The state of technology in 2018: the enterprise market is thriving, and the consumer market is stagnant, dominated by “innovations” from a few large behemoths
This article is a bit of an annual tradition: in mid-December I summarize the state of technology,1 and appropriately enough …
Context & Ripple Effects
This is Stratechery's mid-December annual stocktaking, and it lands four years into a question the same publication posed in 2014: which of wearables, Bitcoin, or messaging would underpin the next consumer computing epoch after PC, internet, and mobile. The 2018 answer is effectively 'none yet' — consumer is stagnant and its visible 'innovations' come from a few large behemoths, while the enterprise market is where growth actually lives.
The diagnosis also sharpens a claim made a year earlier by Learning by Shipping: the best window for startups to out-innovate incumbents opens precisely when those incumbents look most unassailable at extreme product-market-fit. If 2018's consumer market is dominated by behemoths shipping incremental feature work, that framework says the stagnation itself is the opportunity.
First-order effects
- Enterprise software vendors are the immediate beneficiaries: corporate IT budgets, not consumer wallets, are absorbing the industry's real innovation and growth in 2018, while consumer-facing giants compete on distribution and iteration rather than new categories.
- Startups eyeing consumer markets face a field where the few behemoths can absorb or copy surface-level 'innovations,' pushing founders toward enterprise problems instead.
Second-order effects
- Capital follows the growth: money rotates toward enterprise-oriented companies, and the decade-end verdict that the 'capital as a moat' model has failed reinforces the shift — subsidized consumer land-grabs lose their financing rationale when consumer demand itself is stagnant.
- Behemoth dominance in consumer feeds directly into the political dynamic Benedict Evans later traced, where tech's move from interesting to crucial polarized the conversation and triggered a rush for easy regulatory answers — concentrated consumer platforms become the natural target.
Third-order effects
- If the pattern holds, the next consumer epoch will not be launched by today's giants but by whatever category matures outside their orbit — the unresolved 2014 candidates among them — echoing the historical argument that incumbency at peak product-market-fit is exactly when disruption arrives.
- As software fades into the background like electricity, differentiation migrates to conventional industry concerns, meaning the enterprise/consumer split of 2018 hardens into a structure where tech companies win by embedding in other industries rather than by wowing end users.
The trend: Technology's center of gravity is shifting from consumer platform innovation to enterprise software, leaving consumer computing stalled until a category outside the current behemoths matures into the next epoch.