The Economist likens it to the new oil.
Klaus Schwab, Executive Chairman of Davos World Economic Forum, describes it as a fundamental component of the Fourth Industrial Revolution, along with robotics and artificial intelligence.
No matter how one refers to it, there is no question that the availability, proliferation and use of data have already changed our everyday lives. Shopping, dating, politics, entertainment, transport – data is re-writing the rules of the game, and the pace of change is accelerating.
It was just 10 years ago that Nokia – at the time, still a power in mobile phones – made a strategic bet (alas, one that failed spectacularly) to pay $8 billion to buy Navteq, a road-mapping company. What was it after? A quarter million miles worth of in-road sensors that provided real-time traffic monitoring. Mapping and traffic data was key to Nokia’s strategy in competing with Apple and Google.
So what happened? Waze. Then an Israeli start-up, Waze didn’t bother with physical infrastructure. It took advantage of a new, and very rapidly expanding, source of data – the smartphone. By capturing GPS signal data from its users, it was able to measure location and speed in real time. Not only where there were sensors – everywhere.
Nokia’s phone business no longer exists (Microsoft bought the business for $7.9 billion but wrote off the entire amount after just 1 year), while Google snapped up Waze for $1.3 billion.
This seems to be a recurring theme – new data companies wreak havoc with the old guard and are then bought out by the apex predators: Google, Facebook and Microsoft, amongst others. The Economist paints a picture of the emerging Data Economy that is not dissimilar to that of the early days of the oil industry, a century ago. The “majors” have the biggest data reserves based on their core search, social media and retail platforms. They are expanding organically – see Facebook’s tagging, Google’s Assistant and Amazon’s Alexa – and inorganically. Facebook didn’t pay $20 billion for WhatsApp because it thought it was a great platform. It parted with the cash because WhatsApp was threatening Facebook’s social media hegemony.
The “wildcatters” are the start-ups, like Waze, whose core and backbone is data. They eschew physical assets and infrastructure, concentrating instead on how to collect the most data with the smallest cost. But there is also a different breed – some new companies and some of the old guard that realise that data is where fortunes will be won and lost. Tesla is a car-cum-battery-cum-solar company but is also a data company. It designed the Model S to collect and transmit driving data, which now totals over 1 billion miles. Why? To power the self-driving car revolution that will be upon us faster than almost anyone imagines.
Autonomous cars are certainly not the only change we will witness. So many aspects of our lives will shift in the next one or two decades that 2017 will seem part of a bygone era. The source of these changes will emerge from this data economy that is evolving before our very eyes.
In the next blog in this series, we’ll look further at the sources of data that are driving the new economy – from the internet of things to social media.