The Internet might just save the planet

COMMENTARY--Two years ago, a recession started which was accelerated by the infamous 911 attack on the United States, and has been afflicting the world economy. However, the usual mass unemployment, destitution, and pop bands with wingeing songs about how everything is rubbish have been strangely absent.

It is my belief that there is a strong almost invisible undercurrent in part caused by the communications revolution buoying up the global economy (I think it goes far beyond the United States now).

There are major attributes differentiating the world economy today from the situation at the time of the last recession:

Hypercommunication giving rise to nano-niches:

Cellphones are ubiquitous allowing small one-man businesses to be as contactable as larger businesses with secretaries and support staff. People advertising their old sofa, or car or computer are contactable in a way that only professionals could have been ten years ago.

The Internet. The Internet allows small numbers of like-minded individuals geographically disparate to function as a nano-niche. This was possible pre-Internet but had a high cost (in terms of communication latency and effort). The plummetting of the cost of communications has given rise to a vast number of nano-niches where people can trade small quantities of low value, limited interest products. (Individuals trade far more than ten years ago).

Some major technological steps have manifested themselves as Internet services:

Search engines such as Google revolutionized searching for items on the Internet. By using 7000+ Linux servers in parallel, plus some innovative software designed in-house, they conquered the speed/number of searched pages problem that had become a major bottleneck in competing search engines. Obviously nano-niches could not function without a usable search engine (aka information directory).

As yet a move to inject more information into Web content via XML and therefore searching using Topic Maps etc. has largely been unrealized. Moving to more intelligent searching is an evolutionary step that will happen, but the current generations are more than adequate.

Auction sites such as eBay created global markets where anyone can sell their wares (usually secondhand) Low value items of interest to one person in a million can be bought and sold whereas once they would have been consigned to the rubbish heap. Goods can be easily placed along with photos from a digital camera. Funds are transferred electronically, and best of all, the bidding system ensures you can sell an item for an appropriate price.

Numerous people make a living now buying and selling through eBay, sometimes as a small business. Without the Internet, the cost of these communications would make this business model unworkable.

E-tailers such as ebuyer.com and Amazon.com are examples of excellent on-line shops that I personally have purchased much from. The lack of a sales force, premises and other chattels of a pre-Internet supermarket means costs are driven down. This does not necessarily work in the case of every product, but works especially well for commodities, where brands are involved, or where you buy through recommendation. Note shares in companies, and commodities like oil, orange juice and so on have been traded for hundreds of years without the buyers setting eyes on the products. Amazon is particularly interesting since you can also buy secondhand products if you want to save some money.

The Green Revolution
I've hopefully demonstrated by this stage that due to lack of communications cost, items that once would have been thrown away are now increasingly traded. This of course means that old items now compete for our wallets with new items. This I believe has pressured manufacturers. I've listed below three great examples of this effect:

Music and Film. Back catalogues have become easy to access. Secondhand items and stock clearance items can be traded at low cost. This means that the control the industry once had over what items were available to consumers through distribution has in effect completely broken down. Bands often sell directly over the Internet, giving out some tracks free. All this pressures the traditional companies in this field. The fact that Desktop Video Publishing is now commonplace, and home PCs are powerful enough to render Jumbo jets and cars that aren't there (www.405themovie.com) does not bode well for profits at Hollywood. The barrier to entry of expensive editing is being erased. Making a piece of music is vastly easier with software like Cakewalk, FruityLoops and so on. You can make anything from an orchestral piece to the latest scratched, sampled, hardcore music. And all without having to learn to play an instrument, let alone employ musicians. Composers do not need musicians anymore.

Software. The hypercommunication possible over the Internet allowed small numbers of people spread disparately over the world to join together working on large software projects. The famous example of this is Linux, which is an Operating System competing with the standard de jour of Microsoft Windows. Linux however, being free intellectual property has slipped into everything from watches to mainframes. This plus a giant volume of other free software (my favorites are MrProject, a great Project Management tool; OpenOffice, a competitor to Microsoft Office; Dia, a competitor to Microsoft Visio; Evolution, a competitor to Outlook) is putting serious pressure on companies that run using a business model based traditional lines. Indeed, Microsoft predicts that revenues from desktop software will drop in future years. It should be noted that only traditional business models are becoming invalid. New business models (for example that of RedHat) are based around taking the open source software and packaging it in a tested, integrated lump.

The sale of the conduit of upgrades is becoming a major part of the business model. A business model for the creation of software in this area is harder to see, and perhaps does not exist at the moment. I envisage a bounty system whereby interested parties wanting that “to die for” feature would pay a bounty that any willing programmer can compete for. Note as a byproduct of the possibility of freedom of software that has arisen from the Internet, people can adapt the software for obsolescent hardware. This is excellent for recycling and is having some effect, although the last figures I read was that 1 million PCs per year in the UK go into landfill, and a massive 15 million per year in the USA. Over time, hopefully this massive waste will slow due to the effects mentioned above.

Cars. In part due to the overproduction, and recent technological advances, excellent cars have become extraordinarily cheap. This means car producers must content will a longer car-replacement cycle. The same is true across the entire manufacturing spectrum. Essentially manufacturers are competing with their old products. Soon there may be a free design of car to compete with. (search for oscar free car design). Imagine any small company on the globe being able to compete to make a new exhaust for your car!

One noticeable side-effect is the pushing down of wealth from pointlessly large amounts in global corporations to smaller companies. Margaret Thatcher said many times 'small enterprise is the engine of the economy'. I'm inclined to go against the grain of my upbringing and agree with many of Margaret Thatcher’s economic views. Perhaps for the first time there will be more than token hyperindustrialization (the concept that big companies would make a large number of small batches of tailored products). The closest thing to hyperindustrialization I've seen is the Nokia mobile phone you can change the cover on! Perhaps the bottle-neck has been R&D in large companies. One company I expect to ride out the storm of nano-nicheing is IBM who seem to have a non-monolithic structure. In a way IBM seem to be a mini-Nasdaq all in themselves. By comparison I do not expect highly monolithic companies like Microsoft to continue to grow. However I imagine they will restructure in the image of IBM.

In conclusion, I expect the future to be greener as old consumer goods are no longer consigned to landfill, coupled with the fact people will get products far more tailored to their individual needs, and therefore harder to supplant for manufacturers. ("yeah, but I really like this old thing"). The multi-faceting of the future will require new business models and the production line famously used by Ford might well start to look like an archeological relic. The Internet might just save the planet yet!

biography
Jeff Davies obtained his masters degree in Electronics in 1989. He started writing programs to automate scientific experiments (real time graph type programs, Microsoft C, VB, QuickBasic) at a UK government funded site. He became Lotus Certified Developer writing CRM systems, Internet Content Management, Document Management and other Business Automation software in Lotus Notes (Lotusscript and Microsoft Visual C++, SGML) for further 7 years. He now works in largely non-software role which is 9-5 in order to spend more time with kids while they are young. Jeff runs his own company Hipparchus Systems Ltd in his spare time as vehicle for projects that hopefully in time will make him extremely wealthy.