8. Open Source + Web Tools

Wherever open source goes, massive innovation and spectacular growth soon follow. Think of the open architecture of the IBM PC and the open protocols of the Internet. Even Microsoft appears to have succumbed to the irresistible lure of open source (or so the company would like people to think).

Linux and other open-source operating systems have allowed manufacturers to build simpler, cheaper machines, such as the One Laptop Per Child project's XO Machine and Asus's Eee PC. Such thin systems will play a key role in enabling cloud computing (see item number 4 on our list). Desktop software offerings, such as the OpenOffice suite and Mozilla's Firefox and Thunderbird, are free (and often superior) alternatives to Microsoft's products. And Sun's Java has enabled the development of rich applications for both the Web and handheld devices.

When open source meets Web-development tools, though, the true disruption begins. Tools such as Apache, JBoss, MySQL, and Ruby on Rails have made it less expensive to develop new products and services and to deliver them across the Internet. That means startups can afford to take longer to develop and refine their products, without the pressure and risks of filing an IPO.

"Web 2.0 is cheaper to build than Web 1.0, and part of that is due to open source," says Keith Benjamin, managing partner for Levensohn Venture Partners. "Things that would have cost US$10 million during the bubble can be done for US$500,000 today."

Meanwhile, the revolution in tools like Asynchronous JavaScript and XML (AJAX) and "semantic markup" has driven a whole new way to build Web sites, says Robert Kanes, a US-based publishing consultant.

"Without semantic markup, there would be no XML, XHTML, or RSS," Kanes says. "That means no higher-level Google algorithms, Flickr, or iTunes. Basically, there was a revolution, and it changed the nature of referencing content--from describing what it looked like or was contained in to describing what it actually was. Now we can slice and dice to our heart's content."

Disruption: The Net is seeing a new boom in Web 2.0 companies that are more stable and more interesting than their dot-com-era predecessors. And with phones using Google's Linux-based Android operating system slated to appear this year, open source could disrupt the wireless market as well.

7. MP3 + Napster

The audio engineers at the Fraunhofer Institute for Integrated Circuits weren't really trying to bring down an entire industry when they invented the MPEG-1 Layer 3 codec, better known as MP3. They were simply building on decades of research in audio compression, which started in the 1970s as an effort to deliver high-quality music over the phone.

But MP3 files' small size--roughly one-tenth the size of similar-quality .wav files distributed on CDs--was tailor-made for the broadband explosion of the late 1990s. The emergence of Winamp in 1997 made ripping CD tunes into MP3s easy, and the first portable players (the MPman F10 and the Diamond Rio PMP300) allowed music fans to listen to them without a computer. In 1999, Napster arrived, giving users an easy way to find new MP3s and share them--much to the chagrin of the Recording Industry Association of America.

Even if Napster didn't kill the record industry (my vote goes to the industry's own greed and stupidity), it changed the business irrevocably. Though the original incarnation of Napster was brought down by legal battles, it paved the way for peer-to-peer networking to develop as a legitimate distribution medium. If not for Napster, BitTorrent might not exist. Ironically, when Nine Inch Nails recently released its Ghosts I-IV album, it used BitTorrent to help distribute the first nine tracks free for the asking.

Disruption: The idea that media should be portable is disruptive. The notion that it should be free--and that some artists can survive, or even thrive, despite a lack of sales revenue--is even more so.