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Startups a Safer Bet Than Behemoths
Former Slashdot editor ScuttleMonkey raises his voice from the great beyond to say that "TechCrunch's Vivek Wadhwa has a great article that takes a look at difference between startups and 'established' tech companies and what they each mean to the economy and innovation in general. Wadhwa examines statistics surrounding job creation and innovation and while big companies may acquire startups and prove out the business model, the risk and true innovations seems to be living at the startup level almost exclusively. 'Now let's talk about innovation. Apple is the poster child for tech innovation; it releases one groundbreaking product after another. But let's get beyond Apple. I challenge you to name another tech company that innovates like Apple—with game-changing technologies like the iPod, iTunes, iPhone, and iPad. Google certainly doesn't fit the bill—after its original search engine and ad platform, it hasn't invented anything earth shattering. Yes, Google did develop a nice email system and some mapping software, but these were incremental innovations. For that matter, what earth-shattering products have IBM, HP, Microsoft, Oracle, or Cisco produced in recent times? These companies constantly acquire startups and take advantage of their own size and distribution channels to scale up the innovations they have purchased.'"
They don't innovate. They scrape the internet looking for ideas, making products that are "just different enough" to avoid existing patents, and they buy up startup companies just as you describe. Just because Apple has better press management skills doesn't mean they don't have similar business practices. Apple is not an exception -- stop dodging this just to please the fanboys.
#fuckbeta #iamslashdot #dicemustdie
"I challenge you to name another tech company that innovates like Apple--with game-changing technologies like the iPod, iTunes, iPhone, and iPad."
VMWare. It's owned 80% by EMC, which is a behomoth and totally innovation free. Yet VMWare puts out a lot of very innovative products.
XML is like violence. If it doesn't solve the problem, use more.
Google made Wave* and GWT which are both quite innovative solutions.
*And then dropped it again.
Google has quite a few features I use a lot that noone else offers. Google Docs for things I like to keep location neutral while still having full create and edit abilities while not downloading anything. Google Voice to keep my phone number portable along with all its other features. Android running on my as well as millions of other smartphones. etc. Google doesn't innovate? Sounds like selective memory with a bias towards Apple to me. About par for a Slashdot submission as of late.
Oh you mean how apple buys up startups to produce their products or how the iPod, iTunes, iPhone and iPad were really just incremental innovations of other services and products that people were already offering?! Yea, I agree. Apple is the greatest tech company, but lets be honest; they are more polisher than innovator.
For those of you who are new to the tubes, http://en.wikipedia.org/wiki/Creative_Nomad, http://en.wikipedia.org/wiki/PressPlay, http://en.wikipedia.org/wiki/Smartphone, http://en.wikipedia.org/wiki/Tablet_pc
Yes, Apple's products did improve upon all these ideas, but they weren't earth shattering. They just used Apple's "size and distribution channels to scale up the innovations" and bring it to the masses.
"...and trots them out in shiny packages with pretty UIs."
I think you meant well-built packages and user-friendly UIs.
http://www.rootstrikers.org/
I'm an angel investor, so I can talk fairly competently on this subject.
Let's compare a well known behemoth (IBM) with a well known start-up (Twitter).
If I invest in IBM, I'm guaranteed a healthy return. Barring any major disaster, IBM will consistently return a profit on what I invest.
If I invest in Twitter, I'm not guaranteed a healthy return. My returns may be enormously higher than investing in IBM if the company is successful, and I might lose my entire investment if the company goes bankrupt.
This actually has some real world ramifications for me. The majority of my money is stored away in Corporate Bonds for major companies, because I know that I have a very low probability of losing the money and a very high probability of seeing at least a two to three percent return on my money every year. That's what makes behemoths a safer bet than start-ups. I only give about 15% of my assets towards start-ups at any time, because for the most part, I will break even in what I invest or lose about five to six percent of my investments.
I angel invest in companies for the fun and excitement of creating something, not because I want to make money.
