Digital Technology Cycles & the Web

by Luke Wroblewski November 29, 2004

Every important digital technology over the past 50 years has seen an initial explosion of entrepreneurial activity, followed by a 90% -plus shakeout of the competitors. But what is generally forgotten is that after the shakeout, the few remaining survivors enjoy exponential growth.

Within a couple of years they are joined by a new generation of savvier young competitors. Meanwhile, over the subsequent two decades, the industry itself typically grows 100 times bigger.

Chips crashed in 1974. Semiconductors are now a $200 billion industry. Processors went down in 1984. They are now a $60 billion industry. Enterprise software had its Waterloo (at least for market leader Oracle) in 1990. It's now a $44 billion industry. If history holds true, the Net, following this current shakeout, will be a $20 trillion industry (nearly twice the current Gross Domestic Product) by the year 2020. Two thousand four is the year it all comes together." – Internet II: Rebooting America, Forbes Sept. 2001

Though bubble-era prophecies often bring foolish optimism to mind, many of them are coming true -though a bit later than originally thought. (Online retail sales and US households with broadband lag just a year behind “heady” forecasts.) By all accounts, the Web seems to be following in the footsteps of the digital technology cycles that preceded it.

The “few remaining survivors” of the bubble-era are enjoying exponential growth: eBay continues to enchant with earnings delights and Google’s stock price doubled in just 60 days. A new generation of “savy young competitors” is emerging online: despite new search offerings from Google, Yahoo, and MSN several upstarts are boldly entering the fray with unique approaches to finding; and companies such as Mobissimo, SideStep, and Qixo are pursuing the next generation of online travel reservation systems.

As the year “it all comes together” comes to an end: “the Internet isn't dead- it's molting. And what will come out of the chrysalis will be gigantic.”