Data Rush

Throughout history there have been various commodities that held high price tags that made them lucrative to those who sought them out.  From Gold and Diamonds, to Oil and Gas, these all existed in limited quantities, they were finite resources, they were not renewable, they were valuable, and they cost a lot of money to mine, but sold for much more leading to great profits.  We're living through an age where we now have commodities that have almost comparable values and yet they meet none of these precursors.  Take data for example, we have discussed in the past how it can be mined and how a profit can be extracted from that data mining. 

What I find fascinating however is that data itself is a commodity and yet it is not a finite resource, it is limitless.  It is renewable, for each piece of data that is examined, new data is generated that is derivative, and new data is generated every day by almost everything we do.  There is no finality to this production process there will be no point we will reach where the last piece of data that can be created has been created and no more can be generated beyond that.  Then comes the question of value, yes data is valuable, but that value is entirely subjective, it is worth only what the person who needs it is willing to pay and not all data is equal.  You can generate terabytes of data that is worthless and you can create a 1.44 mb floppy disk equivalent that is priceless depending entirely on what the data can be used for.  Then comes the cost of production, this one is rather simple - free.  It costs nothing to generate data, it is being generated constantly, the cost only comes from collection of that data and the infrastructure needed to log it.  This is akin to having a farm where crops just grow with no effort on your part to sustain them all you have to do is harvest it.

All of these things amount to a commodity that shares none of the traditional epithets of a commodity.  Yet still we pursue it and we do so on an industrial scale that has created tech giants with market capitalisation in the order of billions and in the case of Apple it breached the trillion mark in 2018, the first US company to do so, although not the first company in the world after inflation is factored in, there have been companies that were larger but are no more - all of which coincidentally capitalised on commodities of the day.  The one thing that sets Apple and tech companies today apart from those of the past is that commodities in the past had a natural saturation point and peak production before decline.  The story today is very different with data being a commodity that has limitless production capacity and is effortlessly generated even when you pay no attention and make no effort whatsoever to harvest it - data wastage if you will.

The question remains however, with all commodities in history eventually reaching inflection points, where is the inflection point with data?  This isn't the first time we had a tech boom, the Dot-Com Bubble of the late 90s is now infamous as the precursor to the modern tech bubble, back then evaluations far exceeded returns and eventually reality hit and caused the corrections that inevitably ensued.  So is this time different?  Is it fair to say that we learned our lessons and that this time things will be different?  Can this really be the commodity that never crashes?

No comments:

Post a Comment

All comments are moderated before they are published. If you want your comment to remain private please state that clearly.