At the lower end of projections the estimated value of Motorola’s 18% loss of market share from 1998 to 2010 translates into a low-end estimate of $30 Billion in lost revenue in 2010. That mirrors Google’s $30 Billion in revenues for 2010.
So the question needs to be asked: Is this really what Creative Destruction is all about?
What the US Economy loses in Mobile Phone handset sales it gains in Search Engine Advertising?
Some how I suspect this isn’t how the globalisation game plan for the USA (Circa 1995) was meant to play out. The creative destruction play book was supposed to be about replacing the old “rust belt” economy with the new information economy. Not replacing valuable high-tech manufacturing and R&D jobs with advertising on the menu.
To make matters worse consider this. The $30 Billion estimate for the gap in Motorola 2010 sales revenue sits at the low-end of the spectrum. If we factor in the high probability that Motorola would now be selling high-end handsets today in the developed world rather than “dumb phones” in the developing world the estimates for lost revenues could go as high as $75, maybe even $80 Billion.
The simple fact is Google is no substitute for Motorola. For the US economy to grow it needs both companies growing strongly. In fact it needs lots and lots of new technology companies to grow strongly to fill the gaps created by the demise of the “rust belt” economy.
So what about Facebook and the other potential So.Me IPO’s? Can they fill the gap?
Take a look at the combined revenues of all of the major startup’s since 1998 (i.e. Google, YouTube, Facebook, MySpace, LinkedIn, Twitter, Groupon, Zynga, WordPress, etc) and you’ll discover this new and exciting wave of innovation coming out of Silicon Valley delivered just over $35 Billion in revenue for the 2010 calendar year (i.e. Google $30 Billion and $5 Billion for the So.Me start-ups). The simple fact is the over hyped waves of So.Me and Web 2.0 are not growing quick enough to replace the US technology and manufacturing businesses that are being decimated by Asia.
In many ways the success stories of Google, Apple and now perhaps Facebook are hiding a fundamental weakness within America’s much hyped innovation engine. Put very simply America is big on ideas at the moment but well short on revenues.
As I have explained previously the US Tech Industry dropped the ball back in 2000 by making the mistake of revisiting the desktop web (i.e. Web 2.0 and So.Me) while Asia (i.e. Japan and South Korea) invested in the next wave of convergence (i.e. Mobile Phones).
The innovation road map for the media IT convergence wave was defined in 1995… that’s probably why we are seeing so many patent claims being made against this new crop of start-ups. It crashed in 2000 when the industry discovered that putting ads on the menu was never going to be enough to pay the bills. Since then online advertising revenues have flatlined (See Take a closer look at the US online advertising spend data and you’ll soon discover the only market Google has disrupted is online ).
Take a look at this snap shot of the US economy in 2007 just prior to the GFC melt down and you can see that the “Google” web’s fiscal contribution to the US economy was negligible. Three years on little, if anything, has change.
By wasting valuable time and resources on trying to discover a way make the “Google” web economically viable the US technology industry not only missed the main game (i.e. Mobile Convergence), it also lost significant market share in the only game that counts – Mobile.
The recent success of Apple doesn’t hide the fact that in a market where it was once a global leader the US – and by association Silicon Valley – is now a niche player at best, at worst a follower of the global trends in Mobile Innovation (e.g. Mobile Wallets, mCommerce and Mobile Social Networks).
Moving forward the big question is can the US Tech Industry recover from its lost decade? Can it move on from the current fascination with So.Me and rediscover its historical ability to profit from the next wave of Creative Destruction?
Fortunately, thanks to MobCon Theory, the next wave of convergence is easy to define. As we have seen before the real opportunities are in commerce not media.
The big question is does America have the appetite for yet another round of Creative Destruction? Can they build a Mobile Economy capable of challenging and competing with the rest of the world? and how will a nation of Google and Facebook compete with a nation building mega cities?
Today America is awash with fragments of the complex mobile supply chain jigsaw puzzle that is the next wave of innovation in Mobile Convergence. The question is can America’s free market economics pull the jigsaw puzzle together in time to get back in the game? I guess we’ll just have to wait and see.
Further Reading:
Posted on March 23, 2011
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