Is Data Really the "New Oil?" (Hint: NO- here's why ...)

good analogy bridges the gap of understanding by linking the unfamiliar with something already understood. Let's dive into- “Data is the New Oil.”   

Oil's Applications over time
Oil of long ago when found bubbling up on a property was considered a nuisance. Thirsty American pioneers of the early 1800's would dig wells and be disappointed when they struck oil. *
Following the invention of the kerosene lamp in 1854, petroleum began to replace whale oil, creating massive protests amongst the social justice warriors of that long ago era; "The greedy oil industry is displacing all those poor whalers! The sad, helpless souls!" And then one of the whalers standing beside them would spit tobacco juice in their face. **   
But it was when petroleum began to be refined into gasoline to power the newly created internal combustion engine that oil's value to society skyrocketed.
A single barrel of oil stores the equivalent of 25,000 man-hours of power and sells on the market as of this writing for $50. It would be difficult to get employees working at .2 cents per hour, unless of course you're an Egyptian pharaoh, ... but even then you have to supply food ... Simply put, civilization as we know it would be non-existent without fossil fuels.
Petroleum, in some form, is a component in virtually everything mankind uses whether it be plastics, clothing, or the transport and cultivation of vegetables. 
It was only after we developed the machinery to transform oil's potential energy into power we could harness that the resource took off in value.

And Now The Data
Data in the past also had little value. Sure, we could proverbially "light a lamp" with it. A meticulous shopkeeper of a hundred years ago could count receipts hour by hour during an advertised sale and estimate the customers and revenue gained, then average it out over repeated instances, but it was an arduous process, especially since like people of today, he didn't know math. ***
And whatever data was collected came with a high cost of storage and transfer- the physical books, the time spent sifting through that mountain of paper, fires destroying it all, etc.

Journey onwards to the invention of computers when the cost of storing all those binary bits was still sky-high, and even if you invested in the massive hard drives, there was simply was no effective way to make sense of it all, we simply lacked the computing power.

Video: Why Data IS the New Oil

What has Changed 

In a nutshell we finally have the computing capabilities to finally “connect the dots” in ways that thousands of our poor shopkeepers working around the clock could never hope to achieve, along with a driving force (transportation in oil's case) that demands massive volumes of data in the form of neural networks/ machine learning; the more data they are fed the better they get.

We also have the storage facilities- servers that can hold ever increasing amounts of data in the same space, while also becoming, per unit of data, more energy efficient.
Andrew Ng, formerly Baidu's (China's Google) chief of artificial intelligence describes the rapid advancements in machine learning by drawing a rocket-ship with an outsized engine and fuel tank., "We now have this giant fuel tank, which is the data, and we also have this enormous engine, which is the computing power. Before, we couldn’t put them together, but now we can."
As the machinery which is both able to harness the of power of data, and refine it, is created, we are able to utilize a resource which previously, like oil, had little value.

Where the Analogy Fails

First off, oil will always have a set potential energy generated from its burning. The value of data on the other hand generally decreases as time marches forwards. 
Imagine being a market maternity maker and identifying a pregnant woman, except the data is a year old, it's virtually worthless to you. (unless data reveals her Catholic, in which case pregnancy is pretty much an eternal state.) 
Or how about the data on the computer of the 20th hijacker? We all wish the FBI had broke the seal on those factoids before 9/11 … 

Look, I'm not trying to inflame, I'm merely demonstrating in concrete terms that most data has an expiration date whereas oil’s “real value” defined as potential energy remains constant.
Video- Why Data is NOT the new oil

Secondly, unless you have millions of years to wait, there is a finite supply of fossil fuel on the planet. Once used, sianora baby, which is why modern day heroes like Elon Musk are so avid about developing alternative sources of energy.
Data on the other hand is being created at an ever increasingly rapid rate. In fact, 90% of the world's 'zeroes and ones' have been generated in the last two years. While there is no "shortage" of data, the need and demand for it is ever increasing, and Google's own chairman, Eric Schmidt, predicts that in the future, "Big data is so powerful, nation states will fight over it."  So maybe data is more analogous to oil than I thought ...
Which leads us to discuss, who will be the big winners from the data wars in our next section ... (Click here to read)

* Ben Dijihoff, an early settler in the state of Texas in 1804 threatened to kill himself if his party struck oil again  He died of a self-inflicted gun shot wound the following day. It was a bad time to be a Texan. (Astute readers might point out that Texas had not yet been invented.)

** As a by-product of having no oil reserves to burn in kerosene lamps, Japan continues whaling til this day, and is one of the few countries which can brag about having "sparkling whale free seas."

*** Seriously, how many people do you see using a phone calculator to figure out a tip? What percentage of them would you guess have liberal arts degrees? Like 100?


Popular posts from this blog

Smile :) Is Western Union is About to Have a Kodak Moment?

Big Data is Electric - Who Is Set to Win the Data + Cloud Wars

Google is David to Facebook's Goliath