Today’s Titans, Tomorrow’s Bygones

by on February 26, 2011 · 1 comment

Newsweek has a great single-page spread on Who’s Eating Your Lunch? about the topsy-turvy tech sector, illustrating beautifully our argument that the relentless force of disruptive innovation is the best remedy for incumbent power:

AOL has been forced to become a content company and team up with Huffington Post now that we all get our Internet from the cable guy. Meanwhile, MySpace is sporting a FOR SALE sign and Borders is facing Chapter 11, while their competitors—Facebook and Amazon—brag of record growth and profits. Now as ever, success in business belongs to those ready to eat the lunch of a complacent rival—and the cycle of life completes itself as potential competitors of the future hit the scene. Here’s a guide to some of the business world’s biggest recent reversals of fortune.

Check it out here.

  • http://www.facebook.com/catherine.fitzpatrick Catherine Ann Fitzpatrick

    I’m not quite as ardent believer as you are in the loveliness of “disruptive technology” as a beautiful market force because I find the technologists are usually happy to disrupt other people, and never themselves, and put brakes into the platform to keep themselves in power even when natural disruptive forces would have prevailed against them. In an authentically free market that they didn’t exploit and monopolize for such long periods by baking controls into the tools themelves, we would see more competitors to Facebook beside the “progressive” Diaspora that would even have a paid model. If 15 million kids can pay $14.95 a month to play World of Warcraft, those same kids and their parents can pay that much to be on the new AOL of the world, Facebook, with its socializing and casual games. Zynga can move to another place that doesn’t grab as much from them. And so on. The Facebook over-valuation bubble generated by the curious phenomenon of the employee stock and secondary stock market even before an IPO will break some time. And then we will be worse for having been “disrupted,” not better.

    I would put the AOL story another way. The technocommunists (cyber-collectivists) sneered at the private-property model of the Internet back in the 1990s and constantly rammed against the walls of AOL — as if there was something politically incorrect about managed communities on the Internet that saved their users spam and porn and organized the chaos (after all, you had a choice of others). They raged with this anti-walled-garden theory, hysterically demanding open source models for a decade, ravaging the Internet with Web 2.0 And low and behold, when the masses were awaked, what did they wish? They didn’t march dutifully in rows to expropriate the expropriators. Instead, the flocked into walled gardens like Facebook and yes, even Twitter and of course World of Warcraft and Second Life. AOL took a beating but they quietly did something brilliant: they provided a free instant-messaging system called AIM that every single teenager on the planet had installed on the computer they had access to, i.e. on their parents’ computer even if their parent thought AIM was stupid and didn’t use it.

    These teenagers grew used to the brand of AOL; they didn’t notice the kudzu of the free discs coming in the mail and at the supermarket checkout. And now they’ve grown up and read Huffington Post and it doesn’t bother them a bit that AOL has taken it over. AOL couldn’t take over Huffington Post without those hordes of now-grown AIM users already sensitized to liking and using the brand. The core “progressives” of Huffpo of course loathe what the “walled garden” stands for and of course now you see the backlash of many of the 6,000 unpaid mainly IT and social media workers who blogged and got sold along with the whole package for $315 million.

    So my point is that it’s not just magic woo-woo of powerful Internety disruptive forces. It’s actually the old-fashioned mainstream walled garden model which is about middle-class values and not radicalism.

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