Understanding The Third Wave of Digitalization

We’re all living in a world where, increasingly, many of our needs are instantly accessible via Internet-connected devices. This transition from analog to digital experiences, where hyper-connectivity and radical innovation rules, is the product of a third wave of digitalization. Understanding how we got here, can help us imagine where we might be going.

Digitalization Changes Us

Humans are changing the world through digitalization, but at the same time, digitalization is also changing each of us. It does this by changing our expectations of what is possible. It also does this by modifying our behaviors. For instance, there’s a good chance there are several things you do differently each day as a result of your smartphone.?

While it’s reasonable to believe we’ve all been through some pretty remarkable changes in just the last few years, and in fact, some stability would be welcomed, the evidence against any type of plateau suggests otherwise. Instead, the digital disruption ahead is likely to happen with greater scope, impact, and velocity.

Origin of the Term

Steve Case, former Chief Executive Officer at America Online—someone who knows a thing or two about connectivity and digital innovation--characterizes our current era, particularly what is happening with the Internet and the Web, as The Third Wave.

To understand it, let’s begin by looking at the first and second waves.

The First Wave

The First Wave occurred during the period of 1985 to 1999. These years were dominated by big tech players such as Microsoft, IBM, HP, Sun, Cisco, and information services such as America Online and Prodigy. These companies built the early hardware and software of the Internet.?

During this time, Websites were relatively rudimentary, largely focusing on broadcasting static information. If you wanted to find out the products and services sold at a company, and perhaps its mailing address, a static Website would be adequate. After all, connections to the Internet for the average user were enabled by slow telephone dial-up access, and delivering anything more sophisticated, would just result in a frustrating experience.?

After a while, connections improved and a more advanced Web emerged, enabling dynamic websites that served up content based on circumstances such as user location and data entered by the user.?

The Second Wave

The Second Wave happened during the years 2000 to 2015. This period was defined by the rapid emergence of advanced online functionality such as search, social, and Ecommerce. Examples of companies who dominated this time included Google, Amazon, Facebook, eBay, Salesforce, and Priceline.?

These businesses built rich applications on top of the infrastructure of the Internet. Notably, during this time, several billion new Internet users were onboarded.?

In 1996, there were just 36 million Internet users in the world. By 2000, 4 years later, the number jumped to 10 times that, at 361 million. 10 years later in 2010, the number had reached 2 billion. By the end of the Second Wave in 2015, Internet usage had reached 3.3 billion unique global users.?

The Second Wave also included the use of mobile phones, and particularly, the arrival of the Smartphone, as devices for regular access to the Internet. Smartphones also enabled the development of millions of new applications, in what has become known as the app economy.?

This ecosystem gave birth to app-native solutions, those built first as an app, such as Uber and Instagram, and for managing your smart home and digital assistants like Alexa. In 2007, there were around 100 million global smartphone users. By 2015, the number had reached over 1.8 billion. Today, in 2023, the number is almost seven billion.?

The Third Wave

The first wave created the Internet building blocks of hardware and software and enabled the platform for the software and services of the second wave. The Third Wave, which began in 2016 and continues to this day, builds on the first two and is defined by Internet ubiquity. This means that Internet connectivity and features are being built into just about everything. To paraphrase Steve Case, to say something is Internet-enabled in The Third Wave, will soon become as ludicrous as saying something that is plugged in, is electricity-enabled.?

Everything Gets Connected

The Third Wave reminds us that connected, digitally-transformed products and services have moved from the periphery of the action to the center. No longer the exception or the alternative, this digital reality is the norm and it’s now. Analog is becoming the outlier.

This notion is radical and noteworthy. It helps us understand why today's digital transformation is unlike anything that has come before. To thrive will mean significantly reframing what we do going forward.

This article is adapted from Dr. Jonathan Reichental’s upcoming and updated LinkedIn Learning video course,?Foundations of the Fourth Industrial Revolution , which continues to be highly popular, consistently attracting over 500 new learners every single week. In the new version, coming in August 2023, the scripts and videos are all updated and several new videos have been created that cover important topics such as generative AI, the metaverse, and mixed reality. In the interim, you can watch Dr. Reichental’s videos and sign-up for his newsletter here:?reichental.com/learn