On Structural Change, Part 5

2. Changing Technology Drivers

In the beginning, scientists tell us that early humans separated themselves from the rest of the animals through their use of technology, starting with sharpened stones they used as primitive axes, moving on to arrowheads and spearheads. Since that simple beginning, technology has steadily driven human progress as man employed more and more tools to make life easier/better. In that sense, technology has always been with us, characterized by the invention and use of tools to accomplish tasks better than before. But such progress hasn't always been pretty (see World War I, here , here and here), nor kind to workers, for that matter. Perhaps the most trumpeted example of cultural resistance to change can be seen with the Luddites in the 19th Century, who rejected new loom technology and actually broke apart the looms that threatened their livelihoods. Guess how well that tactic worked for them in the end ...

Technology, Culture, and Change have always had an uneasy relationship, as each new generation has looked at new technology developments, sometimes with unease, but more often with excitement and anticipation. New technology carries the mantle of progress, whether we agree or not.

So when technology took off like a rocket starting about 100 years ago, as science and engineering hit their strides and inventions related to electricity and telecommunications came of age, society hit the fast lane, so to speak. With first atomic energy, then electronics, we even added a new descriptor, now referring to "high" technology when there was an electronic component involved. And increasingly, there was something to do with electronics in nearly every technology advance. Hi Fi was part of High Tech too.

But even as we entered this era of digital technologies with the advent of the integrated circuit in the 1960s, analog technologies managed to maintain a strong hold on our lives - as we observed above, the cultural transition to adopt technologies proved slower than the technological change that drove society's progress.

We've moved ever more rapidly through stages as silicon chips became more and more powerful, cheap, and available. Chips are now everywhere, they're in everything, and with familiarity has come complacency - we hardly realize that they're there, but they are. Everything has become digitized, it seems. But though we have accepted chips into our lives and the changes have been evolutionary on the surface, the combined impact of digitization is revolutionary over the longer term.

Our automobiles, for instance, now seamlessly merge mechanical and electronic technologies - to name but one formerly human function now guided by chips, computers take over for the driver when the brakes engage in an emergency. Like our cars, all of our old analog devices have come to incorporate one digital component or another to make them more capable and/or more efficient - but at all costs, technology is used to make products more appealing in a highly competitive marketplace. We now call these digitized devices "smart."

As children born into this digitized environment grew up, they came to accept technology as a natural way of life. As digital natives, younger folk accept and incorporate technologies into their lives in ways that most of us older digital immigrants are incapable of doing (incapable of doing, that is, without great, conscious effort). And as the digital has become ever more commonplace, we face a double-edged sword: on the negative side, the pace of change now seems to quicken with each new year. On the positive side, however, providing a little balance, our experience lets us learn better ways of doing things - two current technology trends, somewhat interrelated, demonstrate this learning effect: Industry Standardization and Open Source.

Industry Standardization. In the old way of doing things, it was a common rule of business for companies to keep their advantages close to their vest, seeking to advance a market lead over their competitors through such approaches. So naturally Steve Jobs, founder of both Apple, Inc. (formerly Apple Computer) and later, Pixar Animation Studios, chose to integrate his software and hardware innovations into a complete user experience with the revolutionary Macintosh - released in January 1984, the "Mac" was the first commercially successful PC to feature a mouse and a graphical user interface (GUI) rather than a command line interface.

But while he had great success with the Mac and paved the way for the PC Era, one suspects that Jobs could have done much more had he only embraced the power of standards. His success with the Mac ultimately paled in comparison with the success of the IBM PC clone or IBM PC Compatible computer, which by virtue of being based on standards enjoyed the benefits of market economics, where industry standard design and common Microsoft operating system software provided high quality and low costs. Thus standardization allowed prices to drop steadily and the majority of the market went to the less elegant but much cheaper PC, relegating the Mac to a small but devoted set of enthusiasts.

But even still, industry standardization is not for everyone. Clearly, it's still not for Apple, which is riding high again by repeating the non-standard route it used with the Macintosh a few decades later with the iPod and iPhone. By building exclusivity into product design and business process, the non-standard approach creates a boundary between the company and the outside world, which advocates say allows the proprietor to retain control over quality issues, making the non-standard approach superior (not to mention, keeping prices higher for longer for the successful company that enjoys a market lead and strong positioning).

Despite the continuing attachment to a non-standard approach by companies like Apple, the virtues of industry standardization have become much better understood since the roaring success of first the PC, and now, IEEE 802.11, better known as Wi Fi, offers yet another example of the power of standardization.

Open Source. In similar fashion, Open Source advocates trumpet the advantages that an open approach to software product development and management holds for the consumer public. Where industry standards bring to bear the power of economies of scale in order to raise quality and lower cost, open approaches bring the Wisdom of Crowds to problem-solving - "many heads make better decisions," so to speak.

