New entrants are not beholden to old ways of doing business. (Apple, Clearwire, Whole Foods)

Apple (AAPL) will break (and transform) the cellular-phone carrier industry the same way it did with the record industry. It remains to be seen whether it will be able to do the same with the cable TV industry, but I wouldn't bet against it.

The iPhone will eventually be available without the carriers. You will be able to use wireless internet access. This will allow innovation and lower costs. This will be good news for Clearwire (CLWR), which provides wireless internet access.

The reason why this will happen is because of the convergence of the technology necessary, the power and vision of Apple, but also because Apple doesn't make money from cell-phone contracts so it has no problem with reducing profit in an industry that won't let go of it's monopoly in mobile phone access without force.

Similarly, Whole Foods (WFMI), the leading organic food retailer regardless of whether it is able to buy Wild Oats or not, will continue to beat the me-too grocers that have non-organic and now some organic as well. They can't market organic and natural foods and better environmental practices as well because they are selling the other stuff too.

Skype (EBAY) and other VoIP companies are another example of this. They are forcing change in the land phone industry.

It is hard for people to give up on the ways of doing business that give them power and profits in favor of innovation, competition, which would be destabilizing to them. New entrants are necessary to challenge the status quo.

The virtualization of the American corporation

Commentary: It's harder to figure out what businesses are actually doing

By John C. Dvorak

Last Update: 2:48 PM ET Jun 1, 2007

BERKELEY, Calif. (MarketWatch) -- The trigger for this column was this week's announcement that Dell Inc. was going to slash 8,800 jobs. Its earnings were relatively flat, and that gave the company the excuse to make cuts, but were these people necessary in the first place?

I bet they were.

I suspect that they will be replaced, as Dell may be exiting the conventional ways of doing business and heading toward becoming a virtual company.

I've been fascinated by the concept of a virtual company for years, and was particularly intrigued by a friend of mine starting a virtual computer-laptop business.

He is setting up shop with almost nobody working for him directly. Via a Web site, customers will order machines online; the orders will be sent directly to a factory in China, where the laptops would be shipped from there to the buyers.

A lot of machines from big vendors are sent directly from China to U.S. customers nowadays. Apparently, there is enough margin, once you set up shop in China, to send gear through Federal Express or other carriers and still make money.

There are all sorts of potholes in this sort of scheme. Shutting down the air-transport system for two or three days could break a company, for example.

But in a global economy, this sort of virtual-company concept is very appealing and explains a lot of today's business orientation. If you knew all the necessary systems that made up a business within an industry, there is no reason today that you could not "virtualize" it by outsourcing everything -- from order taking, Web-site development and manufacturing to delivery and customer service.

To fully understand how this concept is taking over modern business thinking, you need to look into the science of business-ontology development. Google it.

A cutback may not actually be a cutback anymore.

There is a lot of academic work being done in this field, and once you get into it you begin to understand how the market and the system is adjusting to the idea.

Let me explain business ontology. The whole science of this is to break down each and every aspect of a company, and its operations, so thoroughly that you could take an ontological schema and use it to simulate the business with a computer program -- as if the entire company was a microprocessor being tested before going into production. It's like a complete formula for the inner workings of a business.

Once the model works, you could then hand it over to an offshoring company in India, which specializes in back-room work, to plug into the specific back-room mechanism of the company as defined by the schema. Each element of the ontologically defined virtual company could be outsourced here and there, the way Boeing Co. now outsources manufacturing of various jet parts.

Anyway, once the ontology and schema of a company's operations is developed, it becomes extremely valuable, since it can be duplicated by anyone who gets hold of the breakdown.

To protect this, the patent office has allowed these virtual mechanisms to be patented, and this explains the emergence of business-process patents.

I suspect the Dell layoffs have to do with the fact that a well-defined mechanism within the company, defined by a carefully constructed ontological schema -- with 8,800 people in it -- will be turned over to some company that can do it cheaper.

Let's face it: The functions demanded of the 8,800 still need to be fulfilled somehow.

I'd advise investors to look into these fundamental changes in the structure of business and the whole business-ontology culture, only so that they better understand these cutbacks in today's world.

In other words, a cutback may not actually be a cutback anymore. As companies become virtual, it becomes harder to figure out what they are actually doing.