The mythology of Amazon’s founding is that it all started in 1994 when Jeff Bezos read that the internet was growing 2,300 percent. It’s not clear what that metric was exactly. Some say it was annually, some say monthly, and I haven’t been able to figure out exactly what the metric was measuring, whether pages, page views, etc. Another story talked about user growth—from 16 million in 1995 to 31 million in 1996.
It doesn’t matter really. It was a huge shift. He perceived it. And he acted on it.
The equivalent, if not more significant shift today, is mobile. And by far the best articulation of those trends that I’ve seen is here (h/t to Fred Wilson):
Slide 6 had the most impact on me. The world in 2017 will have about 7.5 billion people of which 3.2 billion will have smart phones (i.e., small internet-connected computers). And that’s from a base of about 1.2 billion in 2012.
That compares to a PC base of about 1.5 billion, with sales collapsing.
Consider the following from Pew Internet for another perspective:
Recalling what Jeff Bezos saw of a doubling in internet users, the percentage point increases in the above are mind-boggling. In April 2012, 18 percent of Americans over the age of eighteen had a tablet. In May 2013, that had increased to 34 percent. The right hand column is misleading in giving point increases and not percentage increases. The percentage growth is tremendous, 80 percent and even 100 percent or higher in many cases.
The uniformity of adoption is amazing, too.
Low income, minority, elderly, rural—those are the fastest growing percentages. Granted, they’re from smaller bases, but they’re converging to the average adoption.
Paul Graham wrote the most thoughtful post I’ve seen on the imprecise nature of describing these devices. He pointed out that if the iPad had come first, we wouldn’t think of the iPhone as something very different. We would think of it as a small iPad that you can hold to your ear to double as a phone. It’s just slightly more tailored to one specific app on the phone.
So smartphones and tablets are really the same thing—a new internet connected device with a touch capability that can run different types of applications that also has special characteristics like knowing where it is in the world, how it’s physically moving through space, and how it’s oriented. That’s all in addition to its ability to deliver all the pre-tablet consumer services that are more valuable with increased mobility: music, video, email, etc.
Oh, and they can be pretty cheap. Sure, Apple is extracting margin for the time being. But given the dynamics of supply chains, contract manufacturing, and scale, prices will drop dramatically. I already know of one entrepreneur that is building an incredible business leveraging the fact that he can buy Android phones built to last year’s specs in bulk for about $50 per unit.
Returning to my earlier post on prophecy, this is one of those shifts that may be prone to both of the failures Clarke identified: failure of nerves and failure of imagination.
On nerves, there’s no doubt the world is moving in this direction. We have to accept it and act accordingly (which means boldly).
On imagination, there’s more that we can’t imagine about what will be possible than we can imagine so entrepreneurs have to be willing to experiment and investors have to be willing to dig to the core of an idea or offering and be willing to suspend disbelief, relying on more fundamental signals—the quality of the entrepreneur and the product. The rest will emerge over time.
It’s an exciting time.