The Next Big Upset

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Remember when the Giants upset the Patriots in the Super Bowl? Well, surprises like that can happen not just in sports but in business, too. Think about it: Google (Nasdaq: GOOG) over Yahoo! in search technology. Amazon.com (Nasdaq: AMZN) over bricks-and-mortar department stores. Blue Nile (Nasdaq: NILE) and its end run past Zale and peers in jewelry.

But upsets aren't really upsets in the business world. In fact, they're as inevitable as a sunrise -- or a risque GoDaddy commercial during the Super Bowl. That's why Fool co-founder David Gardner has a service called Rule Breakers.

Three industries, three upsets in the making
Our guiding thesis in Rule Breakers is simple: Find the Next Big Upsets. How do we do it? Start with the industries that have experienced glory in the past. They're the ones most likely to be complacent and, in the process, to be disrupted by a bold upstart.

Here are my three picks for industries that will play host to the Next Big Upset:

• Software-as-a-service over installed software. SaaS, as it is known, is highly attractive for its cost advantages and its lower administrative burden when compared with installed business software from the likes of SAP and Oracle (Nasdaq: ORCL). And let's be honest: Would you really want to install software if you didn't have to? The many customers who use salesforce.com (NYSE: CRM) say "no."

• Content networks over do-it-yourself distribution. Online video has become a phenomenon. Digital applications are becoming more common. (See SaaS, above.) Neither is possible without complex infrastructures for delivering data reliably across the Web. Google has built much of what it needs internally. But few others have, and with the expenses for servers, routers, software, and so on being what they are, we expect that few will. Enter Web-content distributor Akamai Technologies (Nasdaq: AKAM), a Rule Breakers pick.

• Virtualization over classic data center infrastructures. With more data comes a greater need for processing power. But power can be costly, especially when it comes to cooling what we techies call data centers -- code-speak for big rooms with lots of servers. The problem is simple. More servers mean more power, and more power means more heat. More heat needs to be offset with more air conditioning, which means ... yep, that's right, more power. But what if servers were more efficient? What if their resources could be finely tuned? That's the theory behind virtualization: Manage processing demand more efficiently, avoid buying new servers, and thereby keep the power bill manageable. VMware (NYSE: VMW) is the leader in this area.

Recently, our Motley Fool Rule Breakers team visited Silicon Valley. To find out about more upsets, you can sign up now, free, to receive dispatches from The Motley Fool Innovation Tour.