IBM innovates more than just about anyone, but most of it is behind the scenes. How about GMR disk technology, for one? Before that, a terrabyte took up a whole room. Now it sits in your hand. Never mind a lot of memory and CPU tech. Problem with IBM is, since it's the biggest of the behemoths, it can be hard to look below the layers of marketing and management to see the cool stuff going on. The startups get a lot of press because they're trying to be seen. That raises capital. The bigger companies with established capital keep their innovations close to the vest till they're ready to exploit. That way, even if they have to share them with others, they still have a bit of a head start.
Agreed.
If you think that the iPad is a groundbreaking innovation and (for example) Google Docs is not, you're seriously biased. Both are "incremental innovations". Tablets have been around for a long time, and so have office suites. While Google did improve some things, like collaborative editing, Apple did just improve the UI without adding any remarkable technical features.
The term "technical" is far to often used for things that are clearly not technical (like UIs), just because they are used on electronic devices like phones and computers.
PS: I'm not a Google fanboi (i don't use it at all), I just used it as a comparison.
Real innovation means that their existing products no longer sell because everyone buys the innovative product.
So why would an established company scrap their existing investment?
What they want is something new enough to be interesting ... but not different enough to threaten their cash cows ... that supplements their existing product line.
Apple is great at that. Look at the iPhone. New iterations of their existing product that never threatens their laptop / desktop computer segment. But can supplement it and works well with it.
It is only the startups that don't have an existing investment to threaten that will take the real risks.
Which is why software patents are bad. They allow the existing companies to sue the startups and limit the innovation.
The author seems to be taking an awfully narrow view of innovation, as if it only matters what occurs in front-page consumer electronics. All of the big companies he names are quite innovative in commercial software and hardware in systems like industrial control, telecommunications and finance that are too complex and specialized to make the splashy tech news. Occasionally news of some big company innovation like IBM's new mainframe makes it to the front page, and reading about the history and technical details of an achievement like that gives some realization of the magnitude of technical progress and innovation going on behind the scenes.
Explorers discover or invent things. Pioneers are early adopter to integrate and make useful these inventions. Settlers reap and create a bussiness ecosystem around the places proven by pioneers. Apple has mainly been a pioneer, and microsoft a settler. Apple did not invent the GUI or Dynamic Memory, or Switching power supplies, or Post script or the Mouse. But they did pioneer the use of those technologies. Microsoft and dell/compaq settled those. They did not invent or truly pioneer MP3 players but they did advance that sufficiently to call it their own and then they settled it. Apple did not invent unix, but they did pioneer moving it from the etherial workstation market to the consumer market and now they have settled unix in the consumer market.
Other than their pioneering in search, Google is purely a settler in every market they occupy. Unix on devices, e-mail, documnet process, thin clients (aka "the cloud"). If you want to call google a pioneer then you have to think of it as a meta-pioneer: integration is really what they are about. But That is almost the definition of settling.
Microsoft did pioneering work in a few areas such as windows GUI on embedded devices. You might say that was apple or palm however.
Apple to it's credit actually does a lot of exploration you don't ever hear about. ARM processors? Power-PC processors? Firewire? Conformal Batteries? But they don't really play that angle up a lot. Lately I've been really impressed with microsoft's investment in the visualization field so maybe they are starting to innovate again.
I also suspect that Microsoft has a shot at becoming a settler in the "cloud" field. THeir new Azure technology seems to be just what bussinesses of many different sizes are going to need to go to managed IT.
Some drink at the fountain of knowledge. Others just gargle.
You know it is BS when they trot out the iPhone. Please explain to me how the iPhone is at all innovative. It is a touchscreen smartphone. Not only had I seen those before, I'd seen lots of them. The smartphone market was well established when Apple came in. They may have done theirs better than some others, they may have presented it in a package more attractive to consumers but those are not innovations, those are good design and marketing.
An innovative product is something that is new and different. It is something that people didn't think about before but now go "Oooo, I see a use for that." For example the microwave was an innovative product. It cooked food in a completely different way, using a different technology.
