Corporate Spenders Remind Tech Where the Money Is
(Bloomberg Gadfly) — Allow me to take you back to the 1970s. Picture the terrible hair and the wonderful rock music. Back then, the best technology was made for governments and companies.
We might be on the cusp of another golden age for corporate technology.
I was thinking about this when Google discussed this week its rebooted strategy for the much lampooned Google Glass, which shows information like repair instructions or weather forecasts in a wearer's field of vision. "Glassholes" are out, and sober uses of Glass on the factory floor and medical offices are in. Glass might still flop in its new target market, but Google isn't alone in identifying companies as the most fruitful buyers for its futuristic eyewear.
My colleague Ian King has written about hospitals experimenting with virtual reality headsets to manage pain or the symptoms of Alzheimer's disease, and this week Selina Wang reported about a startup called Meta that uses holograms to try to change office work. Microsoft has emphasized commercial uses for its $5,000 HoloLens goggles. Think architects collaborating on building blueprints. Forrester Research has estimated companies will buy far more midpriced VR headsets in coming years than consumers will. Meanwhile, after two price cuts this year, Facebook is now charging $400 for its Oculus Rift video reality kit aimed (for now) mostly at video game fans.
It's not news that businesses are a gold mine for tech companies and for way more than VR gadgets. Big corporations and governments are responsible for the bulk of $2 trillion in annual spending on technology products and services. And even many of the most successful consumer technology companies — Amazon, Microsoft and Apple for example — generate huge sums selling to corporations or their workers.
But tech companies focused purely on businesses are one of the biggest technology trends of the last decade. Amazon transformed its fortunes and the direction of the industry with cloud-computing offerings from Amazon Web Services. There's also a proliferation of young companies targeting businesses including Slack, Docker and Box. Corporate technology is actually really good now — sometimes.
Even consumer companies are trying to make businesses foot at least some of their bills. Instacart is figuring out ways to make money from large food brands such as Red Bull, and not only from consumers reluctant to pay delivery fees. Airbnb and Uber want more bookings from people traveling on the corporate dime.
Some of this strategy is about squeezing revenue from as many sources as possible. But it also highlights the limits of tech products and services just for individuals. We the people are penny-pinching jerks. Businesses watch their bottom lines, too, but they are often willing to pay for software and gadgets that give them an edge.
That's why Intel, Oracle, International Business Machines and the early internet were built on sales to governments, spies, big corporations and others that wanted cutting-edge stuff and had the budgets to support its development. It feels a little like that again now. I think I'll stream some Pink Floyd.