Are Tech Companies Too Large? – The Rise of Information Technology

There are many reasons the tech industry has seen astronomical growth.  At the simplest level, these reasons are better hardware, a worldwide digital network, the cloud, and the financial markets.

The first two reasons show how we got here, and the last two reasons show where we’re going.  We’ll help you understand the playing field so you, too, can understand how the tech industry has grown so swiftly.

Growing Demand For Computing Power

Smaller Hardware

The title here might be a bit confusing because the hardware we have is actually staying about the same size.  We’ve just been able to make the same-size hardware do so much more.  

We’ve come from computers the size of a room down to the mobile phone you hold in your hand.  This ability to do more computing while using less space is critical to every step we’ve taken in the growing IT sector.

Better Software

Software used to be sold in boxes at stores all across the country.  Now, you can download any software you might need over the internet.  More on that later.

Software has almost outlived its utility as a word to describe what computers can do.  It’s no longer just about word processors and video games because new, custom-made programs are being created every single day for specific purposes.  

We also have millions of mobile applications that allow you to download mesmerizing video games and electronic board games, help you make your life more efficient, or simply take a better picture.

The software used to write these programs is accessible even to young students.  These same students have even been known to create some truly innovative mobile apps.

Moore’s Law Demoted to Theory?

As the speed of growth in computing power continues to skyrocket, Moore’s Law is nearly unable to keep up.  For a refresher, Moore’s Law says that the number of transistors on a microchip doubles every two years.  We are near to the point where we can more than double it every two years.

As that becomes reality and our hardware becomes a more and more cutting edge, there is no telling what we find we can do with nearly limitless computing power.

At The Speed of Light – The Need for a Global Information Network

Mobile Phones

The first mobile phones were the guinea pigs in the great experiment that has led to our present day, which allows us to access unthinkable amounts of data from nearly anywhere on the planet.  As the need for better communications around the world grew, so, too, did the networks of communication towers that currently span the globe.

The information we consume and send now floats over our heads between communications towers and satellites.  This has taken quite some time.  In fact, the growth of communications networks has perhaps been the slowest because of the complexity and expense of the equipment.

The Internet

The internet is not merely a gimmick used to consume useless information but a tool that has been a necessary part of one of the next points of discussion – the cloud.  

The internet itself has also been a proving ground for new ideas not only in IT sectors but in retail and many other industries.  The most fascinating ideas and news over the last several decades has been spread at lightning speeds thanks to the internet

What Is the Cloud?

Virtualization – More Computers Are Only A Click Away

Can you imagine a world where your computer can actually do the work of two, five, or even ten computers?  Well, you’ve arrived!

To most people, a cloud is a place where we store pictures and documents.  You can create photos on your phone and dump them into your “cloud.”  You are merely touching the very tip of the iceberg, as it were when you do this.

The cloud allows for the virtualization of operating systems.  Many companies like Microsoft, Amazon, and IBM have spent billions creating massive computing centres which house all the hardware you might need – thousands of them!

They then create marketplaces where this computing power can be sold on an as-needed basis, and their customers don’t have to worry about the overhead involved in building and maintaining their own internal networks anymore.

While digital storage for you and me is certainly a part of that, the cloud services sector has grown to offer software with artificial intelligence and machine learning capabilities.

If your website could add value to customers by offering photo analysis software, the cloud can offer that.  Need to boot up several servers during heavy traffic and turn them off when the traffic has subsided to save costs?  The cloud can manage that, too.

The cloud is the next frontier in the IT world.  It’s already proven to be an efficiency powerhouse for all kinds of companies from small manufacturing plants to massive multinationals.  This is laying the foundation for efficiencies that we can only guess applications for.

Never See Downtime

By building these computing centres at strategic places around the globe, cloud service companies have enabled the globalization of data storage and processing.

If your company has an internal network of multiple servers in one location, and that location experiences a power outage for any reason, then your company can’t keep working.

Cloud service companies offer built-in redundancy and connectivity across regions.  This means that downtime is reduced significantly.

Market Valuation – Many Peaks and No Valleys In Sight

Relentless Demand

Obviously, those who have been watching their stock portfolios have noticed that tech companies have outperformed consistently.  While there’s certainly more volatility associated with this growth, investors want in.

Most companies have grown significantly by virtue of offering better products and services.  However, some of the demand stems from investors’ belief in what companies can produce in the future.  Companies like Amazon and Tesla are among several that are helped somewhat by investors’ continued belief in future growth.

Stock prices continue to grow, and this helps tech companies generate capital that can be used to expand their businesses.  This keeps improving the likelihood they’ll improve their revenue generation over time, which only keeps improving the value of their stock price.

Buying Out the Little Guy

Speaking of Amazon, some companies have simply made it a point of acquiring smaller companies with technologies that can benefit the buying company in some way.  Think of Audible and Whole Foods – two major acquisitions Amazon made that allowed massive and nearly immediate expansion into new revenue streams.

This process happens with relative frequency in the tech industry.  Some companies hope for such a thing when they set out on their journey.  Acquisition by a major tech company can bring in hundreds of millions or even billions depending on the services the little guy creates.

Final Thoughts: The Growth of the IT Industry

The growth of the IT industry has led us to our present situation simply by virtue of fast growth followed by the discovery of what we can do with this new technology than another phase of growth, and this series of events has compounded over decades to now.  

There are some who have ideas about what we might see in the short term as a result of this truly phenomenal growth.  However, we can only guess what future generations will find out they can do with this continually expanding, truly fascinating technological revolution we are experiencing.

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