Apple hasn't been in to innovation much at all these days, but the iPhone is the worst example of all. It is their least innovative product, and an example of them going in to a well established market. None of that means it isn't a good product, or a popular one, but you need to separate those from innovative. After all, LCD TVs are an incredibly popular product these days, but certainly aren't innovative, we've had LCDs around for decades.
Unfortunately I think too many Apple fans drink the marketing kool-aid and think that everything Apple does is "innovative". They feel like that matters, for some reason, that somehow it isn't ok to but a product just because it is good and you like it.
Except they completely change the paradigm of how people actually consume products. Apple brought MP3 players to the masses, multitouch to the masses, modern smartphones + mobile apps to the masses, etc. There are clear before and after effects. If you think innovation is purely in an algorithm, you're a moron that clearly has never tried to actually productionize anything.
The references are all to hardware products. What about Gmail's innovation to get 8gigs in a free account? It used to be hard to get 50mb in your attached account. Innovation is not limited to physical products. I love most of apple's stuff, but this is awfully dismissive. It's an assessment of goals based on a narrow definition.
Is that innovation is often something that you can't see, because it applies to early tech. It happens behind the scenes, and you don't see the results for many years. For example is a scientist invents a process for using carbon nanotubes to produce sub 11nm processors right now, engineers won't be able to develop that in to a workable fab solution for probably a half a decade or more. Then once it is workable, it will take time to design a CPU using it, and build fabs to produce it. By the time yo have the 11nm CPU in your home, the technology is 10 years old.
Also it doesn't seem innovative on the surface. "Oh look, someone made a faster CPU, because that hasn't happened for the past 40 years." You don't see the massive innovation behind that faster CPU.
Consumer products are not on the cutting edge usually because you don't want cutting edge. The cutting edge is expensive, and riddled with problems because it is new. You want tech that has been developed and tested, that is easy and stable to use and can be purchased cheaply. Nothing at all wrong with that, it just means that you rarely see an innovative consumer device.
Which one?
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If you want pound for pound revolutionary change to society, Google Maps has done way more to change our lives than the iPod, which is really just the next step on the evolutionary chain started by the Sony Walkman. Incremental, my ass. It has single-handedly democratized the way we interact with location and geographical information.
The iPhone was pretty revolutionary, though, touching off a revolution in how we integrate handheld devices into our social lives. And GMail is mostly a souped-up Hotmail that sucks slightly less.
Also, both Google and Apple began as startups with revolutionary products, and both have had hits and misses over the years.
I have no idea what the point of the original article was. None of its assertions sound remotely true.
You can have them replaced by Apple.
I'm not defending — or criticizing — non-user replaceable batteries, just stating that calling them time bombs is a bit of an exaggeration.
They bought the company that invented the Android platform back in '05, sure. Are you really saying that in the last five years they've done absolutely nothing innovative with the platform though? I'm not saying they have (my knowledge of Android isn't as vast as my knowledge of the underlying tech, like the Linux kernel), but just because they bought the start-up that created the platform initially, doesn't mean they shouldn't get credit for all the work they've done since.
cat:
I'm sorry, but this is garbage.
Summary: "Apple is awesome. Everyone else sucks."
What could have been a valid point gets derailed by blatant fanboi blinders. Apple is NOT an innovative company either. It's an innovative spin doctor. They are good at convincing people they must have a trimmed down, stylized, and monetized versions of established technologies. iPod? MP3 players. iPhone? Smartphones. iPad? Tablets. iTunes? Napster.
Further, Apple is just as into buying up established tech and upstarts to inject life into its glossy image as everyone else (SoundJam MP). It even buys open source projects when parts it requires are at risk of being GPLv3'ed (CUPS). Hell, if it were not for FreeBSD's license terms, there probably wouldn't even be a OS X or iOS at all.
Putting Shinola on things is a far cry from being innovative.
http://en.wikipedia.org/wiki/SoundJam_MP iTunes was not an apple innovation either...
today is spelling optional day.
