The Power of Mobility: How Your Business Can Compete and Win in the Next Technology Revolution

Chapter 7. Connect: Capture the Power Unleashed by Metcalfe’s Law

The Internet revolutionized how business gets done, not just because it extended the value of digitization onto data networks, but because of the reach of connectivity that was involved. Unlike previous data networks, the Internet was not limited to one location, or one company, or a limited group of collaborators, but rather it was a network for the world.

Because the Internet was everyone’s network and cut across traditional boundaries, the digital value that had been captured within companies could now be amplified by extending it beyond those companies. This translated into three dominant business models from the mid-1990s to today.

The first successful business model is represented by Amazon.com. In 1995, Jeff Bezos launched “the world’s largest bookstore.” In reality, there was virtually nothing real about Amazon’s bookstore—it was almost all digitized virtual reality. Bezos combined digital data about the books that were available from publishers with an attractive digital online storefront and the capability to accept digital payments using credit cards and Amazon.com was up and running. As of the third quarter of 2006, Amazon was reporting more than $2 billion a quarter in sales. I’d say it worked.

What Amazon.com did was not radical by today’s standards, but it could be done only because the piece parts had been digitized (information about books, pictures of book covers, and credit card transactions), and ...