by John Funge
on 8th Dec 2016
Estimated reading time: 10mins
In the 16th century, a group of around 600 Spaniards defeated the Aztec empire, a civilization with millions of people and hundreds of thousands of soldiers. Superior Spanish technology played a large part in the conquest. Fast forward to recent decades and Silicon Valley companies, including Apple and Google, have used their superiority in software development to capture markets that were dominated by companies such as Sony (Walkman versus iPod), Motorola (acquired and later sold by Google), and Nokia (acquired by Microsoft). In these cases, it is evident that technology leadership was crucial to success.
More generally, it may be useful to measure the technology acumen of a company as it could be predictive of their future success. Clearly, it is not easy to measure technology leadership directly, so we say it is a hidden variable. There are, however, several observable variables that might shed light on a company’s technology leadership. In this post, we explore one such source of data, Domain Name System (DNS) records.
DNS records are the address book of the internet. When you type a URL into your browser, DNS records have to be publicly accessible in order to retrieve the required information to display in your browser. As a result, we can easily look up DNS records for different companies to find out about some of the technology choices a company has made. For example, here are the DNS records for Winton:
winton.com. 60 IN TXT "winton-kentico-prod.azurewebsites.net"
winton.com. 60 IN TXT "0ed1fe018a69e0255ddc184b09947bc4074a1716b0"
winton.com. 60 IN TXT "v=spf1 ip4:220.127.116.11 ip4:18.104.22.168 a include:_netblocks.mimecast.com include:u1975914.wl.sendgrid.net ~all"
winton.com. 60 IN TXT "22.214.171.124"
winton.com. 60 IN TXT "MS=ms54328320"
From Winton’s DNS records, we can see that we use Microsoft’s Azure Cloud service, SendGrid’s emailing service and Mimecast’s email security and archiving service. To gather this data at scale for all S&P 1500 companies, we use the standard dig command-line tool and execute a simple script that collects information for the domain associated with each individual company (for example, microsoft.com for Microsoft). The script takes just a few minutes to run and is re-run periodically to track changes over time.
With information on all S&P 1500 companies, we get an idea of technology popularity and trends. We can then compare different sectors and even individual companies against these benchmarks to see if they are ahead or behind the curve in their technology choices.
The graph below left shows the proportion of S&P 1500 companies that are using Google’s G Suite (aka Google Apps) across sectors and from low to high market capitalizations. The graph on the right shows the same information but for Office 365. Microsoft is the clear winner so far in this fight; perhaps the most recent earnings report from Microsoft should have been less of a surprise to the stock market (Microsoft Shares Soar to Record on Earnings Boost from Cloud).
Note that some sectors contain only a small number of companies (shown in parenthesis) and so less significance should be read into their results; for example, telecommunication services has only 16 companies.
Similarly, we can also see adoption of cloud services like Amazon Web Services (AWS). Note that the numbers are a big underestimate because we can’t see non-public facing internal cloud deployments. Some companies, such as Netflix, have moved their entire outward facing infrastructure to the cloud. However, even in these cases the company may still have additional internal-only, non-cloud computing resources that are not visible.
We can also look at usage of Gmail, Outlook.com, Salesforce, SharePoint and many other technologies. Looking at adoption of Adobe Cloud services, for example, is interesting because we can clearly see that (presumably due to the high cost) it is a service disproportionately favored by large-cap companies.
As a final anecdote, we can look at the list of S&P 1500 companies that have adopted the new IPv6 Internet Protocol in response to IPv4 address exhaustion. Overall the list only includes 28 companies (less than 2% of the S&P 1500!) and, as expected, mainly consists of large Internet and networking companies, such as Google, Facebook, AT&T, Cisco, Netflix, and Yahoo. But interestingly there are some smaller companies that have potentially displayed technical leadership by making the transition to the newer protocol, such as FutureFuel, Iconix, ArcBest, and LSB Industries.
We only started collecting DNS records for S&P 1500 companies this year, but over time we will build up a history of changes. We can easily expand the universe in scope to monitor more companies both in the US and worldwide. There are also data vendors we work with who have related data that goes back to 2010 and we plan to publish some of the fascinating trends we have uncovered from this data in future posts!