Maybe there's just too much competition, too much disruption -- even for the disrupters -- and too little worldwide growth for tech to thrive right now?
That's how I feel after interviewing Bill McDermott, the co-CEO of SAP (SAP), after the company disappointed, in large part because of a slowdown in the Asia Pacific market but also because of the difficulty of switching to a more cloud-like model. That's how I feel after hearing from Microsoft (MSFT) and Google (GOOG), where the competition has really stung and the disruption has got even the most disruptive company in the universe, Google, which disappointed on the mobile line.
I think this competitive thesis doesn't get talked about enough. If you go on the conference calls of SAP and Oracle (ORCL), you hear about how dog-eat-dog things have become. These companies aren't even collegial any more. They are just going at each other. Oracle may have declared a truce with new partner Salesforce.com (CRM), but that's because Oracle simply didn't have enough of a cloud business, in part because that undercuts its lucrative enterprise software business.
Meanwhile, what's winning this market? Companies that have little competition, such as the healthcare maintenance organizations. UnitedHealth Group (UNH) just isn't duking it out with anyone significant that I can tell. The rails? They don't seriously compete anywhere. The defense stocks? They've pretty much carved out their areas of expertise. The airlines? They used to go at it, but the government has sanctioned a host of mergers that take out the competition pretty much for good.
Yep, when companies compete, I mean really compete, like they do in cellphones and tablets and personal computers, it can be brutal out there. And the brutality can hurt the best, as we found out with Apple (AAPL) in the last few quarters and now with Google tonight.
Strength in the worldwide economy can mask the problems that stem from competition for those that do compete globally, but not in this environment, where Europe, Asia and Latin America are weak and can't be counted on for upside. Yep, competition is the common thread of the losers, without the economy to bail them out. Things can change -- new innovations, improving economies. But for the moment, the competition has gotten the better of the tech companies that have reported so far.