Ben Thompson: What Is a Tech Company?: "Note the centrality of software in all of these characteristics: (1) Software creates ecosystems. (2) Software has zero marginal costs. (3) Software improves over time. (4) Software offers infinite leverage. (5) Software enables zero transaction costs. The question of whether companies are tech companies, then, depends on how much of their business is governed by software’s unique characteristics, and how much is limited by real world factors. Consider Netflix, a company that both competes with traditional television and movie companies yet is also considered a tech company: (1) There is no real software-created ecosystem. (2) Netflix shows are delivered at zero marginal costs without the need to pay distributors (although bandwidth bills are significant). (3) Netflix’s product improves over time. (4) Netflix is able to serve the entire world because of software, giving them far more leverage than much of their competition. (5) Netflix can transact with anyone with a self-serve model. Netflix checks four of the five boxes. Airbnb, which has yet to go public, is also often thought of as a tech company, even though they deal with lodging.... Uber, meanwhile, has long been mentioned in the same breath as Airbnb, and for good reason: it checks most of the same boxes.... WeWork... is hard to see how... is a tech company in any way.... Peloton is also iffy as far these five factors go, but then again, so is Apple: software-differentiated hardware is in many respects its own category...
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