Defending the case of Tera Mergers like Googazon

Amazon, Google, Quanta, Gigabyte, Asus, Foxconn, Yahoo, AOL, IBM, Intel .... These are all companies that have undergone or are rumoured to undergo tera-merging in a not-so distant future.

The ten companies mentioned are all considered as leaders/near-leaders in their respective fields and their financial size is nothing short of being exceptional.

Of those ten, four have already merged to create Tera-companies that rival some European countries by their sheer human and financial power.

Tera companies have the following features : breadth (they are global rather than international), weight (their market capitalisation runs in tens of billions of US Dollars), length (their products affect major segments of our living), depth (their influence on geopolitics and economics cannot be negated).

Foxconn+Quanta for example generates USD 2 Bln profits annually and builds everything from laptops, servers to motherboards.

Another sought-after and predicted merger/buyout is that of Amazon+Google. Google has one of the largest market capitalisations in the entire webosphere.

Tera-mergers are going to become more and more common, often caused by competition but also by the prospect of shrinking and changing markets.

Like drops of water coming together due to gravity, the smaller the number of remaining (bigger) companies, the faster the drop will tend to come together.

A classic illustration is the HP case where Compaq purchased Tandem Computers and Digital Equipment Corporation only to be swallowed by HP.

Barriers to entry are now so important in most sectors that it is near impossible for newcomers to storm the markets the way Google or Dell did and throw the old army out of the windows.

Companies prefer to quash newly-formed competition by acquiring it rather than let it grow and grow and grow. Myspace and Youtube are two examples.

Also the bigger the companies become the more fields they cover and the more competition they get. Google moved from its core (searching) over to web-services, going head on against Microsoft and others

These pre-emptive assaults means that overnight, smaller firms can find themselves competing with tera-companies (thanks for Mergers and Acquisitions) that will drive their share value and their marketshare southwards.

Illustration : Dell acquired Alienware and HP got hold of Voodoo. It is not going to be rosy for companies like GamePC who have to go out and diversify around their core - but not spread themselves thin.

You can expect the trend to go on. More mergers and acquisitions are going to happen, probably at a faster rate than ever before.

What is it going to change? Much more from much less. Unlike Ford's one-size-fits-all colour, contemporary Tera-companies will tend to offer personalised/individualised features to their customers.

Illustration : Amazon, Ebay and Google for example.