"ARM is a licensing company that develops technology so it can sell licenses."
I think ARM falls nicely into "technology company". Calling something "a licensing company" doesn't make sense when they license their own technology products.
Same for IBM. They might service software from other vendors, but I suspect most of their profit is by servicing their own. As such, again, it doesn't make much sense to call them "a services company".
IBM also makes a large amount of money servicing and implementing other company's technology products, specifically SAP and Oracle (and probably a lot of Microsoft too). To me, they are a technology services company providing consulting, implementation, and outsourcing services, and they also happen to develop some of the technology products that they sometimes implement.
That assessment of IBM is way off. They service other company's products insofar as is necessary to develop complete integrated systems for their customers, systems they build mostly with their own technology elements. In some cases, they build systems entirely with their own elements (a Power7 machine running a DB2 server in AIX, for example). Their relatively recent acquisitions of companies like Rational and Telelogic were moves to own more of what they service. Owning and developing the hardware and software they sell and service is core to IBM's business.
I would like to suggest a simple litmus test that lends a similar, though slightly different, definition of a technology company:
If one or more people at your company need to constantly read recent scientific research papers in one or more fields of one or more of the hard sciences in order to build a critical and central component of one or more of your central products then you're a technology company.
The only difference this will have with the OP's definition is that even if you decide not to license your applied science to others but merely sell an application, you're still a technology company. E.g. if you actually read physics papers in order to come up with a novel microwave emitter, you're still a technology company even if you've decided to just sell microwave ovens.
OTOH, if all you need to develop your product is news about the latest web framework, or even a blog post explaining some nice sorting algorithm - you're an applications company.
The "software is eating the world" meme when put into perspective is like saying "accounting practices are eating the world" or "sales strategies are eating the world" in 99% of real world cases. In most businesses, software has become another staple support of a competitive business but it is not an end in itself. In other words, software is a means of trying to achieve maximum efficiency of existing processes and this has been the case for a long time.
We probably don't like to acknowledge it but software is predominantly a support role in most of the companies it is so called "eating." It is utilized to streamline the business process once it has been defined and proven to have an impact on the bottom line.
Accounting and sales is now done with software. And not only "done with software", but with increasing amounts of domain and business knowledge embedded in the software.
That's what "software is eating the world" means. It isn't just that every business needs software in some vague sense, it's that every thing the business does has software in its foundation. Accounting, sales, billing, analysis, development, logistics, pretty much everything except high-level executive vision.
> software is a means of trying to achieve maximum efficiency of existing processes
When my paper airline ticket is replaced by software (the ticket shows on my phone's screen), is that streamlining existing processes or replacing them?
Your perspective may depend on whether you make printers or not.
Email streamlines communications by replacing letters and stamps.
Software is streamlining video rentals by replacing DVDs with downloads and streams. When the DVD factories shut down, is nothing being "eaten"?
There's a useful distinction between companies that sell technology and companies that use tech for competitive advantage.
However, language is defined by how we use it. In common parlance, "tech company" means the latter kind of company. Normatively decreeing otherwise is futile.
Should we talk more about the former kind? Yes. But I disagree that the latter kind is not a useful category. Distinguishing between "factory companies" and "non-factory companies" was probably very useful at the beginning of the industrial revolution. We're still in the early days of the information revolution.
By "software is eating the world", we don't mean that every company uses email or has a blog. That's not software that gives a competitive advantage, precisely because everyone already has it. "Software is eating the world" means that Uber is a better taxi dispatch service than traditional taxi dispatch services, because of software they developed. It means Netflix is a better movie rental service than Blockbuster, because of software they developed. It means Apple and Google upended every mobile phone manufacturer and carrier, because they could develop better operating systems and browsers.
"Software is eating the world" does NOT mean that every company uses software (duh), but rather that companies with software competency (or even excellence) will have a significant advantage with which to edge out their competitors.
The part of this article I really associated with is the focus on "startup drama". The startup drama has its place -- stories of founders fighting through the hard time or working out when to throw in the towel are wonderfully didactic in nature whilst getting across the human story. It's why Founders at Work is one of my favourite books.
Most tech blogs however have distorted these startup dramas to the point they look like poorly scripted television shows. They've discovered, just as gossip magazines did, that more drama => more eyeballs => more revenue.
Very few sources I have come across prioritize information over hype and it feels like the tech community is paying for it.
What I disagree with in the article though is the focus only on wanting to hear of tech startups. I asked an entrepreneur on advice about Natural Language Processing startups (of which he'd founded a few). He said "To bake banana bread you need to be able to bake bread". Tech startups, as different as they are to normal businesses and startups in other fields, share a great deal as well. We'd do well learning from their trials and follies too and hence why HN is so open to articles from all over the map.
Kevin Kelly's book What Technology Wants defines technology very broadly, so that it includes just about anything invented by humans (i.e. not already in the cosmos prior to humans), including language and sewing machines. That makes a lot of sense, but it doesn't reflect popular usage.
My favourite definition, because it aligns most closely with typical usage:
"Technology is a word that describes something that doesn’t work yet."
