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All companies are "tech-dependent companies." This is an intellectual dead end. Traditionally, the business world has qualified tech companies as those which p
by pembrook 6y ago
All companies are "tech-dependent companies." This is an intellectual dead end.
Traditionally, the business world has qualified tech companies as those which primarily function via zero marginal cost distribution provided by software and the internet.
If Airbnb and Ebay aren't tech companies, then neither are Google and Facebook. All four are marketplaces (Google and Facebook are advertising marketplaces at their core).
Saas and marketplaces are the most solidly "tech" businesses that exist by the textbook definition. They fully take advantage of zero marginal cost distribution.
- shajznnckfke 6y agoI don’t think that definition is right. Nobody will argue that Apple isn’t a tech company, and the iPhone isn’t zero-marginal-cost.
- pembrook 6y agoThis isn't a black or white thing. It's a spectrum. On one end you have pure play tech like Stripe or Facebook (100% zero marginal cost). On the other end you have industrial firms who produce mostly undifferentiated commodities with thin margins like tires (super high marginal cost). Apple is clearly a tech company since they conduct tons of activities that are zero marginal cost (iOS, MacOS, App Stores, AppleTV, Apple Music, Apple News, Logic Pro, iCloud storage, etc. etc.) However if you remove the software part of their business, then they'd be a commodity phone company, and valued by Wall Street in the same way TV manufacturers are (ie. like Samsung, with a PE ratio roughly half that of Apple). The higher value and differentiation is mostly derived from the software (an OLED screen with a processor attached isn't high margin otherwise--see Samsung's margins). Hence why "software is eating the world."