Sanford C. Bernstein analyst Jeffrey Lindsay is betting that Google and Amazon.com will loom as the two giants of Internet. According to Lindsay's report, "U.S. Internet: The End of the Beginning," cited by Reuters, "Both Google and Amazon.com are still racking up annual growth rates in the 30-40 percent range, with only a relatively modest slowdown in sight."
Given how those two companies own their respective fields, it's not a stretch to forecast them as long-term winners in the coming years. Google and Amazon have done the best job of creating clear value propositions for online users in the last decade, although Google has the better margin business selling ads on search pages.
Google owns search, with a nearly 70 percent share, and is moving into the applications space; Amazon is the premier online, personalized retail shopping site; and both are poised to become major providers of computing infrastructure services for the planet.
Google and Amazon have momentum and traction, but that doesn't mean they are invulnerable. They have only a decade of history, and they would acknowledge that they could be knocked off, just as they knocked off a variety of competitors on their road to greatness.
A scenario in which Google or Amazon are taken down isn't likely in the next several years, however. The two are well established and the online market is reaching early adolescence, making it more difficult for newcomers to be supremely disruptive to incumbents. If competitors become a nuisance, Google and Amazon have the clout and deep pockets to acquire or extinguish them, if they see them coming.
The two big winners in Lindsay's report could take some lessons from Microsoft if they want to stay on top. Microsoft can provide examples of how to diversify and grow, as well as cautionary tales about treading on antitrust laws, getting big and missing major shifts, such as the initial phase of the Internet. Having the smartest people in house has helped Microsoft and the newer giants succeed, but ultimately they have blind spots. They would do well to heed the advice of former Intel executive Andy Grove: Only the paranoid survive.