Dow Jones replacement of GM with Cisco is momentous

It's official: General Motors is off the Dow Jones Index, and Cisco takes its place. The transition is more than just a dry Wall Street accounting manoeuvre: From a cultural, economic, and societal perspective, it marks a seismic shift in how our world is organised.

For starters, it embodies the transition from the transportation age to the communications age. We're now in what might be credibly called the "post-automotive" era.

Many predict that the American love affair with auto ownership has run its course, for a whole host of reasons: rising oil prices, an increased preference for denser, urban environments, lack of resources (especially among the Gen-Yers coming of age in a financial crisis), and an overall cultural shift towards long-term sustainability. Even companies such as Hertz have gotten into the act. The company now offers hourly rates and "car-sharing", with the goal of making it possible for people to procure cars on a "just-in-time" basis — thereby avoiding having to own cars at all.

At the same time, communications technology is ubiquitous with ongoing increase in users. Cellphone deployment in parts of Europe recently exceeded the ratio of 1:1 (more than one mobile device for every man, woman, and child). In fact, just as many households are questioning the necessity for owning a car, they're stocking up on routers. A significant percentage of US households now own routers, with the number continuing to climb.

These days, there's also the cultural expectation that distance doesn't matter. Parents regularly videoconference with their kids. Former schoolmates keep in touch through Twitter and Facebook. And telepresence is beginning to take off. In other words, virtual presence is increasingly replacing the real sort.

So the GM/Cisco transition definitely marks the end of an age dominated by the idea of moving people, and formally inaugurates the age of moving bits instead.

There are other cultural and economic implications of the shift: General Motors' manufacturing plants are a storied part of American history, while Cisco's products are designed in the US, but largely assembled elsewhere — not good news for the next generation of American line workers. General Motors is headquartered in the midwest, while Cisco's on the west coast. GM workers are often high school educated and unionised; Cisco's are typically college-educated, nonunion. And so on.

Cynics might also point out that for Cisco, in particular, the event may not be entirely auspicious. Is it really a good thing if the company you're replacing went from unquestioned market dominance to bankruptcy in a matter of decades? Fellow Network World pundit Brad Reese amusingly analyses Cisco in the context of the book How the Mighty Fall, by Jim Collins — pointing out that the company may be in for a rockier time than it expects.

Regardless of which angle you take, the implication is clear. The king is dead, long live the (new) king. And welcome to the new regime. Expect it to be very different from the old one.