The old story of technology in business was a trickle-down affair. From telephones to computers, big companies came first. They could afford the latest innovations, and they reaped the benefits of greater efficiency, increased sales and expansion into distant markets. As a technology spread and costs fell, small businesses joined the parade, though from the rear.

Now that pattern is being challenged by a bottom-up revolution, one fueled by a second wave of Internet technologies like the search services from Google, Yahoo and Microsoft and software delivered as a utilitylike service over the Web.

The second-generation Internet technologies — combined with earlier tools like the Web itself and e-mail — are drastically reducing the cost of communicating, finding things and distributing and receiving services online. That means a cost leveling that puts small companies on equal footing with big ones, making it easier for upstarts to innovate, disrupt industries and even get big fast.

The phenomenon is a big step in the democratization of information technology. Its imprint is evident well beyond business, in the social and cultural impact of everything from blogs to online role-playing games. Still, it seems that small businesses, and the marketplace they represent, will be affected the most in the overall economy. Long-held assumptions are suddenly under assault.

Get the full story at The New York Times