Standing on the verge of the new millenium, it's an appropriate time to emulate the Roman god Janus and look both backward and forward. There's an old Chinese curse which says "may you live in interesting times." Certainly the last few years have qualified as such. What can we draw from the past to help us face the uncertain times ahead? What lessons have we learned and where are we going? And why isn't life like the portrayal in 2001: A Space Odyessy?
While many people complain that the world is changing too rapidly these days, the truth is that the North American infrastructure hasn't altered considerably in decades. The Eisenhower Interstate Highway project began in 1956. The Boston subway was the first in the United States and dates back more than a century. The Brooklyn Bridge in New York City was completed in 1883 and is still in use today. The Empire State Building opened in 1931 and even the World Trade Center was finished in 1973, making it more than a quarter of a century old.
With a few notable exceptions, most of what we buy and use today is only an evolutionary outgrowth of old technologies. Your color TV? Perfected in 1953. Cable? Dates back to the '40s. Refrigerator? Try 1927. The automobile has been with us since the late 1800s and the first powered flight took place at Kitty Hawk in 1903. Robert Goddard first successfully launched a liquid-fueled rocket in 1927 and wrote of interstellar travel back in 1907. Everything old is new again.
Human nature is such that we continuously tweak things, seeking incremental improvement. Entire industries develop around products and services, making wholesale replacement difficult. Even though the United States Department of Energy admitted that the CANDU (Canadian Deuterium Uranium) reactor was the safest in the world, General Electric was already building light-water reactors domestically. Political choices were made which culminated in a near-meltdown at Three Mile Island, an accident which wouldn't have occured had a CANDU reactor been in place.
We still use cowhide for our leather sofas, shoes and coats. American consumers still prefer the power and smoothness of the gasoline engine over the cleaner and cheaper diesel. People don't like electric cars even though their performance and range have improved dramatically over earlier incarnations. The gas turbine barely got out of the gate, even though it has huge potential when combined with a flywheel, generator and electric motors.
Look around and you'll see that we still have books, newspapers and magazines. We still build our houses and furniture primarily out of wood. While CDs have mostly replaced LPs and we now have microwave ovens for lightweight cooking, most of what surrounds us is old technology. Audiophiles still buy tube-type amplifiers, claiming that sound reproduction is somehow "truer". These same people claim that only vinyl can properly capture high-frequency nuances. None of that digitally sampled stuff for them!
Basically, people are resistant to change. It frustrates me to no end to have to wait in line at a grocery store while someone manually writes out a cheque and goes through the approval process. Have they never heard of a debit card? Then again, we probably all know people who won't even use an ATM. In fact, why am I waiting in line in the first place? Why can't my groceries and other goods be delivered to my door?
Aye, there's the rub! Do you want someone else to determine what makes a head of lettuce or a tomato acceptable? People are tactile: they want to be able to touch things, try them on, sit on them, whatever. Misunderstanding of this basic concept led to the demise of many dot com retailers. People like to think that they have choices even when those choices have already been narrowed at some point in the process. Hands up everyone who thinks that the tomatoes which show up at the local grocery store haven't already been sorted and graded!
One of the notable exceptions mentioned earlier is, of course, solid-state electronics. The discovery of the nature of electron flow in semi-conductors led first to the transistor and eventually to the integrated circuit. Drawing on the pioneering work of John von Neumann, Intel delivered the first general-purpose processor (the 4004) in 1969. Subsequent chips included the 8008, the 8080 and the 8088/8086. It was the 8088 which IBM selected to serve as the central processor in its Personal Computer (PC).
As a historical aside, it was interesting that IBM chose a chip which only had an 8-bit versus a 16-bit bus. There were nay-sayers (myself included) who felt that the only reason for the choice was to "throttle" the performance somewhat. At the time, IBM was making a lot of money selling dedicated word-processing machines called DisplayWriters. Making the PC competitive with the DisplayWriter would only reduce profits. Apparently, the engineers working on the PC wanted to use the Motorola 6800 but IBM didn't have the rights to manufacture that chip. Interestingly, Motorola is today a second-source for the PowerPC chips designed and manufactured by IBM.