HP ProBook 4720s Notebook PC - i7 CPU, 8GB ram, 500gb 7200rpm HD, AntiGlare, 3yr support: $1948
MacBook Pro 17": i7 CPU, 8GB ram, 500gb 7200rpm HD, AntiGlare, 3yr support: $3348
That seems like WAY more than $100 difference.
Plus, AppleCare support SUCKS ASS!
Why?
#1 No accidental breakage coverage.
- My wife's macbook LCD was broken by my kid, they wanted $750 to replace the LCD. Screw Apple.
- We bought the LCD on our own and I repaired it for under $85.
- I have dropped, crushed, etc my HP and Dell's with accidental replacement coverage and they replaced or fixed no questions asked.
#2 To get any sort of support and replacement you need to goto an Apple Store.
- If I want, I can have a goon come out and hand deliver a part or replace it.
#3 For most repairs, the laptop is shipped out for repair.
- My wife's piece of crap macbook spent over 2 months at the repair depot in 6 different repair issues, in the first 12 months owning it. Bad MB, and serious overheating issues, random poweroffs and blackscreens.
- We evenually filed a lemonlaw case against Apple to have it replaced with a new one. The new one too had overheating issues, but at least wouldn't randomly shutdown
#4 No "you keep the drive" support option.
- If I DO have to send my laptop in for repair, I do not want to have over all my sensitive business and personal material with it.
- With the case of my wife's laptop, and others, Apple has wiped the HD and reinstalled the OS just for trying to diagnose issues such as random reboots. This was done without asking. Luckily, I had backups of everything on her system.
Other Reasons Apple is not Pioneering?
- iPod copied the design of players already out, and even removed features those had which are beneficial
- iPhone was just another smartphone, except it was the only one that could only run 1 app at a time.
- iPad, out of the box, is way behind on performance and ability of other tablets that have been out.
- 'Earthshattering' iPods/iPhones/iPads: no true usb storage support options. Limited embedded hardware codecs. No ability to email attachments from the mail app.
Yes, I own an iPad. If I couldn't have jailbroken/rooted/crosscompiled cli apps from linux over to it, I wouldnt have bought it.
Yes, among all the laptops and systems we own, we have a macbook for my wife. Yes it is one of the largest purchase regrets I have made in the last few years.
It's a common observation that small companies hire more people than big ones. This is a myth. The small company jobs don't last as long. The numbers on people hired are easy to get, but the longitudinal studies which track workers over many years tell a different story. It's necessary to distinguish between career progress and churn.
Most startups fail. The median life of newly formed businesses in the US is about three years. (That's pre-recession.) Most venture-funded companies fail. (From talks I've been to by VCs, the most likely outcome is what VCs call a "zombie" - not successful enough to pay back its investors, but just barely able, after downsizing, to pay its current bills and keep operating. Many dot-coms ended up in zombie mode, limping along for years.)
There's a long-term effect that's even more troublesome. Knowledge, as an economic resource, may be mined out. The cost of obtaining new knowledge can exceed its commercial value. Big corporate R&D labs doing basic research, as GE, AT&T, Xerox, HP and IBM once did, are a thing of the past. That trend peaked in the 1950s and 1960s. Venture capital took up some of the slack, but even that is no longer working. Venture capital funds, as a class, have lost money each year since 2000. That's new; from 1970 to 2000, most VC firms were profitable.
All this discussion and debate over innovation begs a question (perhaps in true Socratic style): what is innovation?
There are products being released every year that one-up their predecessors in terms of features, appeal, and usability. Is this innovation? To some extent, I would admit that it is a form of innovation; ideas are being created and (re)combined to produce new and (sometimes) wonderful things.
At the same time, it is my opinion that none of this "Apple vs Microsoft vs Google vs {fill in the blank}" is truly groundbreaking innovation. What technology has been produced that has fundamentally altered the way the world works? Some of the things that come to my mind when that question hits are the printing press, electricity, the telephone, manned flight, wireless communications, the integrated circuit, and the internet.
