During a tour in a museum in my hometown. I entered the “Past Technology” room. As I was walking by, fascinated by how the Radios and TVs looked like 30-40 years ago and how far and fast we got to where we are now. I was stunned when I saw the cellphones that were hanging on the wall.
If you think about each and every one of those phones, they were unique at their time and special. An endless time and thinking was invested in making and developing those cellphones (not to mention the money).
Nokia and Motorola were the leaders of their era. Motorola launched its first cellular phone in 1973 and dominated the industry after it was overtaken by Nokia in 1998. In 2000’s everything changed, entering the millennium for Nokia meant new challenges; a slowdown in the mobile phone market and a declining market share. The last nail in the coffin for Nokia was Apple’s touch-screen iPhone that was introduced in 2007.
Looking at the 2007 cover of the Forbes magazine and answering the question (in retrospective), that was written in the description explains everything I’m saying in a mere Yes or No answer.
After you read that and got the Idea, think about Apple and Samsung, and who might overthrown them, or how they can disrupt further and stretch their lead. Take it further to another sectors and think about Netflix, Hulu and Youtube in the streaming indusrty. Another front is the e-commerce, Amazon.com Walmart.com and Alibaba, again how they can stretch their lead or be disrupted.
If you think it’s impossible to overthrow those companies, here is another example: Yahoo and Google.
The Death star Amazon
Disruptions can happen in any sector, at anytime. Yesterday we witnessed what might be a big one. Amazon announced that it acquired the online pharmacy Pillpack, according to The Wall Street Journal; Amazon outbid Walmart and bought the 5 year old startup for ~$1 Billion. Shares of CVS, Walgreens Boots Alliance Inc and Rite Aid Corp. all fell sharply on Thursday (-6.10%, -9.90% and -10.66% respectively), the fall wiped out more than $11 billion in market value for the three companies. Im not suggesting that this is the end for those stocks, yet i used them as an example to embody the effect the disruption process has on stock prices.
What to do as an investor
Expecting the unexpected is really hard. I bet many of us who actually thought about who might take down Amazon or Apple heard an inner voice that said: “Are you serious?” Or “No one”. Your job as an investor is to know what is going on around you. If you read and think more you’ll simply know more.