Internet impact varies by industry
LEF clients will probably recognize this diagram, which in various iterations we have been using for some five years. It shows that the Internet has thus far been proved to be disruptive in the Christensen sense to only a small set of low-security, information (bit-based) industries, and even there the disruptions are only partial. Let’s look briefly at each of the four quadrants.
• Lower right. Low-security, digital businesses are by far the most affected. Recording companies, publishers, advertisers and packaged software companies are all facing major business model challenges. On the other hand, Microsoft is still earning billions. Television, cinema and radio show few signs of going away; online and offline advertising exist side by side; and even traditional publishers, while often suffering, are far from dead. There are even many examples such as education where the Internet has been almost entirely sustaining. The bottom line is that only the music industry has been highly disrupted; in the other areas, it’s partial disruption at most.
• Upper right. High-security, digital businesses still have the potential for disruptive change, but there has been little dramatic change thus far. Whether one is looking at telecoms (Skype), banking (PayPal), insurance or health care, there are few examples of new firms leveraging the Internet to displace established leaders. Smart phones are a good example: the Apple iPhone and Google Android are challenging the Blackberry’s domination of mobile enterprise messaging, but they are very much sustaining (even rejuvenating) for the established global telecoms giants. If truly disruptive change is to come to the carriers, it will likely take many more years.
• Lower left. While Amazon and other online retailers have had a major impact on low-security, physical product businesses, established players such as Walmart and Tesco, as well as countless smaller firms, have found the Internet to be sustaining to their businesses. Even physical bookstores such as Borders in the US and Waterstones in the UK have been relatively stable. There are few, if any, high-profile disruptive casualties.
• Upper left. The impact of the Internet on the supplier structures in high-security, physical businesses has been minimal. On the other hand, the use of consumerized technologies to (for example) manage virtual weaponry, such as predator drones, is beginning to have revolutionary effects on military training and culture. Thus, in this quadrant, consumerization and the Internet are having two very different effects (which is something we will be studying further), but overall IT has been a sustaining force.
