News broke today that Blockbuster's is going bankrupt. As I was reading this morning I wondered how the largest video rental company (BY FAR) allowed a newcomer to become a serious threat to their business in a matter of 3-5 years, and force them into bankruptcy in about 10 years.

My conclusion after a bit of thought is that as the big player in the game, the incumbent has an incentive to be complacent. In the case of blockbuster, doing business as usual seemed to be a pretty good option. The owner (W. Huizenga) was a multi-billionaire and blockbuster was bringing in large profits every year. Complacency was pretty profitable. For Netflix howeverr, complacency would have meant non-existence.

On the global scale, I now see many countries that are as hungry as Netflix was in the late 90's. The generation before them grew up dirt poor and this history is never far away from their minds. They are now training their current generation to adopt the best from the U.S. and reject the worse. But they ARE changing..rapidly. They're diversifying their economies to build a base of manufacturing for the working man, and research for the intellectuals. In the U.S., the working man is going broke, and the intellectually gifted are often going to finance (take a look at Harvard/MIT recruiting over the past 10 yrs).

Software development is the one area where I can say the US is on very solid footing relative to it's peers, but is that enough?

It's somewhat cliche to say that China is a rising power, but I wonder if the rise of countries, particularly China, India, Brazil will mean a radically different future for the U.S. There is large segment of the U.S that are nostalgic to a past perceived American glory and yearns for even more complacency than we see today , and I fear what will happen if they get it.