In 2017, Can We Stop Calling The Tech Sector A Sector?
Another year, another CES. In its milestone 50th year, CES continued the trade show’s reputation for introducing awe-inspiring tech, from TVs thinner than an iPhone to a new wave of wearables to friendlier voice assistants to supercar-supercomputer hybrids and everything in between. Year after year, CES grows in popularity and [some of] the tech showcased in Las Vegas trickles to the consumer. Much like technology as a whole, CES has gone from niche hobby to ubiquitous element of mainstream culture.
A quick “Best of” search shows just how far CES has come. It represents so much more than TVs, computers, and mobile devices, and the companies that made the biggest splash this year are not exactly “tech companies” per say.
- Whirlpool’s Zera Food Recycler turns household food scraps into fertilizer.
- Lego’s Boost Kit animates toys and teaches kids to code their own robots.
- Honda’s Neuv comes with Hana, an AI assistant that learns likes and dislikes, measures heart rate, and orders coffee.
Today, companies aren’t just utilizing tech, they’re creating it themselves. At times, the tech industry’s disruptors don’t belong in the category. Tech giants aren’t sticking to their own swim lanes either. With so many others entering the tech industry, why do we even still consider technology a standalone category?
As we enter a new year, I ask, “Can we stop calling the Tech Sector a sector?”
Tech Is King
This question has been a long time coming. In the last few decades, technology has become the most powerful force in business. In 2016, five of the top ten most valuable companies on the Fortune 500 are tech companies. The professions traditionally viewed as direct lines to wealth are no longer the ‘guarantees’ they once were. They are just one of many roads to potential success. Startups are the new aspiration. Coding is the new “Proficient with Microsoft Office.”
It only makes sense that companies like Whirlpool, Lego, and Honda would dabble in the business of Apple, Google, and Amazon.
Certain tech innovations cause fundamental shifts in how we live our daily lives. First was the Internet, and then came mobile. Next up will likely be Artificial Intelligence, with text and/or voice as a conduit. To a certain extent, these booms occurred in the silo of technology and later radiated out. Today, tech innovation trickles into the mainstream almost instantly. As more smart/connected devices are introduced, the adoption rate is faster than in generations past and the Internet of Things becomes a reality.
As The Wall St Journal notes, 2016 was a monumental year in technology, and tech companies sat at the forefront of mainstream conversation. Apple faced the FBI. Amazon made brick and mortar stores quiver with its Go stores. Snapchat proved skeptics wrong with the phenomenal launch of Spectacles.
One area in which the tech sector did disappoint, however, was in shiny new IPOs. Entering 2016, many anticipated startups like Uber and Airbnb to go public. We’re still waiting. As we progress through 2017, Snap Inc. will (probably) go public, and if and when the Ubers and Airbnbs of Silicon Valley file, will they fall into the Tech Sector? Maybe the Services Sector? More on that later.
The Tech Titans Are Crossing Borders
Technology has become a catch-all category: a label that society gives a company it can’t quite define (or that a company gives itself when it refuses to define itself). However, the reality is that tech permeates nearly every business. Rather than sitting next to the Consumer Goods, Financial, and Health Care Sectors, Technology rests above them all and can no longer operate in its silo.
In the traditional sense, tech companies fall into one of five subcategories: Computer Hardware, Computer Software & Services, Electronics, Internet, and Telecommunications. Just listing those industries, I think I have proven my point.
Consider the “products” from these companies that make headlines. Tech companies aren’t sticking exclusively to their core businesses. They’re not only are taking on other industries, they’re disrupting them in major ways.
Amazon (formally a Services company) produces original TV series and films that win awards over traditional networks and studios. Facebook is certainly becoming a media company, no matter how much it denies it. Google, along with Facebook, is the reason why advertisers are migrating budgets away from traditional media like TV, print, and billboard. Apple may soon head in an entirely new direction with its long-rumored automobile.
The list goes on and on.
And while tech companies stretch into other industries, new competition is entering the ever-expanding tech bubble.
Not All Companies That Make Tech Are Tech Companies
If CES proved one thing, it is that any company with the proper motivation, resources, and strategy can launch a great tech product. As noted above, one need not be a tech company to innovate in the space.
Because Honda developed an AI, is it now a tech company? No. At its core, Honda (and Ford and Mercedes and BMW — you get it) is still an automotive company. Take, for example, Nike. When the shoemaker launched the Fuelband in 2012 (R.I.P. Fuelband), it did not suddenly morph into a tech company. Nike’s feet remained firmly planted in Consumer Goods. Companies like Honda and Nike are simply doing what savvy businesses do: embrace technology to innovate in their respective industries. These are, however, legacy companies that evolved over time. What of startups like Uber and Airbnb? In speaking with my peers at these companies, employees resoundingly say “I work in tech.”
No you don’t.
If you work at Uber, you work in transportation. If you work at Airbnb, you work in hospitality. These two companies (and startups like them) are the inevitable next step in the evolution of existing industries.
Such a reality may explain Uber’s stalled IPO. In the last few years, Uber has made strategic pivots to diversify its offering. UberPUPPIES and Christmas tree deliveries were just test runs for a larger plan. When Uber spun UberEATS into a standalone app, the ride-sharing company signaled to the world that its ambitions lie beyond transportation. Uber wants to be a network of resources, with transportation as one of many use cases. Until this ambition becomes a reality, however, I argue Uber is still, at its core, a transportation company.
As Silicon Valley unicorns race toward IPO, the ambiguity of technology as a sector becomes more and more obvious.
The state of technology today is a complicated one. Companies fail to define themselves concretely because the capacity in which we interact with them has fundamentally changed. Technology has empowered the everyday consumer to access and demand anything, from any one, at any time. That change in dynamic has forced and enticed companies to redefine themselves. Old companies become tech companies, tech companies enter generations-old industries, and fresh startups refuse to play by anyone else’s rules. Business, at it were, exists on a spectrum.
The tech bubble hasn’t popped. In fact, more people are filing in by the minute.