When Industries are Reset
In a 2015 post, Benedict Evans wrote: “Sometimes, an entire industry gets reset to zero, and all the entrenched advantages and parameters go away. The iPhone had that effect, and so did HMS Dreadnought… It was launched by the Royal Navy in 1906 and was the first modern battleship, such that all previous battleships are known retrospectively as ‘pre-dreadnought’. Amongst other innovations, it was the first to have turbine engines and the first to have a single large-calibre battery. Rather like the iPhone, it contained few things that were fundamentally new – most of the key features had been around for a while and considered elsewhere – but it was the first to put all of them together in one place in the right way, and, like the iPhone, this changed everything. Every other warship afloat was obsolete… This is rather what the iPhone did, to both the mobile business and the entire consumer technology industry. All the existing parameters and entrenched advantages went away and the whole market was reset to zero.”
I asked ChatGPT for an explanation on what “resetting the score” meant: “”Resetting the score” is a metaphor that is often used in the context of innovation to describe a situation where a new innovation or technological breakthrough disrupts an existing industry, causing a shift in the balance of power between incumbents and newcomers. The metaphor implies that the old “score” or established way of doing things is no longer valid, and that a new score or set of rules is needed to reflect the changed landscape.”
In another post in 2020, Benedict Evans wrote: “When Steve Wozniak created the original Apple I in 1975, IBM dominated the computing industry. It was nicknamed ‘Big Blue’, it was so far ahead of its competitors that people talked about ‘IBM and the seven dwarves’, and it had just come through yet another anti-trust case. IBM’s dominance, of course, was based on the mainframe, which was the central paradigm of the computing industry, and it had sealed its dominance just a decade earlier with the launch of the 360 system. However, over the next decade it became obvious that the flood of PCs that followed the Apple 1 were going to overtake the mainframe. All of the focus of innovation, investment and company creation moved to the PC. Indeed, PCs created the very idea that software could be a separate industry, and not just something that was bundled with your hardware. Microsoft, not IBM, dominated the PC ecosystem, and so Microsoft became the centre of the tech industry – it became the new sun in the solar system.” He added: “The competition [is] something that solves the same underlying user needs in very different ways, or creates new ones that matter more. The web didn’t bridge Microsoft’s moat – it went around, and made it irrelevant. Of course, this isn’t limited to tech – railway and ocean liner companies didn’t make the jump into airlines either. But those companies had a run of a century – IBM and Microsoft each only got 20 years.”
These two posts, the recent developments in search, the changes forced by the pandemic for many industries, and my own thinking about AdWaste (half of the $400 billion being spent on adtech – primarily Google and Meta – is being wasted) made me wonder if the idea of an “industry reset” could be applied to the work I (via Netcore) have been doing. But before I get to that, let’s look deeper into the reset of industries, a process first explained by Joseph Schumpeter.
