{"id":2299,"date":"2020-03-04T02:39:13","date_gmt":"2020-03-03T23:39:13","guid":{"rendered":"http:\/\/kusuaks7\/?p=1904"},"modified":"2024-01-02T13:08:36","modified_gmt":"2024-01-02T13:08:36","slug":"why-software-wont-eat-the-world","status":"publish","type":"post","link":"https:\/\/www.experfy.com\/blog\/software-ux-ui\/why-software-wont-eat-the-world\/","title":{"rendered":"Why Software Won\u2019t Eat The World"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tIn 2011, technology pioneer Marc Andreessen declared that\u00a0software is eating the world<\/a>. \u201cWith lower start-up costs and a vastly expanded market for online services,\u201d he wrote, \u201cthe result is a global economy that for the first time will be fully digitally wired \u2014 the dream of every cyber-visionary of the early 1990s, finally delivered, a full generation later.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tYet as Derek Thompson recently\u00a0pointed out<\/a>\u00a0in\u00a0The Atlantic<\/em>, the euphoria of Andreessen and his Silicon Valley brethren seems to have been misplaced. Former unicorns like Uber, Lyft, and Peloton have seen their value crash, while\u00a0WeWork saw its IPO self-destruct<\/a>. Hardly \u201cthe dream of every cyber-visionary.\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe truth is that we still live in a world of atoms, not bits and most of the value is created by making things we live in, wear, eat and ride in. For all of the tech world\u2019s astounding success, it still makes up only a\u00a0small fraction<\/a>\u00a0of the overall economy. So taking a software centric view, while it has served Silicon Valley well in the past, may be its Achilles heel in the future.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The Silicon Valley Myth<\/strong><\/h3><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe Silicon Valley way of doing business got its start in 1968, when an investor named\u00a0Arthur Rock<\/a>\u00a0backed executives from\u00a0Fairchild Semiconductor<\/a>\u00a0to start a new company, which would become known as Intel. Unlike back east, where businesses depended on stodgy banks for finance, on the west coast venture capitalists, many of whom were former engineers themselves, would decide which technology companies got funded.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\nOver the years, a virtuous cycle ensued. Successful tech companies created fabulously wealthy entrepreneurs and executives, who would in turn invest in new ventures. Things shifted into hyperdrive when the company Andreessen founded,\u00a0Netscape<\/a>, quadrupled its value on its first day of trading, kicking off the\u00a0dotcom boom<\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tWhile the dotcom bubble would crash in 2000, it wasn\u2019t all based on pixie dust. As the economist W. Brian Arthur\u00a0explained in\u00a0Harvard Business Review<\/em><\/a>, while traditional industrial companies were subject to\u00a0diminishing returns<\/em>, software companies with negligible marginal costs could achieve\u00a0increasing returns<\/em>\u00a0powered by network effects.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tYet even as real value was being created and fabulous new technology businesses prospered, an\u00a0underlying myth<\/a>\u00a0began to take hold. Rather than treating software business as a special case, many came to believe that the Silicon Valley model could be applied to any business. In other words, that software would eat the world.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The Productivity Paradox (Redux)<\/strong><\/h3><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tOne reason that so many outside of Silicon Valley were skeptical of the technology boom for a long time was a longstanding\u00a0productivity paradox<\/a>. Although throughout the 1970s and 80s, business investment in computer technology was increasing by more than 20% per year, productivity growth had diminished during the same period.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tIn the late 90s, however, this trend\u00a0reversed itself<\/a>\u00a0and productivity began to soar. It seemed that Andreessen and his fellow \u201ccyber-visionaries were redeemed. No longer considered outcasts, they became the darlings of corporate America. It appeared that a new day was dawning and the Silicon Valley ethos took hold.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tWhile the dotcom crash deflated the bubble in 2000, the Silicon Valley machine was soon rolling again. Web 2.0 unleashed the social web, smartphones initiated the mobile era and then IBM\u2019s Watson\u2019s defeat of human champions on the game show\u00a0Jeopardy!<\/em>\u00a0heralded a new age of artificial intelligence.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tYet still, we find ourselves in a\u00a0new productivity paradox<\/a>. By 2005, productivity growth had disappeared once again and has remained diminished ever since. To paraphrase economist Robert Solow, we see software everywhere except in the productivity statistics.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe Platform Fallacy<\/strong>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tToday, pundits are touting a new rosy scenario. They point out that Uber, the world\u2019s largest taxi company, owns no vehicles. Airbnb, the largest accommodation provider, owns no real estate. Facebook, the most popular media owner, creates no content and so on. The implicit assumption is that it is better to build software that makes matches than to invest in assets.