The CPU in the IBM PC ran at a clock speed of 4.77 MHz. The fastest Intel chips these days run at 1.5 GHz, over 300 times faster. A 5 MB hard drive for the Radio Shack TRS-80 used to cost $5,000. A 40 GB drive can be had today for $150, a price reduction from $1,000/MB to 0.375¢/MB. The IBM PC came with 16 KB of memory while most systems today shouldn't be purchased with less than 64 MB, or 4,096 times as much. Modems used to operate at 300 bps while today they can squeeze 53 Kbps over a good telephone line.
We've now got residential ADSL and cable modem, capable of download speeds of up to 1.5 Mbps. Not too long ago that kind of bandwidth would have required a T-1 leased line costing roughly $5,000/month. We have internet telephony and H.323 video conferencing available at home for the price of a microphone and camera. Total cost: $50, and the software is freely available. Home networking, both wired and wireless, is gaining in popularity as more homes acquire multiple machines and the desire to share a single internet connection.
Web cams have become cheap and allow us to keep an eye on things at home or at the daycare while we're at the office. I can check my bank balance, transfer funds or execute stock trades over the internet. I can check e-mail at anytime, from anywhere in the world, anywhere there's an internet connection. I can buy airline tickets as well as make hotel and rental car reservations at my own convenience. I can purchase almost anything imaginable over the web and can resonably expect prompt delivery, if not overnight.
Okay, so perhaps the rate of change in technology is rapid. The computer might only be a tool but it's an incredibly powerful and flexible one. Automobiles might be old technology but throw a few computers into the mix and you end up with a car which can diagnose itself and convey that information to a mechanic. Add the appropriate receiver technology and you end up with a device which can calculate your position and altitude, anywhere in the world, with remarkable accuracy (GPS.)
So we have this powerful technology coexisting with very traditional attitudes. Where is this leading us? Almost everything I've mentioned in this treatise shares one common trait: convenience! The car replaced the horse and carriage, resulting in the demise of the buggy whip manufacturers but ridding us of the responsibility of stabling, feeding, grooming, etc. horses. The refrigerator replaced the ice box, resulting in the demise of the ice man but freeing us from being house-bound, waiting for the ice man to arrive.
An excellent example of this would have to be the cellular telephone. Once bulky and expensive, these are now commodity items, given away for free to customers who sign a contract for a term of service. The money is made on the usage side, not the hardware side. Now you no longer need to seek out a (functional) pay telephone and keep change in your pockets if you have to make a call while you're out and about. Unfortunately, having a cell phone also means that people can contact you almost anytime.
There's always a downside to convenience. The private automobile was supposed to give us freedom but its given us gridlock instead. The cell phone permits us to place a call from almost anywhere but it also means we can be reached at almost any hour. The resilience of human beings is such that we can accept the downside when the upside is so much greater. To unite these threads, what would you want to have with you when your car breaks down?
Since I don't see North Americans abandoning their wooden furniture or cowhide shoes any time soon, I believe that the potential for future opportunity lies in convenience. Fortunately, this can manifest itself in so many different ways. As in the past, we're going to see winners and losers. The winners will spot an opportunity and address it intelligently. They'll have a good business plan and will have properly identified the target market and the potential. Despite protestations to the contrary, they will have little difficulty securing venture capital.
I can hear some of you already asking "so what's going to be hot, Uncle Phil?" A couple of examples are definitely in order:
Well, that's certainly an ecclectic mix and that was my intent. There are going to be many opportunities in the future. I'm not suggesting that we're not going to see some revolutionary developments, but just remember that the cell phone is only a logical extension of the device patented in 1876 by Alexander Graham Bell.
I wish all of you a most bountiful New Year! Cheers!
Copyright (c) 2000 by Phil Selby