Distrupting Internet...........................

The main thing that stood out to me at Fortune Brainstorm Tech last week was the continuing impact that the Internet and cloud-based computing services are having on all sorts of businesses, sometimes far beyond the fields we normally consider.

The conversation started with Netscape and Andreessen Horowitz co-founder Marc Andreessen talking about how "software eats the world," meaning that software is changing all sorts of industries. That theme continued through the end of the conference as J.C. Penney CEO Ron Johnson explained how he is going to use software and mobile devices (including RFIDs and remote checkout) to change the retailer. Airbnb co-founder Brian Chesney also explained how his company is changing the world of travel and hotels by making it easier for people to rent rooms in others' homes.

It's obvious that Internet-based services have already changed the music business. Discussions with executives of Disney/ABC and Comcast, and of the NBA and Turner focused on how portable devices and the possibility of "TV Everywhere" are beginning to be quite disruptive to the traditional TV and video business. Another panel focused on over-the-top TV services, and executives disagreed on whether the transition is happening faster or slower than predicted.

Tech companies are very much impacted as well. Michael Dell explained how Dell is now gaining more of a cloud and Internet focus and Zynga's Mark Pincus talked about how the Internet is changing gaming. Companies like Time Inc. and Intuit are thinking about the impact of the cloud, while AT&T seems to be worried that we'll run out of spectrum to make this all happen. 

Even tractor maker Caterpillar is now a software and technology business, chairman and CEO Doug Oberhelman said, describing the company as "a technology business to make more efficient machines." He noted that the company has a lot of software engineers these days. Technology is important in energy areas, such as the technology that brought us tracking and thus the ability to get cheap natural gas. He talked about how the company is working on technology that can "gasify" all sorts of engines. 

Much of the company's research and development in the future will be based on software and electronics, he said, pointing to a project that has 50 autonomous vehicles working on a western Australia mining site. Pushing the importance of STEM (science, technology, engineering, and math) education in the United States, he showed off a basketball-throwing robot that was designed in six weeks in a high school classroom in a Caterpillar-sponsored program.

In a panel on big data, Michael Chertoff, former Secretary of the U.S. Department of Homeland Security, talked about how there is a "huge revolution in the way we look at information" and how this is impacting both government and business. 

While big data storage may have gotten too much attention recently, "data done right is not overhyped," DJ Patil, chief data scientist at Greylock Partners said. Data-driven organizations will leverage data to create efficiencies. Matt Quinn, CTO of TIBCO Software, said the big misconception is that people have more data than they think, and the big challenge for most organizations is the inability of people to look at the totality of the data. Chertoff seemed to agree with this, saying the big issue is how to take huge amounts of information and make sense from it.

All this, of course, has an impact on the valuation of tech companies, but instead of being a positive, it's often negative. In another panel, Egon Durban, managing partner and managing director of Silver Lake, shared data showing how technology companies are no longer valued above their peers. Investors used to pay a significant premium for growth, but mostly don't these day. One reason, according to Noah Wintroub, managing director and global head of Internet and digital media investment banking at JPMorgan, is investors are convinced that "the period of competitive advantage has gone down."

Overall, he said, "disruption has become very mainstream."

Whether this is good or bad, or whether there is enough change or not, remains a debatable proposition. I thought the most fun was a debate between Google Executive Chairman Eric Schmidt and venture capitalist Peter Thiel on whether technology is working. 

While they might have radically different ideas, I suspect both would agree that perhaps the area that needs the most change is education. I heard a lot of ideas about how to change teaching methods, textbooks, and other parts of the education system, but I'm only sure there's still a long way to go.