Valhalla’s Art Marks had an insight about one way the Internet transforms existing businesses: it weakens the value of special-purpose networks.
Consider what is happening with pay TV today. Today some $56B flows into the cable providers, satellite providers, and other “MVPD” organizations who essentially control special-purpose networks for distribution of video entertainment content. The “entertainment-weighted” equivalent flowing into Internet Service Providers for so-called “over-the-top” video is something like $5B.
It doesn’t take a genius, reflecting on the history of music distribution, software distribution, and news distribution, to conclude that most of the $56B will flow over to the Internet providers over the next four or five years, and the Internet will eat the lunch of yet another special-purpose network. What VPNs did to VANs, what VoIP does to TDMA, an Internet video stack will do to pay TV.
At the same time that networks are converging, the devices attached to the Internet are diverging. Yesterday we had PCs, then laptops, then netbooks. Now we have smartphones and tablets. Tomorrow we will have so-called net-tops (desktop appliances with Internet access and cloud-oriented computing), connected TVs and set-tops. And the day after that, perhaps the full-blown “Internet of Things”.
It makes sense, and to paraphrase what, for example, David Isenberg said in 1997: “dumb network, smart edges”.