What technology has been invented/produced recently (say, a decade or so) that has made such a fundamental shift as these? (Honestly, if you can think of one, please post a reply. I'd love to hear your opinion)
(((dB)))
"Well established"? Smartphones were a niche market before the iPhone, and only exploded in popularity (and continue to grow dramatically) after the iPhone was introduced in 2007. Windows Mobile was far and away the largest smartphone platform; where is it now? And as to your assertion that the iPhone was not at all innovative, please show me the touchscreen smartphones before the iPhone that had a UI designed for a touchscreen device, not a desktop OS shoehorned into a mobile device. Please show me a smartphone that had a mobile Internet experience comparable to iPhone. Please show me even one of the "lots" that you've seen that had such easy access to a large and diverse collection of applications. Oh, and please show me the plethora of touchscreen Android devices that existed before the iPhone. If in your view the iPhone was not innovative, how would you classify the Droid X and HTC EVO, et al?
Congratulations. You just described the iPhone and iPad. The hardest part by far in consumer electronic design is not the features, it's the interface, and if you think that Apple's success with iPhone and now iPad are due to just good design and marketing, you need to take off your hate-colored glasses and stop with the feature-checkbox mentality. It's all well and good for technically minded persons and tinkerers, like many (most?) Slashdot readers, to think that it's fun to have to trim the spinnaker, strap the cat to the buttered toast, and change the dilithium crystals just to check their email, but for the average non-tech-elitist Joe and Jane, it's completely unacceptable.
Most people only think of innovation as occurring within their narrow range of interests, and for geeks that means that anything with electrons or logic flowing though it will make them jizz their pants. How many Slashdot readers would consider Dell to be an innovative company, much less one that had a seismic impact on computing? And yet it was Michael Dell's commercial and production innovations that resulted in the commoditization of the personal computer and made them widely affordable to the broad public, including most people here I'd wager. Demystifying existing technology for the average user and presenting them with easy and intuitive ways to interact with their data is Apple's genius, and it is true innovation at work, despite what you might think.
I will rarely criticize anything as harshly as this, but, it has to be said: some of the analysis in this article could be used as a chapter in How to Lie with Statistics.
For example, the article cites Tim Kane's "analysis" that shows that startups were responsible for all US job creation since 1977. His proof of this is to take all the net jobs created by firms existing for one year or less and compare that to the net job creation of companies existing for more than one year.
Seriously, what kind of a piss-poor business can't manage to last a year? The least successful businesses I've ever seen, those one-off restaurants that crop up and then die, manage to last a year before their owners realize they're throwing away money. So, basically that data set lumps together a whole bunch of positive numbers in one category, and dumps all the negatives in the other.
Now, the analysis in the cited article does get more nuanced than that, and it does, eventually, explain what I just said. But, it's very, very easy to get a misleading opinion from that presentation, and the linked article seems to perpetuate that misperception.
So suppose a company wants to do something about energy efficiency. They invest $10 billion dollars in R&D, and invent an amazing new room temperature superconductor. It works without caveats, it is just a wire that can pass a near infinite amount of current. The process for making it isn't that complex, so it doesn't cost all that much. So they can make it for $0.50/meter. They add $0.50 more to recoup their R&D and it sells for $2/meter to the end user.
Ok but now say there's no patents, so anyone can do it. they look and say "Oh that's not hard to do," and start making the wire. It also costs them $0.50/meter to make. However they've no R&D to recover, so they can get it on the market at $1/meter. Now the original company is fucked, they can't compete on the lower price, they've got $10 billion in R&D to recover. They lose a massive amount because they were the ones willing to take the risk and initiative to develop something new.
While it may be easy to say "Well screw them, we take it for the betterment of the world," consider the real result is that the first company would just never invest the dollars in R&D in the first place. If they know that the invention would just be taken, why bother? Instead they concentrate on just making things with existing technologies. Maybe do a bit of cheap development, but mostly you want to just produce, since creating just means you get it taken away.
