You still may be thinking that Twitter and Zynga are great, but now it’s really over–there is no new opportunity. If you think that, you’d be wrong again.
In addition to the unprecedented number of people now reachable via the Internet, we are at the very beginning of a gargantuan new technology cycle: the move from Web/PC computing to cloud and mobile.
Back when I was a youngster in the early 80s, the technology landscape shifted from Mainframe to Client/Server computing. Interestingly the biggest opportunity wasn’t investing in the lighter weight computers that replaced the mainframes, but rather in new products created due to other results of the change. When you don’t have to pay for computing cycles on a MIP/minute basis, developers can change the way they program. The first major change was the move to relational database technology. Relational databases notoriously wasted CPU cycles vs. the old hierarchical databases such as IMS. However, if you didn’t care about CPU cycles, then you could easily cut your database development time by a factor of 10 or more and radically reduce the level of expertise required. By moving to the relational model, developers were released from the tedium of navigating hierarchical databases and used their new found freedom to rewrite every existing application from financial systems to HR applications and wrote a whole set of new systems like Customer Relationship Management. The relational database and application boom created hugely valuable new companies such as Oracle, Siebel Systems, and PeopleSoft. It didn’t stop there. As a result of the shift in application architecture, the old computing infrastructure became inappropriate and created new companies in Networking, Storage, and Management Software like Cisco and EMC.
The shift to cloud computing will have a more profound impact on the computing ecosystem than the shift to client/server. As with client/server, one of the first technologies to break has been the database. Application developers, no longer constrained by the massive administrative costs to set up servers, can solve previously impossible problems by seamlessly adding more hardware–except at the database layer. As a result, dozens of new exciting companies have emerged to replace the old “scale up” relational technology with new scale out solutions. Moving up the stack, everything about today’s application architectures suffers from the performance, scale, and programming model constraints of relational databases. Much like in the days of hierarchical databases, there is a large and important set of functionality that developers dare not tackle due to these limitations. New application companies like WorkDay and Proferi that take advantage of the cloud to deliver never-before-possible solutions, will devastate their old school RDBMS-based competitors.
While server virtualization enabled cloud computing on the server tier, it broke the current networking and storage architectures leading the way for the next generation of decabillion dollar companies in those categories. In the cloud, where applications have been completely decoupled from the underlying infrastructure, the old network and systems management software no longer works, leading to an opportunity for a new company to grab that $30B market.
The greatest beneficiary of the mainframe->client/server shift was a software company called Microsoft which took full advantage of the switch from dumb ASCII terminals to personal computers. Microsoft broke the mold by delivering solutions to both consumers and enterprises and leading the original consumerization of the enterprise. As today’s clients move from PCs to mobile devices, a huge set of opportunities will emerge for new companies to solve important problems.
The very largest opportunities will likely come from companies for which there are no analogy or precedent. Profound new platforms open the market to ideas never before imaginable.
Resource: Bubble Trouble? I Don’t Think So