Be on the wave or under it
The News – 07/08/03
The Cheap Revolution, Part 4
In parts 1, 2 and 3 of this series, I talked
about a variety of trends that are shaping both business and technology
that I am grouping, or inelegantly lumping, together under the
buzzword The Cheap Revolution. The buzzword was coined by Forbes,
but I’m not letting that stop me.
Anyway, there is a bit of a paradigm shift occurring in business
and in computing in which some of the conventional wisdoms are
being challenged. Wisdoms like “Bigger is better” (get high end
computers to manage large computing tasks; grow huge companies
to gain efficiencies); and “Information wants to be free (it also
wants to be expensive); and “You need to measure it to manage
it (but analysis can lead to paralysis and the future’s coming
faster, faster, faster).
The buzzword for the future of business is likely to be “Fast,
Cheap, and Out of Control.” I’ll amplify a bit about the “Fast”
and the “Out of Control” this issue and then let this topic alone
for a while.
Of all the provocative things I said in the first three parts
of this series, the claim that the pace of change is accelerating
got the most comment. Last issue,
I reported Prof. Andrew Odlyzko’s objections to this assertion
and went on for a bit about why I agree with Ray Kurzweil that
change is changing faster than before.
While it’s true that it still takes a while for technologies
to catch on, they are indeed catching on faster in the last thirty
years or so than they did in the previous thirty. Go to www.kurzweilai.net
and check out Ray Kurzweil’s plots
of the rates of adoption of various technologies.
Besides, we’re talking apples and oranges. I’m saying there are
more and more and more emerging technologies as time goes on.
Even if they all take the “normal” amount of time to develop and
gain acceptance, there are so many of them, all firing randomly
into the public’s consciousness, that the effect will be ever
It will get to the point that society can’t absorb any more.
We can argue how long technologies take to mature and reach acceptance
but you can’t deny that in the last decade multiple life and business
changing technologies reached mass acceptance almost simultaneously:
cell phone, Internet, laptop computers, PDAs, wireless LANs, CDs,
DVDs, airbags - the list goes on and on. The last decade was a
period of time unlike any other in terms of the quick assimilation
of new technologies. It dwarfs the previous period (’83 – 93)
and towers over the one before that (’73 – 83). If that’s not
the accelerating pace of change, then I’m an avuncular ape decendent.
The point is: I don’t really care how long it took each of these
technologies to go from lab to mass acceptance. There are so many
more of them now than there were before, each egging others on
in a virtuous circle. And it’s not going to slow down, at least
until we reach some kind of societal saturation point. (Of course,
one thing could slow this all down: a nasty global occurrence
such as a depression or world war.)
I’m not saying the Bubble boosters were right. They don’t have
to be right for this hypothesis to be right. However, they may
have just been a little premature. The Bubble DID transform
business. The Bubble DID transform our lives. The transformation
wasn’t sustainable at the level the Bubblers brayed about, in
part because of bad business plans, and in part because of curmudgeonly
naysayers who were determined to bring down the hubris-filled
Frankly, I think the Bubble burst because Greenspan pulled back
the money supply post Y2K. The Fed had increased the money supply
in case there was a bank panic, and it was obvious they were going
to rein it back in after the big date. (I just wish I’d done what
I’d said I’d do: Get out of stocks in late December 1999!) It’s
no coincidence that the Bubble burst roughly a quarter after 2000.
The central bank just yanked the money supply back, and Greenspan
pricked the Bubble. He did it on purpose to curb the “irrational
Of course, it was all a house of cards and bound to fall at any
point. Greenspan chose a controlled crash at a time of his choosing
rather than a potentially messier disaster.
Be all that as it may, just wait until nanotechnology really
hits. Yes, I know it’s been in the works for decades. When you
see the violent changes rolling through every industry, you’ll
no longer disagree about the rate of change.
Alert SNS Reader Jeff Ellsworth takes issue with the entire idea
of revolutionary technological change but then ends up coining
a terrific phrase that could be the buzzword of Kurzweil’s Singularity:
I disagree on part of your theory on
accelerating revolutionary technology. I think that everybody
is a little too quick to label something revolutionary. The telephone
was [revolutionary] because of what it was compared to: Morse
code! And, it took a serious amount of time for any new revolutionary
product to take hold - one generation is the usual marketing allowance.
The Internet in its revolutionary form had been around for well
over a decade or so and the Web explosion was (as some other and
more expert than me say) the acceleration part of the adoption
What the dotcom bubble said was that
adoption was accelerating and that everyone's products were revolutionary. When
in fact most were dependant on truly revolutionary products and
were derivative improvements. [Like] WiFi is to networking.
I do agree that there are more revolutionary
products out there at the same time. That is, the phone stood
alone for its period - whereas it is possible that there are a
few [similar innovations] all becoming revolutionary and adopted
products today. Some would say this is not surprising since there
are more things out there - therefore more things can be conceived.
“There are more things in heaven and Earth, Horatio, than are
dreamt of in your philosophy.” That was the buzzphrase for an
earlier millennium. This thousand years’ motto might well be,
“There are more things out there; therefore more things can be
conceived.” I couldn’t have put it better myself. Perhaps we’ll
name it Ellsworth’s Maxim and I can bask in its reflected glory.
Leaving the change thing aside for a moment, I’d like to conclude
this philosophical harangue with a consideration of how we are
going to be Out of Control and yet remain undamaged. The key is
self-organizing systems, otherwise known by the Forrester Research
moniker, organic systems.
