Rapidly Growing Niche

What is disruption? How does it occur? When we answer these questions, we will see that in many cases the leaders in the market are blindsided by the rapidly growing niche.

The word "niche" describes a market that fits nicely into a crevice of the overall market, but, according to popular opinion, doesn't really matter. And that's actually the funniest thing of all, in a way: the market that doesn't matter can actually take over the larger market, given certain characteristics. Love this stuff.

Cars

Consider the rise of the automobile. The specific market that internal-combustion vehicles displaced was the horse-drawn carriage, trap, dogcart, brougham, or whatever Sherlock wanted to call them. But consider the advantages of the new niche technology.

The space taken up by the conveyance is the first issue: having a horse and a cart means having both a stable and a garage, while a car only requires a garage. Umm, not to mention that the stable had to be swept out(!).

Which brings us to the next issue, consumables: a horse must be fed, and so must a car. But what the horse eats can go bad, and must be carefully regulated to avoid having the horse eat itself to death. Fuels can be easily stored. In plain fact, people were used to using fuels because they lit their houses with kerosene.

Repair was another issue: a horse can go lame and a car can also break down. But when a horse goes lame, it's usually not recoverable (and sad). However, a car can be fixed.

In the personal transportation market, the ever-growing advantages of the rapidly growing niche product, the car, increased its uptake dramatically, even exponentially, displacing the horse-drawn carriage. It took decades to fully play out.

Instead of sweeping out stables, we are now dealing with the hydrocarbon emission problem, and its carbon footprint. One thing is clear: we need to be smarter about the environmental impact of our disruptive technologies!

But now consider electric vehicles. In the US by the high cost of gasoline, which was almost $4.10/gal in June 2008, drove the hybrid Toyota Prius to great success as they were selling about 20,000 of them per month at the time. The cost of gasoline went down, driven by an economic downturn (caused by hurricanes and a crisis in mortgage lending which led to bad debts and a foreclosure increase). This occurred simultaneously with the introduction of the disruptive technologies of shale oil extraction, fracking, and improvements in deep-sea drilling. This caused the biggest oil producers, Saudi Arabia and Russia, to be dominated by the production in the US, for a while. The Saudis countered, with their huge cash hoard as a life boat, by increasing oil production, thus decreasing the price of oil even more, but diminishing their spare capacity. This had the dual effect of helping them to retain clients that they were losing left and right, and also of putting pressure on the Americans whose revolutionary oil extraction techniques might (still) be made too costly by reducing their profit margins.

All of this will eventually lead to a spike in oil prices and thus even greater reliance and demand for electric vehicles, like the Tesla Model S, which I am seeing everywhere. Perhaps because I live near Silicon Valley. Hmm.

Progress is accelerating

As mechanical wonders turn into embedded computers and sensors make them ever more cognizant of our environment, the size of a gadget is going down dramatically and the capabilities of a gadget are increasing tremendously. Once you can carry it in your pocket, it becomes irreplaceable, essential. The smaller gadgets get, the faster they will improve: now the improvements are often a matter of simply writing new software.

So what used to take decades now takes a few years. In the future it likely won't even take that long. Now let's look at some more examples of disruption (and disruption prevented) in this era of faster progress.

Computers in general

Well, now we come to the biggest disruption of all, which is actually in progress: computers. The rise of the smartphone shows that an all-in-one gadget can succeed over the feature phone. And by modifying its form factor and use cases, the rise of the tablet shows that there is a great alternative to the netbook, laptop, and even the home computer. Even businesses find that iPads can replace a host of other, clumsier gadgets.

What were the advantages that triggered the displacement of the feature phone by the smartphone? A single high-resolution glass touchscreen was an astounding improvement over the button-cluttered big-fat-pixel interfaces of the feature phones. A simpler interface with common visual elements won out over the modal menu environment that had to be searched through laboriously to find even the simplest commands. It can even be argued that the integrated battery made the process of owning a phone simpler. What cemented the advantages of the smartphone was the ecosystem that it lived in. On the iPhone, this is exemplified by the iTunes Music Store, the App Store, and the iBookstore. A telling, crucial moment was when the smartphone didn't have to be plugged into a desktop computer to be updated and backed up.

