If we look into history we can see many patterns repeated over and over. One of the most interesting is the birth and fall of great empires. Though out history empires empires have risen and fallen. The egyption empire lasted for thousands of years, Rome lasted for a mere 1500 years and the UK for a few hundred years, the last great empire the USA will be surprised within 100 years by china. The one thing that these empires seem to have in common is the greater the skill and knowledge of the average person the more powerful the empire became and the shorter the empire lasted. Even if a empire is destroyed suddenly, if the people still retain their skills and knowledge/technology it will be rebuilt. Germany and Japan were destroyed after WWII and had to pay huge war reparations, yet they still managed to become the second and third most powerful economies in the world.
This pattern is repeated with corporations, and markets. I remember reading that in 1940 the average life span of a corporation on what is todays Fortune 500 was about 40 years. That has now been shortened to 20 years and is shrinking.
So what does this mean for us? Well when it comes to the internet, there were many companies created from 95 to 2000 but only a select few made it because of limited ways of monetizing the internet. This resulted in a handful of companies virtually controlling the internet. Now here we are a couple of years later and technology has brought us cheap servers and software enabling a new class of companies that can exist and be profitable in a way that they couldn’t be before mostly by using cheap hardware/software and living off of advertising. What we will continue to see is a steady stream of companies rising and growing to a monster size in a short period of time. These companies will dominate the markets they created for a period of time only to see their market fragment into niches that will be dominated by multiple large companies.
I think what history will remember the most about this period of the internet is this is when the USA stopped being the dominate force on the internet. The forces (technology) that created companies like yahoo are now no longer restricted to the USA. Other countries have high internet penetration, major drop in technology costs, and software to create many sites can practically be bought off a shelf now. With technology costs start becoming marginal, all that is needed is a source of skills and talents and many countries have plenty of that. Just look Canada and plentyoffish.com, I created site from my apartment. No funding, no employees and now have the second largest site in a billion dollar industry. I have proven its possible and many others will follow now that they know it can be done.
If I had to sum it up, i’d say the internet will see many monster sized markets created out of nowhere, only to see them fragment into niches. As these niches form, the skills and technology needed to become a market leader will grow exponentially. This will make it virtually impossible for one company to be dominate in multipul fields.