Last year, few were talking about the metaverse. Now, if you don’t talk about it, you’re considered old and creaky. Fans value the desirability of the metaverse in the trillions. I was recently on a Zoom call and a breathless callback claimed the metaverse would be an 8 trillion dollar market by 2030. He gave no reason except that his sons were making money in digital art. Meanwhile, a shrunken contrarian friend hears the metaverse and sees a bubble forming. He’s looking for ways to short-circuit the hype.
History says the metaverse will be big, just like the often bubbly internet, but don’t panic. You have time. A panicked response is worse than no response. Words matter, and so before you commit energy and capital to the Metaverse, make sure you know what the Metaverse means. Can you define it?
What does Satya Nadella, CEO of a major global company, say about the metaverse? It spells it out in the simplest, shortest number of words possible. The metaverse, says Nadella, is two things:
A digital representation of the physical world
A physical representation of the digital world
Let’s break this down. A digital representation of the physical world is already happening. Technical managers call it a digital twin. Think of any large physical project with high capital cost – an oil and gas pipeline, a power plant, a chip factory, a pharmaceutical supply chain. Such work is doomed without timely data, a complete picture of what is happening. It’s not new. Four decades ago, Walmart tapped into a primitive digital twin strategy using barcode scanners and IBM mainframe computers to see what was being sold. A Walmart headquarters official in Arkansas could make adjustments to a store in Colorado. Walmart’s competitors, such as Sears and Kmart, have been slower to build digital awareness.
The idea of the digital twin is not new. It continues to advance with each new generation of semiconductors, sensors, wireless communications, software, graphics, predictive analytics, and powerful laptops. Think of it as the trading metaverse. It is currently dominated by big tech companies such as Adobe, Microsoft, Nvidia, SAP and others.
Physical representation of the digital world– the consumer metaverse – is what’s doing the buzz, of course. Facebook changed its corporate name to Meta in October. Its goal is to migrate its social media users to a 3D world of avatars, fantasy games, digital art, cryptocurrency, and more. Facebook has spent billions building its vision for the metaverse. But CEO Mark Zuckerberg has so far failed to excite his investors.
Here’s a speculation: Meta won’t run the consumer metaverse. To see the future of consumer technology, you can first look to Asian, Southeast Asian, and Indian companies. Don’t overlook gaming, entertainment and sports companies. (A day after I wrote this column, Microsoft announced a $69 billion cash offer for US game developer Activision Blizzard.)
My reasoning is twofold. I base myself on the observation of four decades of technological changes. First, consumer technology revolutions are usually led by young companies with young users. (Corporate tech revolutions, on the other hand, are typically led by people between the ages of 35 and 60; think container shipping, relational databases, cloud computing, 5G wireless.) Meta is more like a business infrastructure. It’s proficient in core technologies like cloud computing and artificial intelligence (with plans to deliver the world’s fastest supercomputer this year). Its leaders are seasoned and have more to lose than to gain. Mark Zuckerberg is 37; his direct reports are the same or older and wealthy.
Second, consumer revolutions require fanatical users. Apple’s iPhone was that. ByteDance’s TikTok is that. Meta is ubiquitous but does not inspire passion. Young companies with fanbases will lead the way into the consumer metaverse – less mature than US tech markets and more like younger consumer markets in Asia, Southeast Asia and India, in my opinion.