Thomas, we agree that the issue of connectivity is important. Hence, I wrote in my network report on WIND:
"The value of the Internet as an asset is determined by the expected benefits that it will generate. Yet, the use of the Internet will permit scientists, engineers, and entrepreneurs to leverage innovation beyond our expectations. The Internet is destined to generate benefits that we do not yet know that we want or need and that we cannot even imagine.
However, what we do know is that the value of any physical network increases as the number of connected elements increases. Metcalfe's law approximates the magnitude of that increase in value by specifying: as the number of elements or nodes increases arithmetically, the value of the network expands exponentially. Metcalfe proposed this model after observing that networks needed to reach a critical mass before they exploded in value. Using a model of a telephone network in which each customer talks to all others once a day, when you have 10 customers, the value of that network is approximated as n-squared, 10 X 10 = 100. If you add one new customer, the value would increase to 121; if you doubled the number of customers to 20, the value explodes to 400. When that value compounds by doubling every 100 days, you have the non-linear explosive growth of the Internet.
Metcalfe's telephone network model assumed one-to-one communication. With the Internet, not only one-to-one, but also one-to-many, many-to-one, and many-to-many communication(s) occur among many sets of people. Necessarily, moving from one-to-one communication to many-to-many communications increases the number of potential interactions. Thus, it must expand the exponent beyond the square. Not only that, Internet communication extends beyond human communication: many devices with embedded systems talk to one another or to many others. Therefore, the exponent of growth in network effects is not limited to a fixed exponent of 2, but may have larger exponents.
What we know for certain about network effects is the bigger the better: the more elements, the greater the value. And, what we also know is that interactivity drives the value higher. Furthermore, the small world effect spreads the outcomes of adaptive interactions faster and further than ever before. The human being is a social animal, and the Internet enlarged the diverse human and nonhuman networks of communicators as it shattered the restraints of space and time.
The Internet revolutionizes how humans live, work, and play. The change is an order of magnitude beyond the usual order of magnitude levels of change in revolutionary products because of the significance of it unparalleled escalation in connected interaction" |
