Playing defense and offense at the same time isn't easy. Yet I find that's exactly what all the competitive companies I speak to know they have to do, and they have to do it with technology. If they don't, they are being left behind. Much of the action in stocks right now revolves around who's successful at connecting with the customer using that technology and who doesn't have a clue of how to fight against forces that have harnessed technology to win.
We come out to the West Coast every year to Dreamforce to learn. We come out with open ears and eyes and we see what companies are doing to be able to keep their turf and invade the turf of the entrenched, whether it be the Old World incumbent or the New World of those who are way ahead of the game.
I see plenty of entrepreneurs wanting to take on the companies that have long dominated their space and they are using technologies like those from Adobe (ADBE) that are a force equalizer. An entrepreneur armed with as little as $50 a month has the ability to make their company look every bit as big as a major department store, except their company's online with no rent and no expensive employees and a very lean infrastructure. We saw technology today that can anticipate what people want using artificial intelligence and then turn it into a product simply by a sketch. That's how incredibly empowering the Adobe technology can be. Adobe's partnered with Microsoft's (MSFT) Azure cloud business and the two work hand in glove.
Speaking of hand in glove, we learned yesterday from Marc Benioff and two executives from Google (GOOGL) -- Diane Green, CEO of Google Cloud, and Sridhar Ramaswamy -- of a partnership between the two companies that could be used to take on Amazon (AMZN) in interpreting gathered data to figure out what people might want ahead of when they want it.
The partnership is terrific for those companies that feel Amazon is too competitive and don't feel like fueling the Amazon beast with their own Amazon Web Services order. You don't pay your opponent while you are fighting them for business if you can avoid it. The problem has been that Amazon Web Services and analytics, which works with Salesforce (CRM) , does give you an edge you couldn't get until this tie-up with Google.
How relevant is this? Take today's action. We learned from a trade publication yesterday that Amazon might be moving into the furniture industry. We have no idea if Amazon truly intends to go into the business, let alone at what price point or style or even strategy, if at all, that the online colossus will choose.
Now let's think about this. Let's say you are one of the companies in the industry -- Restoration Hardware (RH) on the highest end; Williams-Sonoma (WSM) for the upper middle, particularly its West Elm business; or Wayfair (W) , the online furniture business that has been considered the Amazon of furniture -- and you love working with Amazon Web Services because it offers you fabulous analytics and the Salesforce marketing cloud, giving you an incredible edge over those who don't know how to tell the story or contact the current customer or, perhaps the most important, anticipate who might become a customer and how to reach them.
That's all well and good, but if you work with the cloud of Amazon, do you want to fund your furniture competitor, especially when Google now offers you the same seamless analytics and marketing ecosystem that Amazon has? So why the heck would you not switch?
You want to play defense against Amazon and offense to take business from the other entrenched companies that are just starting to figure out a digital strategy. That's why the Google-Salesforce tie-up was such a big deal.
As big a deal as that may be, the news that rocked this event occurred south and east of here, the talks that David Faber revealed yesterday about Disney (DIS) talking to Twenty-First Century Fox (FOXA) about a merger of their entertainment assets and infrastructure.
This is a huge possible deal and it is all about another sworn opponent that can't really be considered an upstart anymore: Netflix (NFLX) . At one point it seemed the whole entertainment complex was giving away its wares to Netflix, funding the online company's worldwide growth.
Some feel they sowed the seed for their own demise because Netflix has such a good command of shows everyone in the world might want to watch. Netflix got to critical mass using its content and now relies heavily on its own proprietary content to bring in subs at an amazing pace.
Yesterday I witnessed a presentation by Twenty-First Century Fox about how it uses Salesforce to get in touch with its real customers, the consumers of their entertainment, without necessarily using conventional methods like broadcast or cable television or the movie theater companies. It was brilliant and it showed me that Fox knows how to use digital media, informed by Salesforce, to hold its own in this new world of fickle millennials.
But then I hear, like you, from David Faber that Disney and Fox were talking about Disney buying these same entertainment assets because both companies need more scale not only to attack their now sworn enemy, Netflix, but also to fend off Amazon, Google and Apple (AAPL) . All of these companies want to be much bigger in the entertainment business in part because they, too, have the artificial intelligence that makes it so most things they do are hits. (Google and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
We don't know whether there will ever be a deal, but we do know that Netflix is forcing Disney and Fox to do things that were unthinkable even a few years ago. At Dreamforce there are as many people talking about stopping Netflix as there were last year talking about blunting Amazon.
Sometimes the technology is so powerful that there are no winners. That's what it seems like in the online travel wars where Priceline (PCLN) joined Expedia (EXPE) in saying it has to spend to keep up with its competitors. That's always the kiss of death, which is why that stock got hammered.
I don't know who wins these wars. They are too early. I do know this: If you own shares in a company that doesn't have a winning digital strategy, no matter what the industry, your goose is cooked as the other guys in your sector will set the oven at 500 and burn you to a crisp.