What happens when tech companies hit middle age?

As Apple turns 40, the company can celebrate its many successes, from the iPad to the MacBook. But it isn’t the only Silicon Valley giant reaching middle age – the question is, will these firms continue to be as exciting and innovative as ever, or opt for a safer, more comfortable existence?

Born on 1 April 1976, Apple’s birthday represents a remarkable milestone for a tech company operating in a highly competitive industry. "Tech" and "start-up" are almost synonymous, and as we enter the Fourth Industrial Revolution, technology firms are at the forefront of the rapid change society is undergoing.

Just days after Apple hits 40, Microsoft is turning 41, and even Google and Amazon are ready to fly the nest at 17 and 21.

Can Apple stay ahead of the curve?

As former Apple employee Jean-Louis Gassée says, “Apple continues to think different”. The firm does face significant challenges, notably in the smartphone market – in many respects the foundation of the business. The iPhone is responsible for around two-thirds of the firm’s revenue.

The death in 2011 of visionary CEO and co-founder Steve Jobs also robbed Apple of one of the industry’s most influential figures.

However, Apple does continue to produce new products. This year, for example, it's already launched a new phone and tablet.

Beyond this, the company has also expanded into other areas, such as services. It's moving towards renewable energy and the recycling of its products, and has positioned itself as a champion of social change. When Tim Cook stood up for gay rights, sales actually went up.

A window on the future

Microsoft is less than 12 months older than Apple, but by 2010 had already been eclipsed by its younger cousin. On Microsoft’s 40th birthday last year, The Economist argued that the main lesson other firms would learn from Microsoft “is that it was too protective, for too long, of its main franchise”. Falling revenues from Windows are reflective of this, and perhaps a warning sign for Apple and the iPhone.

Can companies prevent a mid-life crisis?

As Facebook (12 years old) and Uber (seven years old) demonstrate, the tech industry is ripe for disruption and the rapid emergence of new players. Arguably the greatest challenge for tech firms is to continue riding the waves of change, without being overwhelmed.

For The Economist, the answer lies not just in internal innovation, but also in keeping an eye on the whole industry. Tech firms are constantly on the look-out for new technology or the start-up that could take business away from their products, or for opportunities to expand into new areas.

Consider Google’s purchase of YouTube or Android, and its development of self-driving cars and other futuristic technology in its lab, X. Or look at Amazon’s acquisition of Colis Privé, a French shipping company, its development of delivery drones, and the expansion into the entertainment industry with Amazon Prime TV and Music.

Whether these tech firms can avoid the pitfalls that come with growing older remains to be seen. However, the lessons from Google, Amazon and indeed Apple emphasize the need for constant innovation, expansion and adaption to meet the challenges of a rapidly evolving industry.

Have you read?
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