Farhad Manjoo
STATE OF THE ART
Technology giants often meet their end not with a bang but a whimper, a slow, imperceptible descent into irrelevancy that may not immediately be reflected in the anodyne language of corporate earnings reports.
Old kingpins like Digital Equipment and Wang didn’t disappear overnight. They sank slowly, burdened by maintenance of the products that made them rich and unable to match the pace of technological change around them. The same is happening now at Hewlett-Packard, which is splitting in two. Even Microsoft — the once unbeatable, declared monopolist of personal computing software — has struggled to stay relevant in the shift from desktop to mobile devices, even as it has continued to pump out billions in profits.
Now Google is facing a similar question about its place among tech’s standard bearers. And like those companies before it, its strength today — a seemingly endless reservoir of ads next to search results — may turn out to be its weakness tomorrow.
–
Perhaps this explains why Larry Page, the company’s co-founder and chief executive, recently delegated responsibility for most of Google’s products to a subordinate, allowing Mr. Page to focus on strategy. It could also explain why Google’s research and development spending increased to $2.8 billion in the fourth quarter, from $2.1 billion in the same quarter a year ago.
That spending, on projects like a self-driving car, Google Glass, fiber-optic lines in American cities and even space exploration, generates plenty of buzz for the company.
But the far-out projects remind Mr. Thompson of Microsoft, which has also invested heavily in research and development, and has seen little return on its investments.
“To me the Microsoft comparison can’t be more clear,” he said. “This is the price of being so successful — what you’re seeing is that when a company becomes dominant, its dominance precludes it from dominating the next thing. It’s almost like a natural law of business.”
Email: farhad.manjoo@nytimes.com; Twitter: @fmanjoo