Perhaps the best example to contrast open and closed approaches to software development is to look at Microsoft, which keeps its source code close to its vest and enjoys a dominant position in the market. But there's a price to pay for such dominance: as products increase in complexity, product releases have taken longer and longer and bug eradication has become more and more thorny. In contrast, many point to Linux , the poster child for Open Source software development, and aver that Microsoft cannot match the benefits of having a far larger group of code developers work out bugs more quickly and completely.

The success of Linux has spawned advocates of Open approaches in a number of areas, even to the point where we speak of "open" in other contexts, as with Open Source ecology and the Open content movement. What each of these uses of the "open" concept have in common is putting the stress on the benefits of decentralization, a key component of this white paper. As with standardization, skepticism to open approaches remains, though they're here to stay as challengers to the more dominant closed models.

Networks. Telecom networks have come full circle. They used to be much less complex, requiring human operators in the middle to make connections between callers. Then, telecom networks helped to drive the computing industry by creating a market for ever more powerful "switching" devices, large computers that is, which took the place of human operators to connect callers to their parties. Expertise and innovation became a source of pride for telephone companies - indeed, Bell Labs was second to none in its heyday. No wonder telecom companies still believe strongly in their "smart" network approach.

But along came the Internet, putting the intelligence out in the hands of the users on the edge with the Internet Protocol Suite, using TCP/IP.

The wonder of the Internet was that a simple shared packet coding practice operated with a high degree of reliability. A dumb network, contrary to what one might think, actually proved more adept at getting a message through. David Isenberg, a former Bell Labs engineer, published a seminal paper in 1997 that best captures this distinction between smart and "stupid" networks - see The Rise of the Stupid Network.

The World Wide Web built on this non-conventional viewpoint with the Hypertext Transfer Protocol (HTTP) and the Uniform Resource Locater (URL), and the rest is, as they say, history. We're all now quite familiar with these three-letter acronyms, or TLAs.

As the network transitions from a "smart" network controlled by a powerful network operator to a "stupid" network that acts as a tool to shuttle data packets around, the power shifts away from the network operator to the application provider and users out on the edge. But the owners of the networks, as we shall see in this paper, do not give up their control, rather, they hold on tight. Such resistance to change is the source of a growing conflict between telecom-centric "smart" network adherents and Internet-centric "stupid" network believers.

Spectrum. Moving from wired to wireless, we encounter an aging regulatory methodology developed by the government to foster adoption of analog wireless technologies back in the early part of the 20th Century. The Federal Communication Commission (FCC) was created in part to manage the commercial use of the electromagnetic spectrum, more specifically, those wavelength bunches used by analog radio and television broadcasters and two-way radio users. Analog wavelength management is much less precise than its digital cousin, which made spectrum a precious commodity and required a cumbersome government agency to ensure that operators could use wireless technologies without stepping on each other's toes and ruining it all for everyone.

But with new technology, some believe that such governmental management has lost its relevance, has become outdated and does more harm than good, even arguing that the FCC now acts more as a government revenue producer than market enabler, as it auctions off wireless spectrum rights for ever greater amounts. For a deeper treatment on the changing face of spectrum management, I recommend this white paper from 2003, as well as this classic by former FCC staffer Kevin Wehrbach, Radio Revolution. (Both of these links will require you to register - just takes a moment!)

The gist of these arguments is that technology has advanced to such a state that the devices on the ends of the network have become smart and can handle the management of spectrum usage to avoid interference far more elegantly than government regulators can. And these were arguments advanced 4-5 years ago. As this trend progresses, we see yet another technology-driven structural change underway.

Mobility. The final technology driver that is helping to accomplish structural change is the growing momentum of mobility. The case for mobility is well-developed in another white paper I wrote nearly four years ago, March to Mobility, available for download (again, you'll need to register).

As high technology grows ever smaller and more powerful and batteries get better and better, hi tech becomes portable. First, we saw desktops go mobile with lap tops and PDAs. And we see a similar progression among our mobile communication devices: we've gone from car phones to analog mobile phones to digital cell phones, and on to camera phones and now, smart phones. This past year, we saw the introduction of new dual-use smart phones that can operate on both cellular networks and Wi Fi networks, bringing more intelligence and potential to bear on the mobility question.

These trends in computing and telecommunications that show more and more mobility fit under the neat label of Technology Convergence.

And the ultra-mobile PC market may well bring in further change from the computing side. A great example of such convergence from the computing side is the EEE ultra-mobile by Asus, which I detailed in a January post titled New Year Brings Renewed Emphasis on Mobility. This device has the potential to be disruptive because it leverages cheap or free options: Wi Fi for access, Skype for VOIP telephony, flash memory in lieu of a hard drive and Linux for an operating system. - net / net, a device like this packs a wallop for a low price because technology has progressed so far and provided so many new options - in short, Structural Change.

Next up, we'll look at the Consumer Impacts.