The next step was the tablet. In retrospect, it was more than just increasing the size of the screen. It required more power and it probably had a very different use case. The use case was closer to the laptop. On the smaller end, tablet sales are probably being cannibalized by the larger phones such as the iPhone 6S Plus. On the larger end, the power of tablets will increase until they become viable alternatives to laptops.

Still, I love my laptop.

But all it would take is a significant increase in battery technology to let the tablets reach the power of the best laptops. Then it will be purely a matter of ergonomics. Tablet are lighter, still quite useful, and clearly good enough for many types of businesses. The disruption of the PC market is but a few years away, I expect.

The post-PC era is nigh.

Those who call tablets PCs really don't quite have a handle on the form factor. Perhaps it's like Microsoft says: all it takes is a keyboard and your tablet becomes a PC. Detachables have the advantage of a keyboard and a bigger battery, with the prohibitive cost of the weight of the device.

While I like my laptop - it IS heavier than a tablet by a huge margin. Perhaps the rapidly growing niche of tablets will displace the laptop - but the growth isn't there yet.

Social media

Now: why did Facebook buy Instagram? Because it was a rapidly growing niche that was taking on more and more of its customers' time. By purchasing it they accomplish two things. First, it's a hedge against the niche technology taking over and displacing them. Second, it prevents their competitor, Twitter, from purchasing it. Mark Zuckerberg, Facebook's leader is smart. He knows that the rapidly growing niche can take over. After all, Facebook successfully did the same to other portals such as MySpace and Yahoo.

And what comes around goes around.

The Unstoppable Now

The universe seems to be moving forwards, ever forwards, and there's nothing we can do about it. Or is there? Is the world too tangled to unravel?

Changing political landscapes

We all see the changes in the world. Climate change is the new catchphrase for global warming. Some areas of the world may never sort themselves out: the Koreas, the Middle East, Africa. Yet we can look to the past and see how a divided Germany re-unified, how South Africa eliminated the apartheid government and changed for the better (bless you Nelson Mandela, and may you rest in peace), how Europe has bonded with common currency and economic control.

Good and bad: will Europe solidify or become an economic roller coaster? Will Africa stabilize or continue on its path of tribal and religious genocide? Will Iran become a good neighbor, or will it simply arm itself with nuclear weapons and force a confrontation with Israel?

Despotic secular regimes have been overthrown in the Islamic world (Egypt, Tunisia, and Libya) and social media seems to have become a trigger for change, a tool for inciting revolution. Some regimes are experiencing slight Islamic shifts, like Turkey. But Egypt, having moved in that direction when the Islamic Brotherhood secured the presidency, is now moving away from it in yet another revolution.

The more things change, the more they stay the same.

The reason that social media became an enabler for the changes we are seeing is because people care. Crowdsourced opinion has an increasing amount of effect on government. Imagine that! Democracy in action. Even in countries that have yet to see democracy.

Let's look at one of the biggest enablers for this: the iPhone.

The iPhone and its effect

Yes, this is one of the biggest vehicles for change because it raised the bar on handheld social media, on internet in your pocket, and on the spread of digital photography. The ability to make a difference was propagated with the iPhone and the devices that copied it. Did Steve Jobs know he was starting this kind of change? He knew it was transformative. And he built ecosystems like iTunes, the App store, and the iBookstore to make it all work. Without the App Store, we'd all still be in the dark ages of social media. The mobile revolution is here to stay.

Holding the first iPhone was like holding a bit of the future in your hands. It was that far ahead of the pack. Its amazing glass keyboard was met with skepticism from analysts at first, but the public was quick to decide it was just fine for them. A phone that was just a huge glass screen was more than an innovation. It was a revolution.

It's even remarkable that Steve Ballmer panned the first iPhone when it came out. By doing that, he drew even more attention to the gamble Apple was making, and in retrospect made himself look amazingly short-sighted. And look where it got him! Microsoft's lack of success in the mobile industry seems predictable, once you see this.

Each new iPhone iteration brings remarkable value. Better telephony (3G quickly became 4G and that quickly became LTE), better sensors (accelerometer, GPS, magnetometer, gyrometer, etc.), and better camera, lenses, flashes, and BSI sensors. Bluetooth connectivity makes it work in our cars. Siri makes it work by voice command. Each new feature is so well-integrated that it just feels like it's been there all along. Now that I have used my iPhone 5S for awhile, I feel like the fingerprint sensor is part of what an iPhone means, now.

