Is Big Data in reality only a hyperbole?
The World Economic Forum (WEF) calls it “the new oil” and “a new asset class”. The vast loads of data have been likened to transformative innovations like the steam locomotive, electricity grids, steel, air-conditioning and the radio.
There were 30 billion gigabytes of video, e-mails, Web transactions and business-to-business analytics in 2005. The total is expected to reach more than 20 times that figure in 2013, according to Cisco. Cisco estimates that in 2012, some 2 trillion minutes of video alone traversed the internet every month.
What is sometimes referred to as the internet’s first wave — from the 1990s until around 2005 — brought completely new services like e-mail, the Web, online search and eventually broadband. The next one – connected the world into social grids giving people identity and voice. For its next act, the industry has pinned its hopes, and its colossal public relations machine, on the power of Big Data itself to supercharge the economy. Some call it Web 3.0, some call it Big Data.
Is Big Data pure hyperbole….
There is just one tiny problem: the economy is, at best, in the doldrums and has stayed there during the latest surge in Web traffic. The rate of productivity growth, whose steady rise from the 1970s well into the 2000s has been credited to earlier phases in the computer and internet revolutions, has actually fallen. The overall economic trends are complex, but an argument could be made that the slowdown began around 2005 — just when Big Data began to make its appearance.
All that promise of Big Data or even Social web hasn’t exactly fired the economic engines of the world as they were expected to. The promise is real – so why would such a disturbing trend start building – One theory holds that the Big Data industry is thriving more by cannibalising existing businesses than by creating fundamentally new opportunities. Online companies often eat up traditional advertising, media, music and retailing businesses, said Joel Waldfogel, an economist at the University of Minnesota. “One falls, one rises — it’s pretty clear the digital kind is a substitute to the physical kind,” he said. “So it would be crazy to count the whole rise in digital as a net addition to the economy.”
… or are these early days?
Other economists believe that Big Data’s economic punch is just a few years away, as engineers trained in data manipulation make their way through college and as data-driven start-ups begin hiring. And, of course, the recession could be masking the impact of the data revolution in ways economists don’t yet grasp. Still, some suspect that in the end our current framework for understanding Big Data and “the cloud” could be a mirage.
There is no disputing that a wide spectrum of businesses are now using huge amounts of data as part of their everyday business.
Josh Marks (CEO masFlight) helps airlines use enormous data sets to reduce fuel consumption and improve overall performance.Although his first mission is to help clients compete with other airlines for customers, Marks believes that efficiencies like those his company is chasing should eventually expand the global economy. For now, though, he acknowledges that most of the raw data flowing across the Web has limited economic value: far more useful is specialised data in the hands of analysts with a deep understanding of specific industries.
Some economists argue that it is often difficult to estimate the true value of new technologies, and that Big Data may already be delivering benefits that are uncounted in official economic statistics.
Also, infrastructure investments often take years to pay off in a big way, said Shane Greenstein, economist at Northwestern University. He cited high-speed internet connections laid down in the late 1990s that have driven profits only recently. But he noted that in contrast to internet’s first wave, which created services like the Web and e-mail, the impact of the second wave — the Big Data revolution — is harder to discern above the noise of broader economic activity.
… reproduced from Will big data prove to be an economic big dud?