A “walled garden” concept in the technology sector is not an old idea – America Online, also known as AOL, Inc. (NYSE:AOL), tried the concept in the 1990s with much resistance from Internet policy advisors and experts – but it is one that is becoming more popular among giants in the much more competitive marketplace than in the AOL hey day of 15 years ago. In this case, we are talking about the ecosystems being designed by Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and Amazon.com Inc (NASDAQ:AMZN).
These three companies are at the forefront of the tech world in terms of developing ecosystems that essentially provideso many services and devicces to consumers that they want to develop such a strong brand loyalty that consumers can rely on their one company of choice for everything. We’re talkin about tablet computers, digital music, streaming video, gaming and even e-commerce as a whole. Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and Amazon.com Inc (NASDAQ:AMZN) have all been working very hard to develop their own sovereign “walled gardens” but have done so in seemingly different ways – Apple through the development of its iDevices, Google through its Search and online advertising and Amazon.com through its e-commerce marketplace – but are looking to get to the same place of being a one-stop shop for consumers – developing a nearly blind loyalty to the brand to ensure a certain level of sales for the bottom line every quarter. And to a certain extent, Microsoft Corporation (NASDAQ:MSFT) is also joining the fray with the introduction of its Surface tablet to go along with its music, video and gaming options through Xbox and affiliated services and subscriptions.
But does this concept of a “walled garden” – a tech sovereignty where customers would never have to leave a brand to get all their wants and needs met – good for innovation and thus good for the customer? Some experts beleive that having a siloed ecosystem controlled by one company can be detrimental to a free internet for everyone. “If someone else controls the distribution of your work and the pricing, then you don’t have a company, you have an affiliate,” said Brewster Kahle of the Internet Archive, a nonprofit digital library. If the goal is a free and open market for all tech companies, “you won’t get there from here,” he said. “But if you want it to be a mall, we’re well on the way.”
But should a few companies – Apple inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and Amazon.com inc (NASDAQ:AMZN) get to dictate what companies get into the “mall”? For example, many companies apply apps for submission into the various app marketplaces, and their work and ability to reach the marketplace is subject to the review of the companies running the marketplace.
Is this what consumers want as far as choice? Does this “wallend garden” concept inhibit or encourage innovation among tech companies? Give us your feedback, and tell us what you think about these companies and how these “walled gardens” contribute to the bottom line for investors in these companies – like billionaires David Einhorn of Greenlight Capital, Julian Robertson of Tiger Management and Jim Chanos of Kynikos, among others?
