Technology: Boom, Bust, and Beyond

For the willing adapters--traditional companies that were quick to integrate broadband, building all manner of internal systems around it--this is also a time of great opportunity. Wal-Mart jumped on info tech early and rode it to the top of retail; the company has even begun using radio-frequency identification (RFID) tags to track products from supplier to store. But broadband doesn't discriminate based on size. Small startups already shave serious money off their phone bills with Skype's Internet telephony. Others harness the power of peer-to-peer computing to distribute everything from software to video, and skimp on rent by setting up completely virtual offices, with employees spread across the globe.

Then there are the foot draggers, the conflicted companies whose very souls are threatened by this digital efflorescence. To survive, they'll need to negotiate a gigantic psychological hurdle, relocating from the material world to the ether. That will often mean becoming complicit in the creative destruction of their own business models and finding new ones to replace them.

Newspapers, for example, have to commit to a world without paper and ink. The efficiency of Web distribution makes all of that tree cutting and printing, trucking, and delivering seem so last century. But abandoning print is terrifying for a business that, until Google and Craigslist began siphoning off advertising, enjoyed 30% profit margins. And it's made even harder by the fact that the identity of nearly everyone in the industry is bound up with seeing that paper--that unwieldy, inky object--appear every morning. Likewise, book publishers, hobbled by return rates of 40% or more, are going to have to follow HarperCollins and Random House in digitizing their catalogs for e-books. That would likely bail out their notoriously low-margin businesses, but it's a leap many tweedy types are loath to take.

Juiced Nation

The fluidity of information will bring about a radically democratized society where consumers enjoy unprecedented power.

But leap they must. The pipes have been turned on, and those data are going to seep into everything. Yes, that means 50 more iterations of the iPod and TVs wrapped around PCs, complete with cheap downloads of every movie on the planet. But in the next 10 years, the Internet also will invade your appliances, even your clothes. And just as you wouldn't dream of being without a telephone now, the thought of being offline will be unthinkable. Universal wireless broadband--which is where all this is heading--will mean that firefighters can turn red traffic lights green from a speeding truck, download building blueprints en route, and perform real-time tests on hazardous materials once they reach the fire. Police will be able to tap into a bank's surveillance cameras to get a head start on cracking crimes. Electric utilities will read meters remotely. Citizens could feed parking meters with credit cards instead of hunting around for quarters, and report potholes, poor garbage pickup, or dead streetlamps by emailing cell-phone-camera pictures to city officials.

More generally, though--and more important--the fluidity of information will bring about a radically democratized society where consumers enjoy unprecedented power. Businesses will be forced to meet our expectations or face our ire, which will be amplified through countless channels (from blogs to search engines of video and text, to others yet to be developed; there will be such a thing as bad PR). Government, too, will have to reckon with us, as millions of interconnected eyes keep watch. Confronted with the ever present threat of cascading viral protests, boycotts, and bloc voting, our representatives will be brought to a level of accountability they've never known. The ombudsman will live within us all.

Of course, any leap into the unknown leaves some bodies broken on the rocks below. After the introduction of electricity, the U.S. population grew by 15% between 1910 and 1920, but the number of personal servants fell 25%, replaced, in large part, by appliances. The same process--"disintermediation" in Web jargon--is happening right now: Since last summer, retail employment has been sliding, even as online holiday sales rose 24% from last year, to almost $20 billion. Ten years ago, online retail barely existed; 10 years from now, it may be the only kind that's left.