Americans now spend over a trillion dollars a year on information-related goods and services—a figure that represents a sixth of the country's gross domestic product (GDP). Perhaps even more significant than the scope of economic activity directly resulting from the information industry is its enormous impact on every other significant sector of the economy. Indeed, the United States has once again risen to become the most competitive economic power in the world, largely as a result of its superior integration and exploitation of information technology.

The information industry today is in the early stages of a momentous transformation. Historically, the industry has been organized on the basis of information form; companies within the industry tended to focus on business opportunities related to a single form of information, such as voice, text, image, audio/video, or data. However, extraordinary advances have occurred over the past two decades and are continuing at a breakneck pace in digital electronics. Coupled with the changes now accompanying the move from narrowband information transmission to broadband communications, these technological developments have occasioned a major paradigm shift in the information industry.

With digital electronics fast becoming the dominant technology for every existing information-based business, a realignment of the broader information industry has become inevitable. We believe that this realignment will occur along the lines of information function or capability. In short, information-oriented businesses will, over the next ten to fifteen years, reorganize themselves into the following three broad groups:

• players involved in the creation and collection of diverse types of information content

• players involved in the manufacture of a wide variety of information appliances

• players organized to engage in various modes of information transport

Significantly, we believe that today's computer hardware industry will be relegated to an important but constricted role as the supplier of memory and processing capabilities to each of the three functionally defined information industries. To succeed in the new environment, companies must learn how to operate on a global scale; partner with others; create breakthrough service concepts; customize their offerings to ever-smaller market fragments; increase their speed, flexibility, and efficiency; empower and develop their employees; and gain access to capital.

The information industry is far from being a mature industry, as evidenced by the low penetration of even basic phone service in a large part of the world. While the information industry is about a sixth of the U.S. economy, it accounts for a mere fraction of that amount for the vast majority of nations. However, that proportion will surely increase, fueling unprecedented growth. Coupled with the dramatic new capabilities made possible by phenomenal and unrelenting advances in technology, it is evident that the information industry is in perhaps the most exciting period ever seen in any industry.