Ten years ago Marc Andreessen wrote an article in the WSJ called ‘Software is eating the world’, arguing that there was a fundamental shift in the role that software plays in the economy. In the past, IBM, Oracle or Microsoft sold technology to other companies, as a tool - they sold computers and software to GE, P&G and Citibank. Now there’s a generation of companies that both create software and use it themselves to enter another industry, and often to change it. Uber and Airbnb don’t sell software to taxi companies and hotel companies, Instacart doesn’t sell software to grocery companies, and Transferwise doesn’t sell software to banks.
It’s useful to compare this to electricity, or cars and trucks. Walmart was built on trucking and freeways (and computers), but Walmart is a retailer, not a trucking company: it used trucks to change retail. Now people do the same with software.
But it’s also interesting to look at the specific industries that have already been destabilised by software, and at what happened next. The first one, pretty obviously, was recorded music. Tech had a huge effect on the music business, but no-one in tech today spends much time thinking about it. 15 and 20 years ago music was a way to sell devices and to keep people in an ecosystem, but streaming subscription services mean music no longer has much strategic leverage - you don’t lose a music library if you switch from iPhone to Android, or even (Read more...)