Where is the disruption from the Internet?

Where is the disruption from the Internet?

Summary: 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?

TOPICS: Browser

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.

Topic: Browser

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  • I wondered when...

    ...someone other than me was going to get it. Not only have the traditional media, the TV networks and newspapers, not adapted themselves to the internet, but by virtue of the fact that we have all of this information at our fingertips, these companies must be able to tell us the truth with the least amount of leaning on either side as possible. However, university studies have shown that majority of media do lean--to the left--and they too many of the media companies lean.
  • PC industry disruption...

    ....is something that is going to happen over the next 5 years. Google, and now ironcially Micr'Oz'soft(tm) Live, are going to fight an online services battle that will have the effect of shrinking instead of growing the "PC" industry. With online services the demand for client side processing power and disk space will plateau and then eventually begin falling. People will migrate en masses over the next 5 years to the convenience of online processing/storage paradigms. Result is Intel/AMD, disk drive manufacturers and other SW and HW vendors who build, assemble, distribute today's "Fat" PC's will need to respin their biz models. They'll need to focus on the server side of things with respect to disk storage and processors and rack mounted/blade deployed computing "boxes". I think Intel/AMD can make the shift if they see this coming as they already build processors and chipsets that support server farms. Another example: N-vida likely woon't need to change much at all as the thinner terminal devices still will need local graphics processing especially for the ever richer video experience people will still want. The change will still be challenging though as Intel/AMD are used to the current mass volume business of "Everyone persoanlly needs at least one of the latest screaming processors for there fat PC(s)". Disk manufacturers also make server side storage solutions today but the seperation in the industry of mass storage companies like Sun/StorageTech versus the dozens of PC and laptop form factor disk companies could speel trouble for a lot of the latter players.
    • Maybe so, but...

      ...am I the only one who gets nervous at the thought of storing their critical data at some remote location instead of right next to them, where they can access it at will without worrying about service outages, back it up easily by whatever means they like, and wall it off by as many layers of security as they feel are necessary?

      I get nervous enough keeping just my e-mail and social networking history online. I can't imagine trusting my truly important data (or my mission-critical apps) to a remote service, on the other end of a connection provided by yet another service, and having to pay subscription fees for the privilege to boot. I also can't imagine I'm the only one who feels this way. I don't see the need for powerful, reliable local storage and processing going away any time soon.
      • A Mix of Central and Distributed...

        ..processing/storage with each user choosing the balance is I think the optimal story from a customer perspective. Being able to personally choose the tradeoff of positives of the two approaches would be the most value delivered to any user. But the key element in choosing becomes human psychology, as you point out. How do I balance the psychological values of the two approaches scenarios. For either approach all the dangers remain but the happen in different ways. Loss of data is possible in both cases;central disk farm destruction/loss for hosted model and loss of laptop in distributed. Data theft also is possible in both models. Corporate employee crime at hosting company in one and theft of your laptop or hacking of your PC/laptop in the other. Also since these days all PC's can be, and usually are near continuously connected to broadband, is my local data really that safe in the face of all the intrusion threats? Answer is "It depends on who you are." The High Intermediate/Advanced PC user knows how to be pretty safe even in the face of broadband connectivity. But it takes daily diligence in staying updated with browser and OS patches. For a huge number, the majority, of others the answer I think will be..." Hosted is, all things considered, truly a safer more convenient play for the beginner to average PC user to avoid both losing data to local disk crashes andlack of backups or to having sensitive data stolen.
        The fact is it's easier to get millions of average Joe's to a "reliably always connected to broadband" state and have legal protection/consequences for theft and loss of provacy then it is to get that same big crew of people properly and diligently patching and backing up 1 to 5 PC's per person.

        The drawback of course is in the long run you may end of paying more money for computing and storage than having well managed distributed PC(s). But, there is something strong and positive to be said for the convenience and comfort of not having to deal much at all with being your own personal IT adminstrator as an extra fulltime job. YMMV. :-)
  • Viruses, worms, rootkits, trojans, spyware, adware, domestic spying...

    That's not enough disruption from the Internet for you?
    Mr. Roboto
  • Exactly right

    What's curious is that many of the media companies that now
    understand this shift still decline to engage their real clients --
    the companies that advertise and which will now become media
    companies themselves by going direct. Instead MSM still try and
    get more different eyeballs cheaper (via user generated content).
    Do they think they can compete with their true clients? They
    think users will continue to supply the content? The traditional
    media companies that survive will need to serve their true
    business clients in much different ways. How is wide open, and
    non-traditional media concerns are quickly filling the void. All
    this is, as you say, hugely disruptive.
    Dana Gardner
  • Yes, there has been disruption...

    ... to the ancient business models of media companies. It's called cable television.

    The three, maybe four network model is under siege and the TV audience has been fragmented.

    The internet? Not much effect.

    The media companies most concerned about the internet are newspaper companies.

    But the problem for them has not been so much the internet as the fragmenting market. When Jon Stewart is the major provider of news to young people, you know that the culture (not technology) is having an impact.

    Even more important than people searching out news that agrees with their attitudes, Wall Street has insisted on irrationally high profit percentage returns, and the media companies have considered themselves powerless to resist.

    The reaction seems so foolish and overdone that the only possible explanation is some kind of threat to executive bonuses.

    Okay, that may be exaggerated. But when you discount cable cultural changes and the reactions to "insufficient" profits, how much change is left to be allocated to the internet?
    Anton Philidor