It's been more than a year since we wrote about the New and Improved Matrix, a discussion about the paradigm shift of being perpetually connect wherever we are and how the Web is being applied to the actual world. These trends are being driven and accelerated by the proliferation of smartphone technology and mobile broadband. It represents a tremendous opportunity, to be sure, but most still don't realize its true magnitude. To get a better feel for what's to come, it helps to understand the landscape and what is really happening in the market.
Though we've heard about the "mobile web" for many years, there wasn't much excitement about its immediate potential. One could envision the day when accessing the web from mobile devices would create new opportunities, mostly in advertising. Then along came smartphones (mini computers) and mobile broadband. Naturally, people assumed this would lead to increased use of the mobile web. This amounts to not seeing the forest for the trees.
A recent Fortune interview with the CEO of Ericsson highlights how even industry leaders largely missed this:
Wireless phone companies and equipment manufacturers totally underestimated the potential of their own industry, says Ericsson (ERIC) CEO Hans Vestberg. Now he and his company are preparing for a totally interconnected world in which billions of consumers â€" and machines â€" talk non-stop to one another via wireless networks.
It's not about the mobile web. It's about something entirely different.
Early last year, we joked among friends about how big the opportunity would be to create a parallel Internet. What if that was your business plan and you could pull it off? It would be a trillion-dollar opportunity. What if there were a parallel online universe with all of the same opportunities as the original Internet and you owned it all? You could sell sex.com and business.com. You could build another Amazon and Google. It turns out that this is precisely what smartphones have enabled.
The conventional view of the mobile web consists of accessing the Internet from a mobile device. The Smartphone Web (as we call it) is entirely different. It is a new online universe unto itself, which is largely created and accessed exclusively through smartphones. This is where most have gotten it wrong and why the magnitude of the opportunity has caught so many by surprise. Indeed, a lot of smart people are still trying to wrap their heads around it.
To be clear, this isn't to suggest that the Smartphone Web and the Internet are mutually exclusive by any means. Rather, it's a bit like how the Internet was built on top of the electrical grid and powered by computers. The Smartphone Web is built on top of the Internet and powered by smartphones. The two are indelibly linked. The parallel nature is driven by the fact that the Smartphone Web necessarily integrates the real world. Through geolocation and augmented reality technologies, the real world is an essential part of the Smartphone Web. Whereas the Internet is largely a virtual place, the Smartphone Web is both virtual and real. It's virtual on top of real. It's the size of the Internet plus the size of the real world. It's a big f'ing place.
To stick with our initial analogy, could you build another Amazon on the Smartphone Web? We think so. What if there were an app that let you browse real-time book inventories for all book stores around you (including tiny niche players), make a selection, and purchase it. You walk a couple blocks to the store, and it's waiting for you at the checkout area. This can apply to any type of commerce. And in many ways, it would also be more sustainable by reducing shipping needs and accessing locally produced goods.
Can you build another Google on the Smartphone Web? Certainly. This is a new and largely real-time environment in which physical locations are digitally connected. The link structure may end up being vastly different on the Smartphone Web.
In short, the Smartphone Web is every bit as disruptive today as the Internet was in 1994. Today, smartphones represent only 15% of all mobile phones in the U.S. If our analogy is sound, it means this is like the days when only 15% of U.S. households had Internet access. Yes, that's a huge opportunity. Plus, the playing field is quite level. Just as Barnes & Noble was caught by surprise and had little competitive advantage over Amazon, established companies on the Internet today have little advantage over startups on the Smartphone Web. Just as the world of Amazon was fundamentally different from the world of Barnes & Noble, the world of the Smartphone Web is fundamentally different from the world of the Internet.
So if you're thinking about starting an Internet-based business and realize that the space is crowded, ask yourself whether a similar business exists on the Smartphone Web. These are where the biggest opportunities of the next decade will be found. Indeed, it's quite possible that this sector alone could spark enough economic growth to get the country (and world) back on track.
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