Big tech, the money factory chasing the new Eldorado

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Artificial intelligence? Many bet on it. Others, on the other hand, although I have disappointed so far, look to the metaverse. Better, then, to continue focusing on cloud computing which, in recent years, has driven corporate accounts. The options on the table – it is evident – are many and there is no agreement among the experts in defining the Eldorado, new or nearly so, for the business of large hi-tech companies. Beyond this, it is undeniable that «the world of technology – explains Giacomo Calef, country manager of NS Partners – is looking for a turning point. The hunt for innovation capable of changing the paradigm is open». A need “in support not only, through the news effect, of share prices, but also to boost profitability and fundamentals in general”.

Yep, the fundamentals. On closer inspection, the “turning point” (or presumed such) is also, and above all, linked to individual business models. Often the big names in hi-tech (from Alphabet to Amazon to Apple, Meta and Microsoft) are considered as one. In reality, these are companies that, yes, have traits in common, but which are nonetheless different from each other. Money factories with defined (and different) business models with respect to which a technological acceleration produces different effects.

The world of Amazon

An example? Amazon. The e-commerce giant has ramped up its business over the years. According to Bloomberg, in 2010 adjusted revenue was worth $34.2 billion. Last year it reached 513.9 billion. A big leap which, among other things, was supported by the so-called “marketplace effect”. That is to say: bringing sellers and buyers together on a digital platform, efficient in terms of technology and logistics, where product prices (even in the wake of the same efficiencies) are lower than average. This feature attracts more consumers who, in turn, attract new sellers. But the greater number of sellers implies a better possibility of selection in products and prices. Which, in a virtuous circle, attracts new consumers by pushing their business. An activity that configures Amazon not only as a hi-tech company, but as a techno-infrastructural reality. That said, however, the real profitability of the company comes from the AWS division. In other words: from cloud computing services which, for example, generated an operating profit of 22.8 billion dollars in 2022 compared to the losses of e-commerce. Faced with such a context, it is understandable why Artificial Intelligence (AI) is a potential Eldorado. On the one hand, this can push the “informatics cloud” (for example because more computational power is required); and, on the other, it is able to make e-commerce more efficient.

TURNOVER AND PROFITS

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Apple at 3 trillion

Different speech in the realm of Apple. The company, which boasts a market cap of 3 trillion dollars, «was among the first to understand – explains Nicoletta Corrocher, professor of the economics of innovation at Bocconi – the importance of combining the offer of hardware and software». That is: «to create a technological ecosystem where, on the one hand, there is a hi-tech product, such as the iPhone»; and, on the other, “the platform on which, among other things, applications can be developed and tested is established”. Which, then, are “launched into the same technological ecosystem”. Not only. Apple has bet heavily on private users. «An approach – Corrocher always says – which was supported by a “manic” attention to a double aspect: the man-machine interface and design». Precisely this last aspect has constituted (and constitutes) an appeal of the Cupertino house. Considering this, Ai, for example in software development, will play an important role in Apple’s. Although the search for a new “wow” moment, even in hardware, is among the priorities. Proof? The recently launched Vision Pro. The headset enables a variety of applications for work and entertainment in virtual and augmented reality. Will it be a game changer? Hard to tell. For now, the Stock Exchange, positive immediately after the presentation of the device, in the wake of the publication of its price ($3,500) has caused the group’s title to (temporarily) be retraced.

L’ex Facebook

From the house of the bitten apple in Meta. In this case the recent search for Eldorado was forced. The former Facebook, beyond the Cambridge Analytica scandal, faces several problems regarding the collection and use of data on his social networks. The rules approved by the EU, together with the Tracking transparency system implemented by Apple, have created limitations on that digital marketing which is essential for Meta. No wonder, then, how the group has been looking for the new grail in the metaverse. The final result, however, so far, is negative. So much so that Mark Zuckeberg, CEO of the company, has returned (with the applause of the market) to focus on the “old” business. A core business that, yes, he has been successful also thanks to the so-called “platform effect”. This consists in the creation of digital places where the more subjects are attracted to use the platform, the more the platform itself expands. In similar situations, the object of the product is us, our behaviors and customs. The company’s formula for success is to have been the first to understand that people have a contagious desire to know the things about others, to interact. The group, therefore, does not exploit the individual need of a subject, but the entire scope of each of us. A “behavioral” activity where the (ubiquitous) AI will make the use of data more efficient (even with the new limits).