Trillion-dollar technology companies like Apple, Google, and Amazon have grown so large that almost every human breathing today is aware of their existence and reach. These brands provide unbelievable value to their customers, but it does come with an attached cost. These conglomerates have grown so large that they have created a massive barrier to entry for others looking to enter the technology space. This keeps competition out and increases the CLV for their brands. Trellis CEO Isaiah Bollinger explains why the major technology corporations are so far ahead and how it may be difficult for any competitor to ever catch up.
Winner Take All Effect
Facebook thrives because there is no alternative platform. Other companies have launched similar services and failed to leave Facebook as the victor earning all the spoils. Facebook added to their Social Media empire by buying Instagram and WhatsApp creating even more space between them and the next guy in line. Google and Amazon play in different fields of technology but they are creating similar experiences.
Economies of Scale
The major technology corporations have recognized that their sector is most profitable by producing in high volumes for a cheaper price. These economies of scale make it nearly impossible for smaller firms to compete without having billions of dollars to spend on upfront costs. Let’s take a look at the computer industry. We have two rival giants: Microsoft and Apple. besides these two, there are no real competitors in the space. Google has stuck to its specialty and has begun to enter the space with software development that can be integrated into other hardware but has not made a real dent as of yet.
Tall Barrier to Entry
The reality is these companies are so far out ahead that it is unlikely for anyone to catch up and gain market share. The barrier to entry has skyrocketed to unfathomable levels. This effect is most prevalent in the industry of technology but could take hold of other verticals as well. Whichever industry you specialize in, be cognizant of the changes that may come. Get your foot in the door before the barrier to do so becomes too high.