Behold, the Next Media Titans: Apple, Google, Facebook, Amazon
Bus + iPad = ? by Richard Smith | smith/flickr. Used with gratitude via a Creative Commons license.
Venture capitalist John Doerr is well-known for his hyperbole. Remember his comments about the internet bubble back in the late 1990s? “The largest legal creation of wealth in the history of the planet.” Most forgive Doerr for getting swept up in things, though. His track record for spotting high tech inflection points and betting on the right companies is unparalleled.
But even a wide-eyed optimist like Doerr, who puts billion-dollar net worth where his mouth is, may be underestimating the seismic shifts going on under our feet.
Let’s recap: During the PC era in the 1980s, Doerr and his firm Kleiner Perkins Caulfield and Byers were early investors in Compaq Computer and Sun Microsystems. During the internet era of the ’90s they helped lead deals in Netscape, Symantec, Amazon, Intuit and Google.
With two new funds, Doerr has raised nearly half a billion dollars to invest in the exploding mobile software and social media businesses. In May he said KPCB was doubling its $100 million mobile software fund because it had already run out of money. Last week he announced a $250 million social media fund and said that thanks to Amazon, Apple, Google, and Facebook, what is happening now in the Valley is nothing short of a “third wave” of computing.
Doerr is hooked on how touchscreens and social networks accelerate use of the internet — and it’s easy to see how he gets there.
We in the United States already spend nearly as much time online as we do watching TV and those lines are merging so fast they are going to cross in a matter of months. Mobile search traffic at Google is up 50 percent in just the first six months of this year. And while a third of Facebook’s 500 million users access their accounts from a mobile device today, expect that number to double in the next two years as smartphone sales double. By 2012, more smartphones will be sold every year than laptop and desktop computers combined, according to Morgan Stanley analyst Mary Meeker.
But for once, I don’t think even Doerr has grasped how big a deal this is. This isn’t just about a new software revolution. There is a massive reexamination underway of how technology, media and communications intersect.
High tech and media have argued about the future for a generation by having the following debate: Are we going to watch TV and movies on our PCs, or are we going to surf the web and answer e-mail from our couch? They called it “convergence,” and it has been the source of so many business failures that few mention it anymore. Indeed, many have come to assume it will never happen.
Now it’s clear what the problem has been: Executives have framed the debate the wrong way. The PC will always be a lousy device to watch TV and movies on. The TV will always be a lousy device for web surfing and e-mail. Smartphones and tablets, on the other hand, are turning out to be good for all of them.
Watching a movie or a baseball game on a smartphone is obviously not the same as seeing it on a big television set, but its portability more than makes up for those shortcomings. It is the only option on the bus, for example. Last Thursday I watched part of the baseball playoffs on my iPhone while I was cleaning up the kitchen. When I was done, I watched the rest on my TV.
This is hugely disruptive. It means that Apple, Google, Facebook and Amazon are becoming more than just dominant technology companies. They are well on their way to becoming the news, entertainment and communications networks of the 21st Century. Five years from now they will touch and profit from almost everything we see, hear, read or buy — like giant media conglomerates. They will control most of the distribution and access to the largest audiences.
It’s already happening. Magazine publishers can’t heap enough praise on the iPad, but there is a reason why their readers must buy magazines individually: Apple and the publishers can’t agree on who will control the information from electronic subscriptions.
Count on the traditional media and communications moguls fighting these changes every step of the way. Phone and cable companies will be scrambling to make their bandwidth the choke point even as it becomes more and more of a commodity. Studios, networks and publishers will continue fighting over how best to control access to their content for maximum profits. But these new platforms already control so much of the world’s audience that it’s only a matter of time before that strategy runs aground.
When I have made this point to executives in the Valley and Hollywood, most make sure to point out that none of the big tech companies make or carry movies or television shows in a meaningful way. What I say in return is that they will. In small ways, they already are. Yes, Google is going toe to toe with the TV networks as we speak over whether the company will get access to their content for Google TV. But I can buy movies and TV shows on iTunes and Amazon. And I can log into most of those sites with my Facebook account.
Terry Semel, the former entertainment mogul who tried and failed to lead Yahoo to this new world, reminded me five years ago that whenever new ways to distribute media have been invented, those used to distributing it the old way scream about how it is going to put them out of business and then discover that it makes them more money than ever before.
It happened with movies on television and on video cassette. It happened with movies and TV shows on DVD. It will happen on the new networks of Silicon Valley too. It didn’t happen fast enough for Semel because there wasn’t an iPhone or an iPad then and Facebook — though Semel tried and failed to buy it — was too small to matter as much.
But all those pieces are in place now, and the powerful vortex being created will turn the world upside down much faster than anyone ever could have imagined.