In an article on La Letter De La Photograpie, Paul Melcher says Instagram just showed the world that “there is no limit to what photography can earn.” That is of course in reaction to the 1 billion dollars Facebook paid to acquire the company last week. Paul goes on to describe the leaps that evolve photography from the massive camera to the instamatic, from manual to automatic (focus, metering and imaging) and how a company that figured out how to make crappy phone camera images look interesting and easy to share, can suddenly be worth a billion dollars without a dime of profits on the income statement (read the whole article here).
This, my friends, is a trend in business called “Software Will Eat The World” coined in an article for the Wall Street Journal by Marc Andreessen (here):
we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.
More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.
Why is this happening now?
Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.
Over two billion people now use the broadband Internet, up from perhaps 50 million a decade ago, when I was at Netscape, the company I co-founded. In the next 10 years, I expect at least five billion people worldwide to own smartphones, giving every individual with such a phone instant access to the full power of the Internet, every moment of every day.
On the back end, software programming tools and Internet-based services make it easy to launch new global software-powered start-ups in many industries—without the need to invest in new infrastructure and train new employees.
Which explains how a company with 13 employees and no profits can replace a now bankrupt company that once employed over 120,000 people with annual sales of $10 billion as the “manufacturer” of a device to bring photography to the masses.