November 13, 2008

The Third Tsunami of Computing – Web 2.0 is irrelevant

By Alvin Wang

People have been asking what is Web 2.0 and what is 3.0.
People have been asking what is Web 2.0 and what is 3.0. Is Web 2.0 ajax or social networking? I would propose that the question is completely irrelevant. The current Internet is an application of the next generation of computer architectures. That is where the lasting advantages will appear. To explain this, it is necessary to look at historical trends.

20 years ago, at the dawn of the Microcomputer age, there was talk about 3 computer architectures. They were mainframes, minis, and microcomputers. Each stage had it’s winners

Mainframes – IBM, Oracle

Minicomputers – DEC, Prime,

Microcomputers –Microsoft, Intel

We can look back at this and see that mini-computer companies are all dead. The Internet came and everyone assumed that this was the next wave. From that, I created this chart

There is the temptation to say that the Internet is cool but let’s jump the next big thing after the Internet. That would be a mistake. The analysis is too simplistic.

Looking back, we can see many waves. Waves come and go. The question is where are the Tsunamis? A Tsunami will alter the landscape and devastate unprepared industries. There is no fighting a Tsumani. You must go with it. The question is how to define a Tsunami and what are it’s characteristics.

Rule 1 – it is almost impossible to predict the outcome even if you are the person starting it.

The first computing Tsunami was the mainframe age. IBM ruled the mainframe age. In 1943, IBM’s CEO Thomas Watson said I think there is a world market for maybe five computers”. Obviously he was wrong.

Rule 2 – One great feature does not make a Tsunami.

Minicomputers were smaller and cheaper than mainframes. They needed less system administrators. They did not need none. There was no way for ordinary people to load their own software. There was no quantum leap.

Rule 3 – Tsunami’s are hard to create. It rarely works on the first try.

It has been said the Visicalc spreadsheet that started the PC age. Visicalc was replaced by Lotus 123. Lotus wiped out by Excel.

Rule 4 – Only true tsunamis provide lasting advantages.

Mainframes have been called dead for decades. Minis are long gone but Mainframes are alive and well. Microsoft Windows and Intel processors are alive well into the Internet age.

Corollary 4 – You can make money at an intermediary stage. Just sell out.

Lotus Development was sold for $3.5B. Bebo recently sold for $850M. You can ride a minor waive to major dollars. Just take them.

20 years ago at the dawn of the microcomputer age, there was talk of three computer architectures. Mainframe, Mini, and Microcomputers. That was irrelevant. The second tsunami was GUI based home computing.

There is a temptation to anoint every new innovation as a game changer, a Tsunami. The Internet was not a game changer for IT. It a precursor like Visicalc was to true distributed computing. The dotcom era is littered with the carcasses of companies that thought that the old rules did not apply. Ajax, Social Computing, Software as a Service, etc are all false waves.

The 3rd Tsunami of Computer Architecture

In violation of Rule #1 of Tsunamis., I think that I have seen the first product of the of the 3rd Tsunami of IT. It is less than 6 months old so there are still a lot of bugs and it needs a lot more features. Windows Vista has a lot more features than Windows 1.0. It is Google App Engine.

Although Google has been using it internally for years, AppEngine was made available to the public in April, 2008. There are problems with it but it makes it possible for a single programmer to write an application for the entire Internet. There is no provisioning, load balancing, or any of the other thousand and one tasks to setup a popular Internet site today.

Internet, Ajax, Wikis, Social Computing are all pieces of the puzzle. The final piece that changes everything is super virtualization. The ability to make many small computers behave like 1 large one in a scalable and transparent way will make creating software as a service systems simple.

Creating a Tsunami is complex and costly.  Google has several billion invested in it's cloud and will probably invest several billion more before it is complete.  There is a market for a super virtualization operating system.  

Of course, I could be wrong.  It is rule #1 for a reason.

Identifying a Tsunami Informs Decisions

We have described the true paradigm shifts the Tsunami change. There can be powerful and less enduring change yet still highly profitable change. Even popular fads or sites with fleeting levels of great popularity such as Friendster can be highly profitable.

Having a clearer understanding and assessment of the true scope and nature of a new technology will help with the formulation of proper business strategies.

The PC industry had many profitable areas such as processors, operating systems and applications. Each area became segmented and had multiple areas where a company could be successful. Knowing that something was PC Industry big would provide context for what to expect and how to respond.
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