My favorite weekend reading was The scale of tech winners by Benedict Evans (). I recommend you to read and draw your conclusions. The article brings a very interesting perspective on old and new generation of tech companies – Wintel (Windows + Intel) and GAFA (Google, Apple, Facebook, Amazon). GAFA created a dominant force in digital world. But what is most interesting is the size of this new world.
To understand the scale take a look on the following chart:
Internet killed printed ads, but Facebook and Google eat digital space. This digital ecosystem created unprecedented opportunities – 3bn smart phones, connected devices, online communication. However, my favorite passage is about small competition in this space:
How do the mice do when there are four elephants fighting it out? As we saw with first GoPro and now perhaps Sonos, if you’re riding the smartphone supply chain cornucopia but can’t construct a story further up the stack, around cloud, software, ecosystem or network effects, you’re just another commodity widget maker. And the aggressive competition in advertising products from Google, Facebook and now to some extent Amazon has taken a lot of the oxygen away from anyone else.
Let me project the story to CAD and PLM space. CAD and PLM world is still living in its own IBM / Wintel age. The major companies in this spaces are around for the last 20-30 years. These companies are slowly evolving, but keeping their existing space.
In my view, the best part of GAFA story to learn is related to Amazon. This is a chart every CAD and PLM company should put in front of them if they want to win the next CAD/PLM platform war.
Amazon changed the scale game by digitalization of commerce, warehouses and deliveries. It is about place with a huge potential to scale – e-commerce and connected fields.
It made me think that to change the scale of the game in CAD, PLM and manufacturing planning, new platforms will have to go beyond a traditional playbook. We need to have more oxygen to burn existing players GAFA created a new digital world and made Wintel and IBM irrelevant in this space. They didn’t create a cheaper PC for that. New functions and new business models are needed.
What is my conclusion? Digital world created a lot of opportunities for new vendors. New CAD and PLM players must realize that new opportunities can be only possible in a new digital world – the place where existing CAD and PLM cannot play. An old function cannot be replaced by the same slightly optimized function. Internet, mobile communication, advertising and e-commerce demonstrated how new platforms can create a new world to scale. New digital CAD and PLM should find economical benefits to manufacturing companies in a new digital world. Then the change will happen and new platforms will win. Just my thoughts…
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Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased.