Paradigm Shifts in the Tech Industry
Augmented Reality Could be the Next Big Shift
In the 1960’s, IBM dominated the tech industry because mainframes were the central paradigm of the computing industry. A decade later, personal computers were going to overtake the mainframes.
Steve Wozniak created the original Apple I in 1975 and the entire value chain shifted towards this new paradigm, the personal computer. This was also the initial days of the software industry and the idea that software could be a sold separately and didn’t just have to be something that came with the hardware purchased.
Apple dominated the PC market for almost 20 years but the most important personal computer came from IBM and Microsoft. IBM did not realize the importance of software at the time allowing Microsoft to create and license the operating system which became synonymous with the PC industry and established Microsoft’s dominance for two decades.
Microsoft’s dominance was challenged primarily when web became the new paradigm. Instead of creating software for windows, people started creating applications for the web. This gave rise to a new crop of companies like Google, Amazon and Facebook.
The move to the web for the first time, made buying a computer useful for the average person. To get online, people needed a computer and windows was the only viable option which worked well for Microsoft.
However in 2007, Apple launch the iPhone and provided an alternative client to access the internet using the iPhone and Google created Android to enable other manufacturers to capitalize on this opportunity.
Microsoft missed out on the paradigm shift that came with the introduction of the iPhone which was the final blow to the companies dominance.
Just like Microsoft became the default operating system with the paradigm shift from mainframe to PC and dominated the tech industry for two decades, Apple and Google built the default operating systems for the mobile and have been the dominant tech players ever since.
Summarizing the Past
Paradigm shifts made is possible for new companies to form and disrupt the incumbent monopolies. This does not mean that the established companies went out of business, Microsoft and IBM are both powerful companies even today but they are not perceived as a threat to the incumbents like they used to.
Another important observation is that the incumbents did not completely miss the paradigm shift.
IBM understood the threat to their business and created a PC in partnership with Microsoft. They built the most important PC in my opinion because it upended Apple’s PC monopoly. Microsoft capitalized on this paradigm shift because IBM failed to understand the power and importance of software.
Microsoft on the other hand did not miss the transition to the internet. Windows came pre-installed with the internet explorer which crushed Netscape which was the company that enabled the transition from building for windows to building for the internet. Microsoft had also launched the PocketPC in 2001 and had a bunch of windows phones on the market when the iPhone was launched.
Nokia dominated the phone market in 2007 but the iPhone created such a transformative change in what a ‘smart phone’ really meant that most of the incumbents had to start again from scratch.
Nokia failed to create the hardware for the smartphone just like Microsoft failed to create the software because it is extremely difficult to discard your old assumptions/beliefs and start with a clean slate.
The most powerful tech companies today are Apple, Google, Amazon and Facebook. These companies capitalized on the paradigm shift to the web and mobile devices. For incumbents to displace these companies, it is important for a paradigm shift to occur. We haven’t seen any transformative shift in hardware paradigm since the launch of the iPhone.
In my opinion, Augmented Reality is going to be the next big paradigm shift. It will allow new companies to emerge and challenge the current monopolies.
Smartphones made it possible for people to carry a powerful computer in their pockets and stay connected at all times.
It took multiple iterations before smartphones became the platforming changing phenomenon that made Apple one the most profitable company in the world. In my opinion, augmented reality glasses are going to be the next big hardware paradigm shift and Augmented Reality as a whole will lead the next tech transformation.
Just like IBM built its own PC and Microsoft built Smartphones, the four tech giants have all been investing heavily to beef up their Augmented Reality capabilities.
The technology for AR glasses is not developed enough to go mainstream. Apple is making substantial progress in building the software layer on top of the smartphone cameras to power Augmented Reality applications.
They launched the ARKit in 2017 for developers to build AR experiences using the smartphone camera and are also working on glasses for the past couple of year and are rumoured to release them by 2022.
Google glasses were a big flop among consumers when they launched initially but Google has been refining its technology and the glasses are used extensively on assembly lines and factory floors. Google also recently acquired North that makes consumer facing AR glasses.
A trojan horse that can dominating the Augmented Reality platform shift is Snapchat. Snap is arguably the leader in Augmented Reality with its smartphone camera filters called Lenses. The company reported that over 170 million snapchat users interact with lenses daily.
Snap recently introduced a feature called Local Lenses that allows multiple users to share an augmented reality experience with persistent graphics that are spatially anchored to the world. It demonstrated an application where users spray virtual paint on buildings while others can see their artwork.
The Snap Kit is well positioned to become the operating system for Augmented Reality. The Snap Kit currently has 800 integration partners and 148 million monthly active users. It allows developers to harness Snapchat’s AR capabilities like the Snapchat camera, custom lenses and bitmoji’s into their own applications.
Over the long-term Snap Kit, the Bitmoji SDK, and the Bitmoji keyboard will spread Snap’s products into every other app. The company is also working on Augmented Reality Glasses called Spectacles but has not been able to gain any meaningful traction among consumers.
Every major paradigm shift in the past changed the way we interacted with the machines in a meaningful way. In the mainframe days, people had to use punchcards to communicate with the hardware.
The PC era introduced the mouse and the Graphical User Interface which made it much easier for the average person to interact with their devices.
The iPhone came with the most powerful touchscreen technology at the time. The touchscreen soon became the default mode for interacting with smartphones and other smart devices like watches.
For Augmented Reality Glasses to go mainstream, they will have to come with a better way for users to interact with the device. The advances in the field of voice recognition and smart assistants made many people wonder if voice was the next big paradigm shift however I believe that voice will become the default interface to communicate with Augmented Reality.
The big four see the platform change coming but it is plausible that a new company will come up with a radically different approach to capitalize on the platform shift and become the dominant force over the next decade.