Where is the disruption from the Internet?

My recent conversation with IBM's top strategist, Irving Wladawsky-Berger, about the disruptive effects of PC technologies reminded me of a key insight I had about the Internet, that almost made me faint(!)

Two years ago, on a sunny afternoon walking along Geary Street in San Francisco, I was thinking: where was the disruption from the Internet? The Internet is an incredibly powerful technology, surely more powerful than the PC, yet where was its disruptive effect?

PC technologies caused a lot of disruption, and forced so many tech companies out of business. But where was the same carnage caused by Internet technologies?

Surely, this was a more powerful technology than microprocessors and PCs? Yet the same tech companies were still there, HP, Intel, Cisco, etc. Yes, some had disappeared but that was more to do with mergers and acquisitions,  which are common in maturing sectors.

The dotcom dotbomb startup failures were a creation of those times, so they don't count in accounting for disruption. Where were the established industry sectors, whose business models were being taken apart?

As I walked and pondered this, I  had a realization that almost made faint, it literally made me feel weak at the knees.  I realized that I was looking for the disruption in the tech sector, but I was looking in the wrong place.

I realized that the disruption was happening in the media sector. Year after year media companies were continuing to layoff thousands of people, advertising revenues were falling 30 percent every quarter, and things continued to get worse.

This was were business models were under attack, this was where an entire industry was being forced to change to a new economic reality, this was where we can see the Internet as a truly disruptive technology: you can see the train wreck happening in front of you but you cannot get out of the way.

The disruption is happening in the media sector because the Internet is a media technology, it enables publishing and distribution. Google, Yahoo, Ebay, Amazon, etc, are all media companies, they publish pages of content and advertising.

This realization has become  important in my thinking and analysis of trends. And now, with this next stage, what I call Internet 2.0 (not web 2.0 because it is more than just web) the disruptive effect will be even larger.

It will affect more companies because we now have a two-way media technology. During Internet 1.0 we were able to publish outwards to any computer with a browser. This time, our media technologies such as blogging, etc, enable us to publish back inwards from any computer screen with a browser. We get to play on either side of the glass computer screen.

And this time around, every company is a media company to a greater or lesser degree. Because every company tells stories, it publishes to its customers, to its staff, to its new hires. We now have two-way media technologies and those that can adapt and master those technologies, and become technology-enabled media companies, will survive.

Because every company is a media company, the disruptive effects of Internet 2.0--a media technology on steroids--will be so much greater than from Internet 1.0. And we've only just begun.