Andrew Walmsley on Digital: The future is cheap

Four trends are changing the business world forever by making start-ups inexpensive and easy.

In 1899, the commissioner of the US Patent Office is said to have opined: 'Everything that can be invented has been invented.' He resigned shortly after, presumably on the grounds that he didn't expect to be that busy in the future.

The authenticity of the quote has been thoroughly debunked, and it's now interesting as an example of how repeated citation can establish an idea as received wisdom. Like many of these bon mots, however, it reflects a tendency of humans to believe the future will be merely an extrapolation of the past; that it will be like today, only more so.

It's a mindset that is dangerous for business, because it lulls participants into complacency; they believe they can defend their territory and rely on barriers to entry. Dangerous, because we are at a point where four trends are converging; their confluence is changing everything for business by speeding up development and radically reducing costs.

Trend one The cloud. Now, email and document-sharing can be sourced from Google, without all the expense of installing Microsoft Outlook, and the server it's installed on. Files can be shared around the organisation and accessed from multiple devices using Dropbox, while video-conferencing can be delivered on Skype. Accounting and tax can come from Outright, CRM from Salesforce.com; today's start-up company can launch with low-cost and scaleable access to business systems.

That's one barrier to entry that big companies no longer have. Worse, many are wedded to cumbersome old legacy systems that lack features that are sometimes free in the cloud.

Trend two Technology: The LAMP stack, Linux, Apache, MySQL and PHP started us on a path toward cheaper development that's been accelerated by Flash, AJAX and XML. Now, HTML5, the latest version of the mark-up language that tells your computer how to lay out a webpage, is set to boost this.

HTML5 bakes in to the browser all the things that used to need a plug-in; video, audio and drag-and-drop, getting rid of the need for developers to pay companies such as Adobe for the kit that makes their plug-in work.

In 1995, according to David Cowan of Bessemer Venture Partners, it took about £15m to develop and scale an ecommerce application; now, you need only about £100,000. There goes another barrier to entry, as access to big piles of capital is no longer needed.

Trend three Everyone, everywhere. There are more than 2bn internet users worldwide. In case you thought that growth was slowing, that is up 7% on the previous year. By the end of this year, half a billion people will be accessing the web from smartphones. New markets, new demand, more time spent online.

Trend four Connectivity. The history of ideas is a story of friction. Humans began to evolve more-complex social groups only by developing language. Printing brought about the renaissance, by allowing scholars to share their thoughts. Now the collaboration tools the web has enabled are hastening this further. Never in history has it been so easy for an idea to spread, from a misquotation to the Twitter campaign that fuelled the News of the World scandal.

If you're in a dominant business, think on this. Never has it been so cheap and so easy for so many people to plot your downfall. There are 100,000 people in backrooms right now trying to figure out how to eat your lunch, and now they've got the cutlery.

Andrew Walmsley is a digital pluralist

30 SECONDS ON ... CLOUD COMPUTING

- Cloud computing basically means having access to all your data and applications from any network device. In the past, individuals and companies could not use, for example, a word-processing application without installing software on a computer.

- The advent of local area networks (LAN) and similar developments led to what's known as the client-server model of computing. Typically, this still required the installation of an application on the computers of individual users of the network.

- What differentiates cloud computing is that no installation of software is required. Users simply access such applications via their web browser.

- No definition can be quite that simple, though. Bear in mind that 'the cloud' is an umbrella term for various IT trends, but as a general rule, all these trends involve using the internet to simplify the way we use our computers.

- Google, Microsoft, Amazon and Salesforce.com are among those offering cloud-computing platforms. These include services from spreadsheets to virtual servers running Linux or Windows.

- There are privacy concerns about cloud computing, and potential regulatory problems where personal data is stored internationally. A potentially disastrous situation for users is that of their provider going bust.

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