To be sure, Apple , Google , Amazon.com , and Facebook have each made an indelible mark on our world. And all four tech behemoths continue to push the innovation envelope.
Continue Reading Below
We asked four Motley Fool contributors to tackle the difficult task of selecting which of these industry leaders would become the most important in the next five years -- and why. Here's what they said.
Brian Stoffel (Apple):I'm not going to make this argument myself so much as regurgitate what Scott Galloway -- clinical professor of marketing at NYU -- said in a recent talk he gave titled "The Four Horsemen."
In it, Galloway argued that Apple would be one of the two most dominant players of these four over time. His basic thesis: Apple has become the world's most powerful luxury brand. That's an important distinction from being a "technology" brand because, as Galloway put it: "luxury brands give you self-expressive benefit -- they signal something about you."
The key here is that people are willing to pay big bucks for aspirational luxury brands, and that will allow Apple to continue enjoying wide margins that the competition won't be able to approach. Galloway argues that, in business, products must appeal to one of three things: people's instinct to survive, their instinct to love, and their desire to mate.
The latter usually sells the best, and Apple knows that. The company's build-out of wearable luxury -- starting with the Apple Watch -- is the first step in exploiting this human tendency. Galloway argues that this approach will lead Apple to shortly become the world's first trillion-dollar company.
Continue Reading Below
Andres Cardenal (Google): Information is power, and new technologies are allowing companies in different areas to leverage the power of information in unimaginable ways. Google's mission is "to organize the world's information and make it universally accessible and useful," and this means the company is in a position of enormous power and influence.
Google is the undisputed leader in search, and the business tends to become stronger as it becomes bigger over time. The more people use Google, the better the quality of the results, which attracts even more users. The same goes for Google's competitive position in online advertising. Advertisers and publishers attract each other to the platform, so a bigger Google means a more powerful Google, too.
As consumers are increasingly turning to mobile, Google is one of the leading players in the segment thanks to the popularity of its Android operating system. Besides, services and applications such as YouTube, Google Maps, Gmail, and Chrome are among the most popular in both Android and iOS, so the company has secured its place in the mobile computing world.
From a financial point of view, Google is a profitable and dynamic growth business. Total sales in the first quarter of 2015 grew 17% in constant currency, and the company generates fat operating margins in the area of 26% of revenue.
This provides the economic resources to invest in all kinds of innovative projects, from self-driving cars to breakthrough healthcare research. As a result, Google has what it takes to be among the most powerful corporations on the planet over the coming years.
Jeremy Bowman (Amazon): On a market-cap basis, Amazon.com is the smallest of these four companies today, but it's the one that has been most consistently focused on the future. It is putting the pieces in place to create several sustainable competitive advantages that should endure for years to come.
In its most recent earnings report, we learned that Amazon has built an industry-leading $5 billion cloud computing business that is solidly profitable. The company's Prime loyalty program likely has somewhere between 30 million and 40 million members who receive a unique set of benefits that no other company could match, including unlimited video streaming and free two-day delivery on millions of items.
It's no surprise then that Amazon consistently ranks among the top businesses for customer service. The company has made pleasing the customer a top priority and continues to innovate to do so.
With leading positions in areas like e-commerce, e-books, and cloud computing, Amazon combines a network of advantages that no other company can match. It is just beginning to leverage those positions with programs like Amazon Home Services that use Amazon's leadership in e-commerce to drive high-profit commission sales in new markets.
It's impossible to say how the company will look in 2020, but it's fair to surmise that its current advantages will only become more entrenched. Its aspirations in areas like groceries and one-hour delivery may also turn into significant competitive advantages. Annual sales will likely have reached more than $200 billion by then as well, further widening its economic moat.
In short, Amazon.com brings a unique combination of growth, innovation, and competitive advantages, and those assets will only make it stronger five years down the road.
Tim Brugger(Facebook):A case could be made for any of these companies becoming the most important to the global community in five years. However, the unprecedented scope and continued growth of Facebook sets it apart.
Leading up to Facebook's Q1 2015 earnings announcement, some questioned its (relatively) stagnant monthly average user (MAU) growth. Of course, with 1.39 billion MAUs heading into 2015, it could be argued there simply aren't that many connected users around that aren't already on board the Facebook train. Regardless, Facebook added another 50 million MAUs last quarter: and that wasn't even the best news.
Nearly 1 billion of Facebook's 1.44 billion MAUs access the site daily. Take a moment to consider that -- of the seven-plus billion people on the planet, nearly 1 billion utilize Facebook each and every day. Now consider that its WhatsApp mobile messaging service has over 800 million MAUs, Instagram boasts over 300 million, and its in-house Messenger unit has grown to over 500 million users.
In other words, over three billion users are on Facebook or a Facebook-owned property every month. Naturally, there's considerable overlap among those three billion users; but that doesn't detract from Facebook's undeniable popularity.
Now, factor in Facebook CEO Mark Zuckerberg's Internet.org initiative to bring connectivity to the world's underserved masses, and the impact that will have on its multiple properties. It's not inconceivable to consider that Facebook or one of its assets will be utilized by half the world's population by 2020. The world has never communicated as often, or as thoroughly, as it does today: thanks to Facebook. And to think, it's just getting started.
The article Apple Inc., Google Inc., Amazon.com Inc., or Facebook Inc.: Who Will Be the Most Important in 2020? originally appeared on Fool.com.
Andrs Cardenal owns shares of Amazon.com, Apple, Google (A shares), and Google (C shares). Brian Stoffel owns shares of Amazon.com, Apple, Facebook, Google (A shares), and Google (C shares). Jeremy Bowman owns shares of Apple. Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.