4 ms·
Is this vertical integration turning into a different kind of monopolizing, centralization of power? Vertical integration at face value is very appealing, it c
by russli1993 6y ago
Is this vertical integration turning into a different kind of monopolizing, centralization of power?
Vertical integration at face value is very appealing, it can lead to better products and better prices. On the other hand, Apple, Microsoft, Amazon, are the likes are platform companies. They control the end user's applications, social networking effects, and consumer branding. The OS interfaces, APIs, standards, programming languages that ISVs and a large portions of the software and IT industry rely on. And increasingly leverage over hardware makers, the OEMs, ODMs, silicon designers, chips makers. The first two were getting concentrated first. Think about Microsoft makes Office run only or the best on Windows. Think about Apple is bundling the Apple software ecosystem (Apple Music, iCloud) with the OS and the device. Think about Google bundling its Mapping and office software if you use their search product. But any technology will have a high barrier to entry first and as time passes gets democratized. Chip design and manufacturing is no different. Now it seems like chip design barrier to entry is low enough and platform companies are powerful enough that it makes organic sense for them to dive into the chip design sector.
Fast forward 10 years, it could be that a company will be at competitive disadvantage without its own chips just like how now a company is at a competitive disadvantage without its own ecosystem, platform and multiple products each enforcing each other to create moat. Yelp and Spotify are always at disadvantage compared to Google and Apple Music because they don't have Search and IPhone. This world, likes of Apple, Google, Microsoft, Amazon must have its own chips in order to compete and survive. In that world, what happens to pure play hardware vendors like Intel, AMD, Nvidia? Right now ARM is an instruction set everyone has to agree to because it enables portability, and right now portability is important for survival in the market. But in that world, the market condition will be that portability has disadvantages and "your own thing" has advantages. For example, Apple can add a unique instruction to their CPU that makes a operation 2X faster. Its easily adopted because software developers all use Apple's APIs and compilers so taking advantage of it is automatic. And you want less portability so a ISV can't support your competitor's product as easily. You can imagine this will happen then standards like ARM doesn't matter anymore.
Seems like this tendency towards concentration is natural. My question is at what point does the natural course to concentration stops? Should we artificially put up barrier to stop or slow down this natural tendency before it runs it course (IE, create anti-monopoly regulations, limit a player to enter a different market if they dominate in the other market).
- amelius 6y ago> Should we artificially put up barrier to stop or slow down this natural tendency before it runs it course We should always ask: would a project like Linux be possible now? Can somebody become the next Linus Torvalds? If not, then these companies have locked down their devices too far.