Customers Question Tech Industry's Takeover Spree

crimeandpunishment writes: "When it comes to the world's largest technology companies, is bigger better? Maybe for the companies, but maybe not for their customers. Tech companies, which have spent $350 billion buying other companies over the past few years, have marketed their acquisitions as beneficial for their customers, offering them a broader range of products, and making it easier for one-stop shopping. But changes in customer service may be offsetting any benefit. In the words of the chief information officer for a large association, 'When the smaller guys are gobbled up by bigger guys, in theory it's supposed to be better, but in our experience it's been worse.'"

Comments

Take over

[Capt.DrumkenBum]

When has anything a company has done been for your benefit?

Re:Take over

[Anonymous Coward]

When has anything a company has done been for your benefit?

All the time. Sorry that they care about me more than you.

- A Shareholder.

Re:Take over

[pete6677]

Companies know that customers care about one thing: CHEAP! They shop where they do because of low prices. Sure, everybody says they care about service. But 9/10 times they shop where the prices are lowest. Why would Wal-Mart, Best Buy and every airline bother to care about service when they know they'll make more money selling cheap shit and giving the illusion of a bargain? This requires skimping on any extras such as knowledgeable employees.

In short, consumers are their own worst enemies when it comes to the death of customer service.

Re:Take over

[cybereal]

Though I feel your cynical view and agree it's probably the usual case, there is more than sufficient evidence to suggest that a genuine desire to please and benefit customers drives at least some businesses. They may be smaller, or only rare, but that's the same thing in nature. The trend would map to symbiosis where one organism relies on another cooperatively for mutual benefit. A balanced relationship between a corporation and its consumers forces this mutual benefit scenario as the corp needs the customers for income and the customers need (or at least think they need) the corp for some product or service. However, when the customers lose their alternative options, the failings of the corporation no longer have the same level of negative effect on the corp as they might have otherwise because said consumers have nowhere else to go.

Of course, this is why monopolies are bad. However, it's probably worth realizing that less-than-monopolies are also bad in exactly the same way. Good examples of this are Wal-mart, FedEx/UPS, and Google. All of these companies take their positions for granted and abuse them one way or another with little recourse as they have few if any general competitors. Though they may offer some good things like broad areas of service or one or two worthwhile operations, they generally pose a threat to any potential competition or even actively stifle it through business practices that only a monopoly could afford (like massive price undercuts or underpaid employees, questionable service, or invasion of privacy.)

Unfortunately, this situation is an eventuality of all capitalistic business pursuits. Either businesses will fizzle out and fail or they will grow, become part of or overtake other businesses to get into a monopoly position. It's unclear if there could ever truly be an amicable solution that prevented this.

Re:Take over

[Altrag]

The company gives you a paycheck because without you (and their other employees of course), they wouldn't be in business very long.
They certainly don't pay you because they WANT to. They'd be much happier keeping their money if they could convince you to work for free. Salaries are a huge portion of most companies' costs.

Same with customers. Apple doesn't make iPods because they benefit you. They make iPods because you're willing to buy them (maybe not you specifically, but the more general "you're") and Apple gets money for it. If no one was willing to pay for an iPod, Apple certainly wouldn't continue making them. And flipping the coin, Apple would be quite as happy to sell you a rotten banana peel as they are to sell you an iPod. Apple only "cares" about what you in the sense that you won't give them money for things that you don't want. Caring about the customer is NOT an intrinsic property of a business, its a requirement for that business to be able to make money in a capitalist society where consumers have the option of not buying.

Even monopoly companies have to "care" about their customers in the sense of providing something of utility. A monopoly on rotten banana peels isn't going to generate a lot of income. Even without the option of purchasing from a competitor, the option of not buying at all is still available to consumers.

At least for most products. These arguments break down in the face of "necessary" products such as electricity, running water, food, etc. Now food isn't so bad because you generally have the option of multiple suppliers, and competition keeps things fair. No such competition exists for things like electricity and water (at least in most cities). For those products, you can neither decide to purchase from a competitor nor decide not to purchase at all. As an off-topic rant, this is the reason why I consider "privatizing" these sort of products to be a terribly bad idea -- all of the monopoly power of a public utility with none of the public oversight. Pretty much bad for everyone except the new CEO and whoever he paid off to make it happen.

Re:Take over

[Moryath]

No such competition exists for things like electricity and water (at least in most cities). For those products, you can neither decide to purchase from a competitor nor decide not to purchase at all.

Well, you can "kinda sorta" - you could build an outhouse in your backyard or a full septic tank in your backyard, provided your local building code allows it. You could install a rainwater collector, filtration system, or simply purchase what water you need from an alternate supplier (though at the cost per gallon, that's suicidal). You could, provided the groundwater quality in your area isn't shit and again that local building codes would allow it, even dig your own well and install your own pump.

You could install a gas/propane/etc generator, or solar cells and some battery storage, if you want to try to go without being "plugged in" to the electric grid, or you could even do without air conditioning and heat what you need to in your house with some other form of heating like a wood-burning stove or fireplace. You could your cooking on a propane or charcoal grill.

Of course, good luck managing to do this in any major city or if you have kids, unless you're Amish or Mennonite. Raise kids in that environment, and the local constabulary will be up your ass with "child welfare" authorities in tow, looking for any excuse they can manufacture to take your kids away and force you to pay up for local utilities...

Re:Take over

[Darth Sdlavrot]

You jest!

The only shares I own directly are in my ESPP. My company has about 2B shares outstanding and I currently own about 4000. My company also has about $11B in cash last I heard.

If they cared about shareholders they'd be using that cash to pay dividends, or buying shares back -- more agressively than they claim to be -- to raise the share price.

YMMV.