Most companies are "Technology Companies" because they would fail to function in a meaningful way if their technology no longer functioned correctly. To divide companies in the way the author has is perfectly reasonable, as are many other arbitrary lines in the sand.
But I fear that definition does just what the article decries- lumps too many companies into the "Technology Company" category. For example, all of the banks in my town fail to function in a meaningful way when their technology no longer functions correctly: the data line goes down, they can't cash checks; all the PCs go down, they can't accept deposits ... never mind that 30 years ago there were still banks doing every thing on paper because no one is trained to Do The Job now, they're trained on how to operate the software.
When asking what type of company is company X the answer should be the same as "In 1 or 2 words, what do they produce and sell"?
The problem is that "tech company" has become a complement and inversely not being able to call yourself one implies you are behind the times. But in reality, just about every company would fail in a meaningful way if their technology no longer functioned. Its difficult for me to think of a business that wouldn't falter without their technology functioning.
I think a software-centric company is more in the "technology" company mold if they have secret sauce somewhere in their apps that give them an edge and the implementation of said secret sauce is not necessarily something that is obvious from the end effect of their app(s).
That is, you couldn't just hand a spec of the company's app to another group of generic developers with the full expectation that it could be reliably replicated in due course.
So some of the magic is in the underlying algorithms - this is what I call a technology driven company, as opposed to a market driven company, wherein the magic is in recognized some business opportunity in the market and applying rather mundane, if laborious, software solutions to them.
This is a spectrum, few, if any companies, are purely one or the other.
Another good test is whether the engineers are considered a profit or a cost center and how the company treats them. This applies more to bigger, established companies rather than smaller companies that may have been started up by engineers even if they are fundamentally market driven.
Is Best Buy a tech company? If you're talking about the stock market, probably - their fortunes align with tech. If you ask me, a potential employee, I would say no. Their focus isn't in developing tech, it's in selling it.
As an employee, I'm more interested in what your employee pool does when determining if it's tech or not - not what you're selling.
In terms of business speak, BestBuy is in the services sector and in the business of retail. I think most would qualify it as an electronics retail company.
"Airbnb makes its money in real estate. But everything inside of how Airbnb runs has much more in common with Facebook or Google or Microsoft or Oracle than with any real estate company. What makes Airbnb function is its software engine, which matches customers to properties, sets prices, flags potential problems. It’s a tech company—a company where, if the developers all quit tomorrow, you’d have to shut the company down. To us, that’s a good thing."
Another interesting industry to look at through this lens is game development. Game companies develop and sell software (and sometimes hardware) to consumers, so they must be technology companies, right?
Wrong. The games industry is not a tech business, it is an entertainment business that just so happens deliver entertainment through software. Looking at things from this perspective can be very illuminating, especially if you're looking at things like the success of Nintendo's Wii six or so years ago.
Similarly, after reading this blog; the writer's daily starting point, I checked once again techmeme; and this does not provide much technology news really, it is not the place to check if you are really in tech. Individual tech blogs are better in this case imho.
If you come up with a new definition of "tech company" and it doesn't include Google you're probably not on to something. Google lives and dies by their technology. They are the technology company.
You could say the same about the UX for any company that sells primarily online. I think the author's point is that just depending on a website as a critical part of your business doesn't make your business a technology business, anymore than having a fleet of delivery trucks makes a furniture store a transportation company.
If a furniture company is unable to function without having an in-house fleet of trucks (as opposed to outsourcing it to a transportation company and/or contracted drivers), then they are really a logistics and transportation company (which could readily start selling or transporting other goods, if they so wished).
If whether or not they did this in house didn't make a visible impact on their growth rate, they would still be a purely furniture company.
Pre-AWS Amazon.com, on the other hand, was an entirely different beast: they built a highly scalable, relevant (they built out a whole division in Palo Alto devoted to machine learning and search relevance), web application. This would be akin to a furniture company building their own trucks (even if on somebody else's chassis).
Likewise, Google doesn't just display advertising they build their own advertising technology. If they merely used banner advertising, they would be (at _most_ a) $100 million company, and not a $200 billion one.
If a furniture company is unable to function without having an in-house fleet of trucks...then they are really a logistics and transportation company...
Perhaps, but we would still refer to them as a furniture company until they started selling something else. The author's point is that the term 'tech company' has become a meaningless distinction when the 'tech' in question has become ubiquitous.
I think Pixar is similar to Apple, who Alex addressed:
Apple is a technology company thanks to some of its lines of business (hardware, software), but is not a technology company in all of its lines of business (music, movies, books).
i.e. Pixar is a technology company thanks to some of its lines of business (e.g. RenderMan), but is not a technology company in all of its lines of business (e.g. Toy Story).
IBM is a services company that develops technology so it can service that technology.
Microsoft is a desktop operating system and office suite company that develops software to sell desktop operating system and office suites.
Apple is a consumer electronics company that develops technology to sell gizmos.
Facebook is an ad platform company that develops software to sell ads.
ARM is a licensing company that develops technology so it can sell licenses.
Wal-Mart is a retail company that develops technology to deliver lower prices.
Technology means far more than just ICs and software.