Surfing the Next Wave, Part 2

Steve Case Blog art2Steve Case says tech is on the brink of a Third Wave. The first wave took 15 years as millions of people got connected online, enabled by the likes of AOL and Cisco. The second wave came as companies like and Google built products on top of that spreading Internet platform.

The Third Wave will infuse the Net into all aspects of human life and disrupt heretofore unshaken areas that need shaking up: healthcare, education, government services. Look at how small, Net-based apps on smartphones are obviating bigger, pre-packaged software programs.

Will Salesforce itself get disrupted by the Third Wave? “It could happen,” Benioff says flatly. He vows to stay vigilant and cites five tech-tectonic plates now shifting: the cloud, social networks, mobile, sensors that measure everything from human heartbeats to electricity use, and “learning.”

But Vivek Wadhwa, the Stanford University fellow and tech author, counters: “I don’t think the incumbents can do it. Mark is a visionary, a genius, he says all the right things. But his department heads are worried about defending their departments.”

Wadhwa continues: “They don’t come to work every morning saying, ‘Hey, I’m going to reinvent Salesforce.’ They come to work every morning saying ‘Hey, I’ve got to increase my bonus, I’ve got to watch my quarterly performance, otherwise he (Benioff) is going to fire me.’”

The incumbents fail to recognize the pressing importance of “the rise of the rest,” Wadhwa says. They don’t yet see the opportunities and threats as the unconnected masses in the developing world come online.  Right now the world has two billion smartphones and five billion not-so-smart cell phones.  But another three billion people not online now will get smart phones by the decade’s end.

Beggars in New Delhi India now use smartphones to get on Facebook. In Kenya, one-third of the economy now uses the digital currency platform M-Pesa, Wadhwa points out.  Their new connections offer a new customer base, but also a new source of their own innovation.

Will Salesforce—itself now an incumbent rather than an upstart—and other titans be ready?

“It depends on whether Mark’s people can figure out the fact that there’s a market there,” Wadhwa argues. “I’m not sure that he can do it. I’m not sure his people understand that. He’s in Silicon Valley, they live in their own bubble, their own ivory tower. They do not understand the rise of billions.”

Yet Benioff points out that 80% or 90% of all enterprise software sales occur in just 10 countries. Is he supposed to neglect that mainstay just because the developing world someday may offer an upside?   Microsoft’s ex-CEO, Steve Ballmer, has complained that the company’s sales in the huge, booming market of China are less than its sales in the Netherlands,

And therein lies the incumbent’s dilemma:  How to hold on to, and keep growing, your current business while attacking new markets to reap a future upside.  Thus Benioff may be in danger of focusing on the business he has now and neglecting the business others are building for tomorrow.

“What choice does he have?” Wadhwa asks.

Up next: Part 3,  What’s an Incumbent to Do?

See also: Surfing the Wave, Part 1:

Click here for video of the full panel on Internet destruction:
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