A VC

Last year Nicholas Carr wrote a controversial article in the Harvard Business Review titled "IT Doesn't Matter". David Kirkpatrick fired back an empassioned defense of IT in his Fast Forward column. And the debate raged on about IT and whether it was a good business anymore. A year later, I thought we had put and end to that debate.

But it appears that the naysayers just won't quit. The latest "Chicken Little" is Columbia University Economist Eli Noam who wrote a piece in the February 16th issue of the Financial Times titled "Market Failure In The Media Sector". Eli argues that the technology, telecom, and media sectors are in the middle of a "market failure" brought on by collapsing prices and commoditization.

As Jeff Jarvis and Om Malik point out on their blogs, this is nonsense. I don't know what world Eli is living in, but its not in the trenches. There is opportunity every where I look in the information economy right now. Maybe I should go up to Columbia and offer Eli a tour of it.

What is happening, as so brilliantly described by another economist, Carlota Perez, in her book "Technological Revolutions and Financial Capital" is that we are at the end of the "installation" period where building infrastructure was the recipe for making money and at the start of the "golden age of IT" where using it in innovative ways will be the key to making money.

Apple isn't making a lot of money on iMacs anymore, but they are making a ton of money right now selling iPods and Airport Extremes. Soon, those cash cows will pave the way for new Apple businesses built around Garage Band and iTunes. As Jeff Jarvis said in his post, "There's somebody using Apple's Garageband in a garage right now creating a future hit that will surely be sold at Apple's iTunes store."

Eli should come down from his ivory tower and hit the streets and see what crafty entrepreneurs are doing with commoditized infrastructure. They are building the "golden age" of IT before our very eyes.