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tYet platform based businesses have\u00a0three inherent weaknesses<\/a>\u00a0that aren\u2019t always immediately obvious. First, they lack barriers to entry, which makes it difficult to create a sustainable competitive advantage. Second, they tend to create \u201cwinner-take-all\u201d markets so for every fabulous success like Facebook, you can have thousands of failures. Finally, rabid competition leads to high costs.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe most important thing to understand about platforms is that they give us\u00a0access to ecosystems of talent, technology and information<\/a>\u00a0and it is in those ecosystems where the greatest potential for value creation lies. That\u2019s why, to become profitable, platform businesses eventually need to invest in real assets.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tConsider Amazon: Almost\u00a0two thirds of Amazon\u2019s profits<\/a>\u00a0come from its cloud computing unit, AWS, which provides computing infrastructure for other organizations. More recently, it\u00a0bought Whole Foods<\/a>\u00a0and opened its first\u00a0Amazon Go retail store<\/a>. The more that you look, Amazon looks less like a platform and more like a traditional \u201cpipeline\u201d business.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Reimagining Innovation For A World Of Atoms<\/strong><\/h3><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe truth is that the digital revolution, for all of the excitement and nifty gadgets it has produced, has been\u00a0somewhat of a disappointment<\/a>. Since personal computers first became available in the 1970s we\u2019ve had less than ten years of elevated productivity growth. Compare that to the\u00a0\u00a050-year boom in productivity<\/a>\u00a0created in the wake of electricity and internal combustion and it\u2019s clear that digital technology falls short.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\nIn a sense though, the lack of impact shouldn\u2019t be that surprising. Even at this late stage, information and communication technologies only make up for about 6% of GDP in advanced economies. Clearly, that\u2019s not enough to swallow the world. As we have seen, it\u2019s barely enough to make a dent.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tYet still, there is great potential in the other 94% of the economy and there may be brighter days ahead in\u00a0using computing technology to drive advancement in the physical world<\/a>. Exciting new fields, such as\u00a0synthetic biology<\/a>\u00a0and\u00a0materials science<\/a>\u00a0may very well revolutionize industries like manufacturing, healthcare, energy and agriculture.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tSo we are now likely embarking on a new era of innovation that will be very different than the digital age. Rather than focused on one technology, concentrated in one geographical area and dominated by a handful of industry giants, it will be widely dispersed and made up of a diverse group of interlocking ecosystems of talent, technology and information.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tMake no mistake. The future\u00a0will not be digital<\/a>. Instead, we will need to learn how to integrate a diverse set of technologies to reimagine atoms in the physical world.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

We are now likely embarking on a new era of innovation that will be very different than the digital age. Rather than focused on one technology, concentrated in one geographical area and dominated by a handful of industry giants, it will be widely dispersed and made up of a diverse group of interlocking ecosystems of talent, technology and information. Make no mistake. The future will not be digital. Instead, we will need to learn how to integrate a diverse set of technologies to reimagine atoms in the physical world<\/p>\n","protected":false},"author":622,"featured_media":3883,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[200],"tags":[106],"ppma_author":[3337],"class_list":["post-2299","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-software-ux-ui","tag-software"],"authors":[{"term_id":3337,"user_id":622,"is_guest":0,"slug":"greg-satell","display_name":"Greg Satell","avatar_url":"https:\/\/www.experfy.com\/blog\/wp-content\/uploads\/2020\/04\/medium_09100e21-0736-4ca7-ac55-7140c8c4d9d2-150x150.jpg","user_url":"https:\/\/www.gregsatell.com\/%20","last_name":"Satell","first_name":"Greg","job_title":"","description":"Greg Satell is an international keynote speaker, adviser and bestselling author of Cascades: How to Create a Movement that Drives Transformational Change. His previous effort, Mapping Innovation, was selected as one of the best business books of 2017. You can learn more about Greg on his website, GregSatell.com<\/a> and follow him on Twitter<\/a>.\u00a0\u00a0\u00a0 \u00a0"}],"_links":{"self":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/2299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/users\/622"}],"replies":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/comments?post=2299"}],"version-history":[{"count":5,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/2299\/revisions"}],"predecessor-version":[{"id":35317,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/2299\/revisions\/35317"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/media\/3883"}],"wp:attachment":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/media?parent=2299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/categories?post=2299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/tags?post=2299"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/ppma_author?post=2299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}