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posted: 8/20/2011 6:07 AM

Four titans in race to dominate tech industry

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  • The four titans of tech are Google, Apple, Facebook and Amazon. And they are impossible to escape, tapping nearly every consumer's wallet and holding vast power over huge swathes of the economy.

      The four titans of tech are Google, Apple, Facebook and Amazon. And they are impossible to escape, tapping nearly every consumer's wallet and holding vast power over huge swathes of the economy.
    Associated Press

 
The Washington Post

Eric Schmidt, the executive chairman of Google, has called them the "gang of four." They are the four titans of tech: Google, Apple, Facebook and Amazon. And they are impossible to escape, tapping nearly every consumer's wallet and holding vast power over huge swathes of the economy.

The companies are racing one another to be king of the digital age, and each is lacking something that another one has. Put in the missing pieces, and one company has the potential to be all things to all people -- a complete system in which consumers spend most of their time watching videos, reading the news, writing email and making purchases.

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"It's the biggest, most intense battle in tech history," said Ted Morgan, chief executive of Skyhook Wireless, a firm that provides location-based technology for mobile devices. "It's so much bigger than even the Microsoft, Apple, IBM battles of the 1990s. I think all four of those guys get it. They get that it's between us four. And we need to have something on every front."

The latest example: Google's announcement this week that it will acquire cellphone maker Motorola Mobility Holdings, a move that will send the company even further into Apple's smartphone turf.

During much of their histories, Google and Apple have looked like vastly different firms. Google, with its powerful search algorithm, has made money by selling ads that appear alongside its search results. Instead of manufacturing its own devices, the company offered its Android software to run on phones built by others, including Motorola, Samsung and HTC.

Apple, on the other hand, has built its success by selling computers, phones and tablets that work seamlessly with the company's software programs. Think of the symbiosis between iTunes and iPods, or the way Apple's mobile operating system, called iOS, works on both iPhones and iPads. By contrast, Apple has had a weaker presence on the Web, a domain ruled by Google.

Now, though, the Motorola deal makes Google look a lot more like Apple, because it will be responsible for not only the software on the phone but the manufacturing of the phone itself.

"Apple is basically an ecosystem with end-to-end delivery," said Michael Gartenberg, an analyst at Gartner. "Google's looking at that and saying, 'Hey, maybe that works for us.' "

The fact that two companies coming from vastly different business models have arrived at such a similar juncture demonstrates how quickly -- and unexpectedly -- these dominant tech firms can wind up competing against one another.

Facebook, the youngest of the bunch, is the world's most popular social network. But founder Mark Zuckerberg's ambitions are grander -- and they run directly into those of the three other titans.

Facebook hopes to be an alternative way to organize the Web, a platform for consumers to spend their time online. Instead of using Google's algorithm to search for news and information, Zuckerberg envisions a future in which people consult their network of friends. Most critically, content on Facebook is out of the reach of Google's search engine. And the more time people spend on Facebook, the less time they are looking at ads on Google, which recently launched Google Plus as a rival social network.

Facebook is beginning to bump into Apple's business of selling apps on its devices. Zuckerberg's company has quickly become a powerful player in the booming market for social games, such as the popular Farmville.

And the company is watching the mobile market just as much as Google and Apple are. Facebook is one of the most popular mobile apps on Google's Android phones and Apple's iPhone, showing that although these companies have become rivals, they can be dependent on one another.

Facebook is edging into Amazon's territory by offering movies for rent using the company's currency, Facebook credits.

Amazon, the world's biggest online retailer, is benefiting from growing sales of its Kindle e-book reader and digital media, including books, movies and music, putting it in competition with Apple's iTunes.

But more significant, Amazon -- like Google -- is shifting toward Apple's territory of making devices. Not only does Amazon have the Kindle, but The Wall Street Journal reported in July that the company is planning to make a tablet to rival the iPad.

The four titans are among the biggest firms in the country. Apple, Amazon and Google have a combined market capitalization -- or total stock value -- of $616 billion, with Apple briefly surpassing Exxon Mobil this month as the world's most valuable company. Facebook plans to go public soon.

The government has noticed two of these companies' power. Google, which says it has plenty of competition in search, is under investigation by antitrust enforcers in the United States and in Europe. And U.S. antitrust officials have looked into Apple for its subscription service for the iPad and the iPhone.

"Compared to, say, an earlier era of Microsoft dominance, these companies are much more ready to tell you what you can and can't install on the devices that you physically own," said Ben Edelman, an assistant professor at Harvard Business School who counts Microsoft as one of his consulting clients.

"They all come at it from a really different skill set," said Morgan, whose company has sued Google for allegedly blocking Android phone makers from using Skyhook's technology. "They all bring something to bear that's not the whole puzzle, but enough of it."

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