Digital Disruption is the key

Republished from Which-50.com

The giant dotcoms like Google, Facebook and Yahoo have made the transition successfully through the most disruptive moment of their short histories. And they have emerged more powerful than ever before.

Disruption is not a death sentence.

The desktop web as we came to understand it emerged in the mid 90's and changed the world dramatically in just a decade. The mobile web emerged during the last decade with the arrival of iPhones and then Google's Android. Its impact was even more disruptive, dramatic and far reaching, and it is still only getting started.

Only three years ago Facebook made no money from mobility and in its stock market prospectus said it didn't really know how it would. Google was a search engine seven years ago, and there were no Android phones in the world. Yahoo was the old man of the club, poorly run and trading on reputation, until Marissa Mayer laid down her "mobility first" dictate.

Today those three companies clearly lead mobile web traffic in the US, each garnering over 85 per cent reach amongst US mobile web consumers in the most recent month according to comScore. And the story doesn't stop at the top three. Run your finger down the top ten list and the story is the same all the way down. Giant tech brands with an internet provenance anchored on the desktop now dominating the smartphone economy.

How were these techs leaders able to survive the wave of digital disruption and emerge so powerful when so many other companies in other sectors withered.

Three characteristics stand out;

• An obsessive focus on customer service, epitomized by companies like Amazon
• An extraordinary pursuit of digital capability and design excellence as represented by companies like Apple
• And a brutal facility to execute disruptive strategy at scale and speed as demonstrated by companies like Google and Facebook.

Capgemini rang the bell on this trend in a report into digital leadership last year where it measured the maturity of business models based on digital capability and capacity to execute. Not surprisingly tech companies own the leadership quandrant as the chart below describes.

As Statista noted earlier this year , "In the end it appears as if the same companies that dominated the internet for years smartly used their size and scale to reach dominance in the mobile space as well."

When you start to drill down into individual company performances the impact of mobility becomes even more stark. Apple for instance will likely derive almost 70 per cent of its gross profits from iPhones this year as the chart below from Statista outlines.

With a higher priced and bigger screened iPhone apparently on the way, Apple is replying on smart mobility to defend its margins. As Statista says, "Given the fact that the iPhone is already Apple's biggest cash cow (see the chart for a breakdown of Apple's estimated 2014 profit), the prospect of improved margins on a top-selling new iPhone will bode well with Apple's shareholders which are waiting for positive news from Cupertino."

Source: Statista

Andrew Birmingham is the editor and publisher of Which-50. For smart insights and analysis around digital disruption visitWhich-50.com and subscribe to our Irregular Insights newsletter.