Re:Take over

[coaxial]

So why don't they do anything to reduce the chance of delays, such as not scheduling more flights than an airport can actually handle during a given period of time?

You don't understand the problem at all do you?

The problem is that there's no slack in the system. None at all. One of the reasons is because planes have to fly at minimum distances apart while staying on certain FAA defined routes. (e.g. Your nonstop flight from LAX to JFK isn't the Great Circle Route, but rather a series of straight line segments that do not always approximate the Great Circle. Ever wonder why your flight goes over Denver? Now you know.) One plane on one route runs into a headwind, or must divert for storm (and it always happens), and the entire system begins to backup, and stays backed up for hours, just like a slowdown on the the highway.

Free flight might be able to help with this, but that's the problem. Most popular destinations are at capacity. They're not over capacity, they're at it. What you want is for someone to voluntarily cut back service so that service is improved for their competitors. That simply isn't going to happen. Something akin to congestion pricing might help, but that's not the airline's role. That's the airports and the FAA's. In fact. it isn't clear that the airports could even do that, since they lease the gates exclusively to each airline. They're not simply assigned on a first come first serve basis.

You can't have your cake and eat it too...

[hackel]

If people really want this free-market capitalist monstrosity, then they need to accept the fact that what is best for the *company* always comes first. It really irritates me every time I hear people complaining that a corporation is not thinking of its customers first, or its employees... That is not a corporations job. They're one and only job is to make money for their shareholders.

If you don't like this--as you shouldn't--then the system itself is what needs to be changed. Don't blame the individual companies--they are doing exactly what we have set them up to do. Capitalism itself is the enemy.

Re:You can't have your cake and eat it too...

[selven]

That is not a corporations job. They're one and only job is to make money for their shareholders.

I don't see how that statement is a necessary and unavoidable part of capitalism. Capitalism is just an economic system that relies on people freely making economic transactions with each other. It does not inherently require the concept of "shareholders" and even the idea that a corporation needs to have owners is not absolute - a corporation is just a relationship between employees and customers, it does not need to have owners any more than the marriage between a man and his wife needs to somehow be owned by someone. There are lots of (unfortunately, small) businesses that do serve their customers, but we can, and should, support them.

Re:You can't have your cake and eat it too...

[Anonymous Coward]

The idea of the corporation is the problem. Capitalism works when one person decides how much risk he wants to undertake in order to gain something. Corporations take much of the risk away by spreading it out among thousands of shareholders. Without that risk, and associated responsibility, corporations can game the system. If companies were run by individuals they would rise and fall like they are supposed to under capitalism. As corporations they can linger on almost indefinitely because they are so resistant to economic damage.

Re:You can't have your cake and eat it too...

[dkleinsc]

While the exact form of it (the legal fiction of a limited liability corporation) isn't inherent in capitalism, the argument that this sort of concentration of wealth and ownership is an inherent aspect of capitalism was really the central point of Karl Marx's Capital. The way that most civilized countries prevent that problem from overwhelming them is via the use of democratic government to check the power of owners in favor of everybody else.

The big exception to this has been the United States since 1980. Anyone complaining about excessive taxation or regulation today ought to read up on what US law looked like in 1960 or so.

it's not about doing business better

[rev_sanchez]

Takeovers are about reducing competition and increasing market share so the don't need to compete. One serious flaw in capitalism is that companies don't want to compete because it's difficult and generally not very profitable.

Customer Support: not malice, it's bureaucracy

[Nemilar]

This past week I had two very interesting customer service experiences -- interesting because of just how different they were.

I spent probably 5 to 7 hours on the phone with HP technical support last week, trying to get them to assist me with a problem we were having with a pair of ProLiant servers. I was shuffled around to multiple departments (and, judging by the various accents, I would say I was probably shuffled to multiple continents as well), each one telling me that the next guy was the right guy to talk to about our issue (which of course he wasn't). This was for a fairly simple question about the functionality of one of their server administration tools, that no one seemed equipped to answer.

Conversely, we also had a hard disk in a ProLiant server go bad. With the serial and part numbers in hand, I was able to get a replacement shipped within 10 minutes.

The two completely different experiences I had suggests to me that when companies get large, they get very good at handling the common support problems, like bad hard disks. They develop procedures that save both the company and the customer lots of time, and are relatively painless. But what's lost is the ability to handle the out-of-the-ordinary service needs that customers have; the company is just too big, and the support guy (let's be frank, in some call center in India*) just doesn't have the resources or the knowledge to handle the problem. This leads to a frustrating experience -- whereas in a small company, these things tend to be handled quickly, because the support guy can escalate easily.

*HP doesn't even try to hide that their support is outsourced to India. If you log-on to their professional support, you can tell right away by the names.

Not so much the size

[Kjella]

Not so much the size as the MO of large IT companies. Create a shell of sales, marketing and consulting while all development, maintenance and support is hollowed out and internally "outsourced" to units in very cheap countries. Even though the quality of all three go down they manage to win bids by in theory offering the same as their competitors for less. In practice it turns out much worse than expect, but that's quickly forgotten during the next round of contracts again with a tight budget.

Acquisitions aren't even good for shareholders

[zymurgy_cat]

Something like half of all mergers/acquisitions fail to generate the returns expected. In such cases, it's usually the shareholders of the company being bought that reap the benefit (assuming they can dump whatever stock of the acquiring company they receive as part of their payment).

Think about it. It's basically a coin flip that company A buying company B will result in any benefit to the shareholders of A. If shareholders were truly wise, they'd tell management to just give them the cash they would have spent on acquiring a company. They'd make out better in the long run.

Re:Over seas customer service sucks! and some time

[fuzzyfuzzyfungus]

Why can't we use people in prison for low level cheap phone centers?

Because cruel and unusual punishment is unconstitutional...