COMPETITION OF INNOVATION

Technological Wars across Overlapping Markets between Google, Amazon, Microsoft, Facebook and Apple

Technological Wars across Overlapping Markets between Google, Amazon, Microsoft, Facebook and Apple

Introduction

Technology giants like Apple, Google, Facebook, Microsoft and Amazon are in a constant battle against myriad startups, each of which seeks to beat the big companies to new markets, and unseat them from the old ones. Plus, the giants are constantly at war with each other, as expanding business models create overlapping territories and new rivalries. It is well understood that tech giants compete with product quality, marketing and even the patent courts. But less understood is how they leverage their deep pockets to compete with extreme pricing models that competitors often cannot match (Spector, 2000). Companies use extreme pricing to gain long-term advantages against other companies who are not able or willing to match them dollar for dollar. Apple's so-called “price fixing” involves Apple giving publishers the power to determine the price of eBooks -- as long as Apple gets its 30% cut. It is an attractive deal for publishers, but there is a catch: Publishers would have to agree to not sell the same titles at a lower price via another retailer that is Amazon. Amazon on the other hand also sells its eBook reader tablets at a loss. It is believed that Amazon wants to drive prices so low that it competitots cannot offer. Once most competitors have been driven from the market, Amazon will be solidly in control of the publishing industry.

Google wants to compete against Apple and Amazon in the downloadable app, music, book and movie business. The company recently re-named and re-organized its downloadable content offerings into a new service called Google Play. To shock users into awareness, give them incentive to fork over a credit card and give Google Play a try, the company is offering a week of extreme pricing called “7 Days to Play.” Select movie, music and book titles, for example, are for sale for as low as a quarter each. Other titles are slightly higher, but all appear to be sold at a loss, with Google paying the difference. Microsoft and Facebook on the other hands are competing in their own way. This paper in connection to the competition among technology giants will assess the nature of competition among them over developing markets.

Theoretical Framework: Disruptive Technology

The term disruptive technology indicates technologies that cause imbalances and disruptions in the logic of production of a product or the conception and application of a service. The semantic space of this expression denotes technologies that cause an inflexion or interruption in the continuity of traditional production factors (Burke, 2008). In terms of innovation and business, this notion sparks the argument that, more than price reductions, it is new ideas that drive entrepreneurial logic and competitive companies. In a society based on knowledge it is vital in research agendas to understand the dynamics and connections between technological innovation and the strong changes in the manufacturing and service ...