amazon.com. And for Facebook, depending less on revenue from Zynga
Protective trade policy
Like a closed-border trade policy between nations, as every tech company begins to enter each other's markets with everyone offering a tablet, smartphone, OS, Web browser, word processor, app store, photo-sharing platform, streaming media service, branded coffee pod, energy drink, and digital shoe organizer, they become more competitive -- and less likely to collaborate. It's difficult to shake hands when each company has a dagger at another's throat.
And rightfully so. Why would Apple want to count on Google to keep providing its map service in a reasonable agreement? Why would Microsoft want to depend on hardware manufacturers that failed to keep up with Apple's stranglehold on consumer taste?
What does this mean for the future of tech-related companies?
The biggest, smallest, and nimblest win
If you have the resources to go ahead with big projects, like new mapping software alone, then you're in a good position for a future with fewer licensing agreements. And if you're small or struggling enough that you don't present a large threat to others, as with Nokia
However, if you can't spend the resources or don't have the talent to become self-sufficient, you could be trounced if other companies can highly integrate their operations as well as Apple does. For example, Hewlett-Packard's attempt at its own mobile OS and tablet failed spectacularly.And if you offer no special expertise that can't be easily emulated, you're looking at a rough road ahead.
There is hope for companies such as Dell and HP, however, if they remain nimble. Moving to services over hardware is the right move when they can't keep up with design, and their expertise is in operations over innovation. And if you believe in Dell's ability to transform, it especially seems fairly priced today.
Fully streamlined companies
The tech industry is entering a new phase where dependence on others is becoming more dangerous. In the earlier tech days, extreme growth allowed companies to work together and grab slices of a growing pie. Now, growth is slowing as tech markets mature. To grow, companies must take competitors' market share, which places everyone at odds.
Ask yourself if your tech investments could be self-sustainable if all of their partners left.
To find out more on the future prospects of these specific companies, check out our new premium reports that cover reasons to buy and sell Apple, Microsoft, Facebook, Amazon, and Zynga. Each premium report comes with a year of free updates. Get started now!
Fool contributor Dan Newman welcomes your thoughts. He does not hold shares of any of the above companies. Follow him on Twitter,@TMFHelloNewman.
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