Updated Feb 26, 2018 - Technology

How Old Tech could roar back

1948: Said to be the world's fastest calculator. Photo: Keystone / Staff / Getty

For several years, one of the greatest fears of the world's legacy companies has been disruption by an Uber or Airbnb — an adroit new startup with a cheap, market-shattering idea. But a surprising new reality led by the confluence of big data and artificial intelligence has softened their anxiety, and made them think they — and not startups — are the new, new thing, according to a new study.  

Quick take: If the study — by IBM and Oxford Economics, a commercial arm of Oxford University — is right, publicly traded legacy companies in numerous industries may be on the cusp of a boom in value.

According to the study, based on interviews with 12,854 C-suite executives in 112 countries across 20 industries, 72% said that, if their sector is disrupted, it will be by old hands such as themselves. Just 22% said a small company or startup would be responsible for such a shakeup.

  • "It talks to a confidence different from the past, when the assumption was that disruption was all coming from small, nimble startups that were going to break up basic business models," Mark Foster, a senior vice president at IBM, told Axios. "Now its more a case of they are fighting back."

The big difference is data: The prevailing wisdom is that companies like Google, Facebook and LinkedIn have vacuumed up the majority of the world's commercializable data. But, according to the study, such Big Tech companies control only about 20% of it.

  • Instead, far older incumbents like Unilever, Procter & Gamble, Bank of America and the UK's Santander own about 80% of the world's data, the study said.
  • "Your bank has records on you going back since you started banking with them," Foster said. "They know a lot more about you than Google or Linked in are going to scrape from the Web."
  • "And they will combine their own information with external information that's on the Web, like likes and dislikes," he said.

A crucial fact: There is a more level tech playing field.

  • AI — the key enabling technology for commercializing this data — is available to everyone and monopolized by no single or group of companies. No single company is in control of AI.
  • Therefore, incumbent companies can build platforms customized for their own industries, and, using AI, can monetize their proprietary data, the study said.

This does not mean Big Tech is in trouble, the study said.

Amazon, for instance, will continue to be a threat to the industries it is preying on, "but there will be more competition going forward," Foster said.

Go deeper: IBM presents the study live in Barcelona at 9:45 am EST today.

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