What Is a Tech Company?
The Translation Bureau is a compilation team that focuses on technology, business, workplace, life and other fields, focusing on foreign new technologies, new ideas, and new trends.
Editor’s note: Nowadays, technology has become one of the foundations of the social and economic system, and it is rarely insulated from technology by new companies. Along with this, there has also been a new problem: In such an era, is there still a technology company? What kind of company is a technology company?
Recently, the famous analyst Ben Thompson wrote an answer to this question. In his opinion, to understand how to define a company is not a technology company, you need to look for context from history.
He started from IBM and Microsoft to Salesforce and Atlassian, and re-routed the technology company’s evolutionary roadmap. Originally published on Stratechery’s blog, entitled “What Is a Tech Company?“. The article is compiled by the Translation Bureau and I hope to bring you inspiration.
Related reading: Famous analysts: Are Airbnb, Uber, WeWork, etc. a technology company?
In the recent past, WeWork and Peloton (Netflix in the fitness field) have released prospectuses. At first glance, they don’t have much in common: one is renting a vacant building and transforming it into an office space. The other sells home fitness equipment and video fitness classes.
However, their prospectus raises the same question: Are they a technology company? Of course, we can ask: “What kind of company is not a technology company?”
No doubt, this is softPieces engulf the end of the world. Nevertheless, I think that if a company uses software just because it is classified as a technology company, it is useless today, which was obsolete decades ago.
IBM and technology-centric ecosystem
Fifty years ago, “What is a technology company” was an easy question to answer: IBM is a technology company, and everyone else is an IBM customer.
This may be a bit of an exaggeration, but it can also be said: IBM manufactures hardware (at the time System/360), develops software, includes operating systems and applications, and provides services, including training, ongoing maintenance, and custom line-of-business software. .
All walks of life benefit from IBM’s technology, including financial services, large manufacturers, retailers, and more, and of course the military.
The work done by hand, such as accounting, resource management, and record keeping, has been automated and centralized, greatly improving efficiency and making new types of work possible.
However, efficiency gains and new business opportunities have not made JPMorgan Chase, General Electric or Sears a technology company. Technology is just a part of their whole.
However, IBM is different: every part of the company is technology–in fact, IBM is a complete ecosystem, including hardware, software, and services, all of which are tied to the subscription payment model. Together, this model is strikingly similar to today’s dominant Software as a Service (SaaS) model.
In short, being a technology company means becoming IBM, which means creating and integrating an ecosystem built around technology.
Risk investment and zero marginal cost
IBM has handed over the contract of the PC operating system to Microsoft, and the story of Microsoft’s dominant position in the computer field in the next 15 years is well known. However, Microsoft’s completely different business model for its software best illustrates the background of this decision.
The reason for the success of the IBM subscription service is that the mainframe manufacturer provides the entire technology stack, so there is reason to maintain direct and continuous contact with the customer.
But in 1968, in order to evade the federal government’s antitrust lawsuit, IBM split its hardware, software and services. This created a new market for software, and to some extent, the software was sold on a specific basis; at the time, the software did not even have copyright protection.
In 1980, the US Congress added “computer applications” to the list of US copyright laws. Since then, the software licensing model has emerged.
The company can now maintain legal ownership of its software and grant countless software licenses to individuals or companies.