This all-in-one device has led to unprecedented spread of pictures. It and its (ahem, copycat) devices supporting Google's Android and more recently Microsoft's Windows Phone 8 have enabled social media to become ever more present, and influential, in our world.

In 2012, a Nielsen report showed that social media growth is driven largely by mobile devices and the mobile apps made by the social media sites.

Hackers, security, whistleblowers

A battle is being fought in the field of security.

Private hackers have been stealing identities and doing so much more to gain attention, and we know why.

Then hackers began attacking companies and countries, plying their expertise, for various causes. The Anonymous and LulzSec groups fought Sony against the restrictiveness of gaming systems, against the despotic regime in Iran, against banks they believed were evil.

Enter the criminal hacking consortia, which build programs like Zeus for constructing and tasking botnets using rootkit techniques, for perpetrating massive credit card fraud.

Then the nation state hacking organizations began to do their worst. With targeted viruses like Flame, Stuxnet, and Duqu. Whole military organizations are built, like China's military unit 61398 with the sole task of hacking foreign businesses and governments.

Is anybody safe?

It is very much a sign of the times that the latest iPhone 5S features Touch ID. You just need your fingerprint to unlock it. Biometrics like fingerprints and iris scans (something only you are) are becoming a good method for security engineering. There are so many public hacker attacks that individual security is quickly becoming a major problem.

New techniques for securing your data, like multi-factor authentication, are becoming increasingly both popular and necessary. Accessing your bank and making a money transfer? Enter the passcode for your account (something only you know), then they send your trusted phone (something only you have) a text message and you enter it into the box. The second factor makes it more secure because it is more certain to be you and not some interloper spoofing you.

The landscape of security has been forever changed by the whistleblowers. Whole organizations were built to support them (WikiLeaks) and governments, banks, and corporations were targeted. The release of huge sets included confidential data from the US Military, from the Church of Scientology, from the Swiss Bank Julius Baer, from the Congressional Research Service, and from the NSA, via Edward Snowden.

It is notable that WikiLeaks hasn't released secret information from Russia or China. It is most likely that they would be collectively assassinated were that the case. Especially given such events as the death of Alexander Litvinenko.

The founder of WikiLeaks, Julian Assange, is currently a self-imposed captive in the Ecuadorean embassy in London. In an apparent coup, one of the WikiLeaks members, Daniel Domscheit-Berg decided to leave WikiLeaks, and when he left, he destroyed documents containing America's no-fly list, the collected emails of the Bank of America, insider information from 20 right-wing organizations, and proof of torture in an undisclosed Latin American country (unlikely to be Ecuador, and much more likely to be one of its adversaries, such as Colombia). Domscheit-Berg apparently left to start up his own leaks site, but later decided to merely offer information on how to set one up.

The trend is that the general public (or at least a few highly-vocal people) increasingly expect all secrets to be revealed. And yet, I expect that they would highly value their own secrets. This is why there is such a trend towards protecting individual privacy.

The reality is organizations like WikiLeaks are proud to reveal secrets from the western democracies like America, but are reticent to do so for America's adversaries like Russia. Since this creates an asymmetric advantage, these organizations can only be viewed as anti-American. Even if they aren't specifically anti-American, they inevitably have this effect.

So they are playing for the Russians whether they believe it or not.

Does the whistleblower movement have the inherent potential for disentangling the world political situation? Perhaps in the sense that knots can be cut, like the Gordian Knot. But disentangled? No.

The only way that the knots can be unraveled is if everybody begins to play nice. And I don't really see that happening.

Perhaps Raul Castro will embrace America as an ally now that we have shaken hands. Perhaps Iran will stop its relentless bunker-protected quest for Uranium enrichment. Perhaps the Islamic militias in Africa will declare a policy of live-and-let-live with their Christian neighbors and stop the wholesale slaughter.

It's good to be idealistic. In idealism, when it is peace-oriented, we see a chance for change. In the social media revolution we see a chance for the moderate majority to be heard.

Only we can stop the unstoppable now.