So long as the economy is fundamentally a capitalism, which it is in every free country, then you have to have something to help protect inventors. Not saying the US system is the way to do it, but you can't just have it where inventions are free for the taking.
Not to mention the multiple innovations in dealing with and indexing obscene amounts of data in the back end. mSQL just isn't going to cut it, you know? That's impressed me beyond words: The back end has radically changed and it just keeps working.
The redundancy and failover are stunning and I don't think you get that without innovation.
The exact implementations may not leak out but the rough ideas do and we all benefit from that. Hadoop anyone?
Take a look at the way the markets that those products occupy changed after their introduction - the iPod was not the first or the most feature-rich mp3 player, but it took a small, gradually growing market and bust it wide open. The iPhone did the same thing: not the first smartphone by long, long chalk, but the first one that was genuinely great to use and similarly turned the smartphone market from a niche into a huge open field that everyone wants to participate in.
They drive trends, and create markets. Look at the original iMac. Look at how many companies copied it. Look at the current iMac (the flat panel one) and consider how current PC makers have also tried to do something similar - Dell's machines that fix to the back of the monitor stand in a crude "iMac-like" way to reduce the computer's footprint are a prime example of this (and move us away from towers/mini towers and desktops).
The iPad is one of those ones that is still up in the air; as a reinvention of the tablet market, I think it is succeeding - just look at the state of tablets before iPad, and now look at the upcoming crop of tablets are are going to "take on" the iPad in a market that now exists for them that wasn't there before. Whether this market is actually sustainable in the long term is another question entirely, but there is no doubt that there is (right now) a market for the iPad (they can't make them fast enough) AND a market for a competitor to the iPad (for example, something running Android). The same is true for the smartphone: the vast and growing market for Android devices owes a large part of its success to the iPhone's ignition of the smartphone market as a whole, formerly dominated by business users with blackberries.
Innovation is not always solely about "I invented this thing that has never been seen before" - it is almost always "hey, here's a new take on something we've all been doing before, but we think is a bit better".
People were going to the movies for years when the VCR came out, and the studios cried out that they were going to die with home taping, then quickly realised that "home cinema" would be a lucrative market, so the movie rental business was born. Hardly pure innovation in the strictest sense: "it's watching a movie.... in your home!" (it's buying music...... on the internet!"), but it was a good idea, and one that people quickly took to.
Apple, for all their faults, are very good at spotting markets - they did it with the iMac, the iBook, the iPod, the iPhone and now are trying again with the iPad (which is more an extension of their efforts with the iPhone and iPod Touch).
Really? You think patents are a measure of innovation? The vast majority of patents issued by the USPTO would have failed the test (that it be non-obvious, novel, and unique innovation), had it even been applied (which it won't, because that would cut deep into the revenue stream).
now we need to go OSS in diesel cars
I challenge you to name another tech company that innovates like Apple—with game-changing technologies like the iPod, iTunes, iPhone, and iPad
False challenge. none of those products are game changing in and of themselves. None of the products mentioned are technical innovations, they are all copies from someone else's work. These products are are examples of terrific marketing and and understanding that modern life is becoming more about style over substance.
Apple doesn't really sell technology products, they sell a "style" and an "appearance of superiority".
Apple is very good at giving people what they want. Unfortunately it seems that people these days want selfishness and ego stroking. The very fact that they put "i" infront of all their product names demonstrates their selling of selfishness.
eg. iPod - a pod of sound designed to keep others out of your bubble and away from the "i"
-- posted from my apple iPad.
Apple is the poster child for tech innovation; ... I challenge you to name another tech company that innovates like Apple ... These [other] companies constantly acquire startups and take advantage of their own size and distribution channels to scale up the innovations they have purchased.
Apple is extremely good at pretty product package and slick marketing. They're not what I'd call innovators, especially considering that in the last 22 years they've bought 29 companies to use their technologies in Apple products.