Sunday, January 19, 2014

Ripples Driving the next Investment Tidal Wave

In a prior post, I described an investment strategy based on "Surfing the Tidal Wave."  Many tidal waves come to mind:  Web 2.0, Social, SaaS, Cloud, Mobile, etc.  It seems like a new IT wave emerges every year.  Enterprise is now hot, with the recent The Economist cover story -- "Coming to an office near you...."

So, how to identify the next tidal wave?  

I approach it like ripples in the pond.

1.  The ripple starts with a new data communications infrastructure, such as the nationwide deployment of 3G.  After all, IT is based on data communications.

2.  Each new infrastructure enables a new user device, the next ripple.  For example, the iPhone (launched in 2007) needed a widespread 3G deployment in the US (2003).  An iPhone without 3G is merely an iPod.

3.  As consumers buy the new device (it becomes a new consumer platform), consumers look for applications or services for that device, the next ripple.  Examples include iPhone games, music, publications, ebooks, etc.  The Apple AppStore sales crossed $10 billion in 2013, Apple Press Release.

4.  As consumers enjoy these new devices and services for their personal use, they start to wonder -- why can't I do the same at work?  This causes the next ripple -- new business apps and services.  For example, MobileIron started to accelerate in Jan 2010 after senior executives received iPhones for Christmas in 2009 (and they liked it!). 

5.  As more users bring these new devices and apps into the enterprise, enterprise IT will need to manage and optimize their infrastructure -- the next ripple.  I incubated Airespace (WLAN switching) in 2002 on the belief that WiFi would be prevalent in the enterprise, and MobileIron (MobileIT) in 2007 on the belief that smartphones would be prevalent in the enterprise.

So, a new ripple starts every time the carriers update their communications infrastructure.  Over time, it looks like the chart below: 
If a country wants to be an IT leader, I suggest promoting the best data communications infrastructure and accelerating the subsequent ripples.

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