A few years ago Marc Andreessen, founder of Netscape coined the phrase that software is eating the world. And by that he meant that software based systems were killing off traditional industries one by one.
It’s a great observation because we have seen entire industries crumble from web competition. And just about every industry that doesn’t involve a direct physical service, such as transportation, or involve the manufacturing of goods has felt the pinch. We still need to go see a doctor when we are sick (although a lot of us will go to Web MD and misdiagnose ourselves first).
Everybody is familiar with the industries that have been decimated by competition with software. How many of you still use a travel agent when you want to book an airline ticket? When was the last time you drove to rent a movie to watch for the evening? How many music CDs have you purchased this last year? Those industries are largely gone. And many other industries have been injured by software, if not outright killed. For example, a large percentage of stock trading is now done online without the need of a stockbroker. There is barely an industry that hasn’t felt some pinch due to software.
Looking out a decade or two it’s easy to foresee a whole lot more industries and jobs that are going to be killed by software. Driverless vehicles are likely to eventually get rid of cab drivers and truckers. 3D printing is going to wipe out a ton of manufacturing companies. When you need a small widget you’ll just print your own, and you’ll even be able to go to a friend to print a new 3D printer.
Can the same thing happen to telecom? Certainly the executives at cable companies seem to be denying that the web is changing their business model. They have an excuse and a story for every decline they see in subscribers. I think it is clear to anybody who understands the industry that for a communications company to be relevant a decade from now that they will need to change their corporate identity to become an ISP. If you can deliver a fast pipe you can survive, and possibly even thrive. But at some future point there is no longer going to be a company that is primarily a cable company.
Anybody who thinks that voice and cable TV, two legs of the triple play, are not in danger of going the way of the CD store or video rental store is kidding themselves. The history of products that have been killed by software is that, at some point, the general public sees more merit in the new software version of the product than in the traditional one. Such changes can be rapid and viral and it only took a few years for people to stop buying music CDs and renting movies at a local store. It was much easier and more affordable to do it the software way.
What the cable companies seem to be ignoring is how much the public is talking about and thinking about dropping their product. I know I am in the industry and so I am attuned to any discussion about telecom topics. But I have noticed that almost everybody I know has either dropped cable or has seriously thought about dropping or downsizing their cable subscription. If that idea goes viral and becomes conventional wisdom, then a huge percentage of cable subscribers could disappear in a very short time.
I am positive that the executives in all of these other industries saw the end coming. But in the US corporate world, with an overriding emphasis on quarterly earnings, no executive from the companies that are now dead ever came out and publicly said, “Our industry as we know it is doomed and our company needs to change massively if we want to survive”. Instead we saw the music and other industries go down in flames rather than admit publicly that they couldn’t make it. Our financial system punishes those who tell an ugly truth, and so company after company died without ever publicly admitting they could not compete with the new paradigm.
So, will software kill the telecom industry? I think it’s inevitable that it will kill voice and cable TV as products. The product that will survive in some form is fast data, because without that none of the software killer products will work. Fast internet, along with electricity and water will be the basic utilities of the future. Will software eat the telecom industry? Probably not, but it sure as hell is going to take a big bite out of it.