Past tech shifts suggest many big companies can adapt to AI

In short: History suggests new technology does not always wipe out big, established companies, and many may adapt to today’s AI wave.

What's going on

Big technology changes often start with new challengers, but older companies often learn, copy what works, and use their size to catch up. The Financial Times points to past examples where incumbents, meaning established companies, adapted instead of disappearing.

One example is the smartphone era. Apple’s iPhone launched in 2007 and quickly improved, then the App Store arrived in 2008, which made it easier for outside developers to add new apps. That created an ecosystem (like a busy shopping street where more stores attract more shoppers), and it pushed competitors like Google’s Android to evolve too.

The same pattern showed up in business software and entertainment. Salesforce popularized software as a service, meaning you use software over the internet like a subscription, and older firms later adopted similar approaches. Netflix helped push video streaming, but many traditional media and retail companies also moved into streaming.

Today, about 30% of large global public companies in the S&P Global 1200 have become “digital incumbents,” according to the analysis. These are older companies that built strong digital skills, and they reportedly outperformed the index by about 50% over the three years to December 2021.

What to watch

AI may follow the same playbook. Some startups will move faster early on, but many established companies already have customers, data, and distribution, and that can help them roll out AI widely. The key number to watch is how many firms join that successful 30%, because the rest may struggle if they cannot change fast enough.

Source: Financial Times