Tech's time of tumult
We're living through the biggest set of changes yet in technology. It's a mouthful - mobile, ad-supported, on-demand, socially-connected, and truly global. Brace yourself, says Fortune's David Kirkpatrick.
NEW YORK (Fortune) -- This is a historic moment in the history of technology. All at once, we are shifting to a mobile, ad-supported, on-demand, socially-connected, truly global network.
Each one of those five new attributes brings with it fundamental, world-altering implications. The fact that all five are happening at once makes this a dizzying time, but one of so much opportunity for tech companies it's almost absurd.
A quick look at each of the five concepts:
We knew someday we'd get devices that enabled us to take the richness of the PC desktop with us wherever we went, and the iPhone is a good start, along with other new phones from Nokia (Charts) and others. Meanwhile, Intel (Charts, Fortune 500) continues its strong push for the Ultra-Mobile PC which will bear fruit faster than most people think.
Mobility is not just one of the forces, but the major force, driving tech forward in most of the world's economies. There are now more mobile phones in use in the world than PCs and TVs combined. And their number continues to burgeon. Sending short messages (SMS) from phones is becoming more important in much of the world than email.
Advertising is becoming the way that consumer software is monetized. Google (Charts, Fortune 500), the world's most adept software company, now garners over 30% of the world's online advertising spending. That has caused every other software firm to wake up. Just listen to Microsoft CEO Steve Ballmer, who has several times recently said Microsoft (Charts, Fortune 500) will become a company driven by advertising. (Watch him on this short YouTube video from last year.)
As for on-demand, that's Google, too. And just about every other Internet company. On demand means forget about applications on your desktop. What you need will be on the web and mostly accessed through just a browser. We've all become used to that model for our personal information and even web email and messaging, but now it's moving into businesses of all sizes.
The recent moves by old-line enterprise firms SAP and Oracle to buy other vintage software companies are just the last gasps of the old regime. The remaining players are consolidating, and the agglomeration is about capturing maintenance revenue from longstanding customers who can't move quickly to the new. But the future is software delivered as an on-demand service over the net by suppliers like Salesforce.com (Charts), who sell on a per-user, per-month basis.
This week was the Web 2.0 conference, which spent much time discussing the social connections that are coming to define the Internet. Tim O'Reilly, who helps run the conference, is the one who coined the term. He says it means any service which gets better the more people who use it.
That's a great simple explanation for the success of Facebook - the ultimate social software. Long-winded tech pundits endlessly bloviate over its supposed weaknesses but the fact is that Facebook is defining a new Internet in which identity is celebrated, not masked. (See my many recent columns on the subject here.) That may be the killer app of the ad-supported future, because the most enjoyable and most effective ads will be the ones delivered with the greatest understanding of who sees them.
The opportunities presented by the billions of people entering the world of digital communications are vast. Comscore's first-ever comprehensive study of the search industry, released last week, showed that China's Baidu is the world's third largest search site, behind just Google and Yahoo (Charts, Fortune 500), and ahead of Microsoft, Ask, and everybody else.
I recently called the adoption of tech by the developing world tech's biggest trend. Cisco CEO John Chambers says some countries including, amazingly, Saudi Arabia, could be poised to surpass our own digital infrastructure. We're moving to a world of ad-supported social web services delivered on cellphones to people in places like India and Azerbaijan. That's where the profits will come from in the next decade.
The New York Times may ask earnestly if we're in a bubble, as they did this week. But the reason big companies (and this time it's not greedy individuals) are bidding up other tech companies is because, like me, they see the opportunities as huge right now.