Amazon the next winner of the Platform wars?

At Monday night's MIT Enterprise Forum event, Mark Anderson headlined a fascinating sideline discussion of the "Coming Tech Wreck."

The discussion centered around how Microsoft, Apple, Google, Facebook, Amazon, carriers, manufacturers, and others are all competing to dominate the next "platform," which they spent the first 10 minutes trying to define.

If you trace the thread of the dominant industry player over the past few decades, that dominance went from IBM to Microsoft to the current battleground with a bunch of huge players. The panel, which also featured Al Hilwa of IDC/Gartner, Steve Tapia of DirecTV Sports, and moderated by Alex Modelski, spent much of the evening analyzing the plays made by each of these players, and trying to identify who would end up on top.

The consensus seemed to be China, and Amazon.

China, because instead of innovating, they steal the innovations from the companies creating the innovations, and then enter the market with far lower profit margins and make for an environment that the creative companies can't compete in. Anderson cited the telecom equipment market as an example of how Chinese competition drove all the major manufacturers of telecom equipment to be shadows of their former selves, specifically calling out Motorola, Lucent/Alcatel, Nokia, Erickson, and others.

The dire suggestion was that the same thing would happen to the big players in mobile devices -- that currently Samsung is fast becoming the biggest global player in the mobile space thanks to being handed Android on an open silver platter (by Google) -- but Anderson suggests that's a temporary lead, as there are at least two Chinese manufacturers poised to eclipse the South Korean Samsung in short order. And after all the innovators have been put out of business, the industry would slump with nobody left to steal from.

Amazon might be the main American winner, because they are playing a longer term game. They regularly sacrifice profit for building their next business, regularly cannibalize their own best business before somebody else does (think Kindle ebooks replacing book sales), and stand the best chance of being the next dominant platform. Right now you can buy tv shows produced by Amazon through an Amazon distribution channel to watch on an Amazon device you previously bought from Amazon. And television might just be the next platform ready for a big player to dominate.

I definitely think the panel missed a couple angles. I do agree that Amazon is poised to be a really huge player, largely because of their Amazon Web Services (AWS) platform. They practically invented cloud computing, at least at the infrastructure level -- which underpins just about everything else that is the cloud. While there are certainly tough big competitors like Rackspace, and cool startups like Digital Ocean competing hard against AWS, AWS is clearly the leader in this space with competitive pricing, a good reputation, and constant innovation of new features that so far leave the others behind. Yet that's a commodity service, with lots of room for competition -- we're finding Digital Ocean to be "good enough" with substantially lower prices.

And the other angle they missed entirely: does the Internet and Open Source change the fundamental structure of our economy in a way that prevents big players from dominating the industry as has happened in the past?

I would posit that our economy is going through some structural changes that make huge monopolistic companies far less viable than they have been for the past century. And that's because nobody can entirely control the channels of distribution -- the Internet can always route around control. I think that when we see 6 completely different platforms vying for supremacy in the mobile space, we don't necessarily end up with one that wins if what people really want is what's in the cloud -- when the value is in the network, the device you happen to use at the edge doesn't really matter that much. (Hilwa had an amusing breakdown of the current market share of the mobile market, globally: 80% Android, 20% Apple, and the rest just statistical noise).

So I do think this discussion had at its center an underlying mindset still locked in a broadcast world, one where there has to be a dominant player. I think we're seeing the tech industry and other related industries changing to look more like most of our other much more mature industries: construction, law, accounting, food production, health care. If you look at any of those industries, you find some enormous companies, yet none come anywhere close to owning half of their market. I think we're reaching a point where the playing field is getting leveled, and there's going to be room for a lot more big players, each perhaps dominating a location or a particular niche, but none able to become a monopoly like our current giants.

Even missing those angles, this was one of the most provocative, interesting MIT Enterprise Forum events in quite some time. There should be video of the event posted soon -- I definitely recommend watching it.