Now while what Forrester describes
is really the first baby steps toward self-organizing information
systems, the trend is definitely real and will eventually produce
a computing fabric that can be out of control in the literal sense,
while obeying organic laws to produce the desired effect. And,
oh, by the way, it’s also Cheap, or at least cheaper than many
But organic IT infrastructure is only one part of what needs
to happen if businesses are going to be able to roll with the
coming changes. (And by the way, many manufacturers claim to have
learned from the Bubble and vow not to be left in the wake of
the nanotechnology revolution. Prospective SNS Reader Orlin Melstrand
sent along a pointer:
“incumbent industrial interests are working hard to ensure that
they aren't caught by surprise,” according to the Nanotech Report
2003 from Lux Capital.)
So all my yammering about The Cheap Revolution boils down to
this point for businesses: We are just leaving the “Chewing Gum
and Bailing Wire” era of business and business systems interoperation.
The next wave will produce autonomic business systems that run
quite nicely without all the messy human intervention that’s all
the rage now. When demand at the customer ripples instantly and
efficiently through the supply chain to tweak manufacturing or
logistics or some other component, we’ll know finally that we’re
not really in control.
I just hope the whole thing doesn’t run on Windows.
Revolution Part 1
Revolution Part 2
Revolution Part 3
- Shameless Self-Promotion Dept.:
It’s here: A new service from StratVantage – The WiFi Guys.
The service is targeted at Twin Cities consumers and small businesses
who buy the wireless networking gear, but can’t get it to work.
We visit and get it up and running fast. Check out the Website
My feature article, Grid
Computing Takes Off in the Enterprise, was published in
the inaugural issue of Fawcette Technical Publications’ Enterprise
Architect magazine. (Registration required to view.)
I updated the Prediction
Tracker page to reflect the rash prediction I make in an
My article, “Innovative Marketers Target Unwired Customers”
was published in the NetSuds
Coming Soon: A new eBook, Be On the Wave Or Under It™
will collect the best of SNS’ insights over the last couple
of years, along with additional material from CTOMentor white
papers and new material. It will make a great gift (Independence
Day?) for associates and friends in need of a guide to the latest
and greatest technology. Watch for more information in upcoming
Several issues ago I debuted SNS Begware, an opportunity for
you, gentle reader, to express your appreciation by tipping
your server via PayPal. See the sidebar for more info. Total
in the kitty so far: $56.48.
I repurposed and adapted an article about the wireless service
known as Short Messaging Service (SMS) for the Reside newsletter.
It’s entitled, Wherever
they go, there you are and it points out how marketers
can use – carefully – this new way to contact their customers.
StratVantage has been accepted as a member of the World Wide
Web Chamber of Commerce and now displays their logo on our Websites.
In addition, I’m featured in Manyworlds’ Thought
Leader Showcase, which lists a few of the white papers I’ve
done. I’ve also added their fancy icon to the StratVantage site.
- Off-Shoring May Not Be As Cheap:
Prospective SNS Reader Cal Butteris sent along an article that
challenges some of the assumptions regarding savings companies
can realize by sending IT work offshore. Industry analyst firm
Forrester Research estimates that 3.3 million jobs accounting
for $100 billion in wages will move offshore over the next 12
years. Those of us in the IT industry cringe when we hear the
sucking sound” produced by this trend. Most – 70 Percent
– of these lost American jobs will go to India, with its large
pool of English-speakers, a half million outsourcing workers
currently, and more than two million college graduates every
However, another pundit, Gartner analyst Debashish Sinha, says
that enterprises may not realize the savings many outsourcers
are touting. When you factor in transitional costs and add the
management overhead needed to supervise a substantial overseas
technology initiative, clients can't expect major cost reductions
until year two or later. “In the first year, you'll probably
see a savings of 18 to 20 percent, and maybe 25 to 28 percent
the second year,” Sinha states.
Heck, you can get savings comparable to that by outsourcing
to rural America, using resources like Cross USA (mentioned
in a previous
SNS). And those folks not only speak English, they share our
culture (well, OK, the Midwestern version of our culture), which
can be a critical difference. What’s possibly even more important,
they’re Americans, and thus companies aren’t shipping critical
information and possibly trade secrets to a potentially unstable
or copyright-abusing country (think China).
To limit their exposure to a crisis, some companies outsource
to multiple countries so that if there’s trouble in one country,
the company can transfer its processing or programming work
to another location. “You need two 'hot sites,' not merely a
theoretical failover site,” cautions Priceline’s CIO Ron Rose.
Processing must be able to be transferred almost instantly,
and “You also need load balancing across both sites to ensure
both sites are truly operational, and each site should be on
a separate power and communications grid.”
Plus, there are substantial upfront costs: travel (flying teams
of programmers and managers back and forth), training, and establishing
the infrastructure. When you add in expensive considerations
like this, it’s easy to see how the attractiveness of paying
overseas workers pittances (five or six years ago I was paying
a senior Visual Basic architect in India $12 an hour) can be
Basically, the offshore outsourcing question is too important
to be left to the financial people. Enterprises need to ask
themselves if putting their enterprise’s secrets and mission-critical
processes in the hands of workers in developing countries –
especially those with totalitarian governments – is the right
- Of Course, I Can’t Win:
Last issue I mentioned that the previous issue got tagged as
spam by Spam Assassin. Well, since I mentioned the verboten
words and phrases in the last issue, of course I got tagged
as spam again. Can’t win for losing. So whatever you do, don’t
mention drast1cally r3duc3 or 0pp0rtun1ty in your
emails or you can get sent to the bit bucket. Some Internet
Service Providers (ISPs) that offer Spam Assassin and other
spam filters discard the emails before you ever see them. BTW,
you’ll notice I adopted the standard spammer’s trick of replacing
certain letters with numbers to beat the dictionary-matching
algorithms. Of course, some spam filters also flag those enumerated
words as well. Ah, well.
- From the “I Told You So” Department:
I’ve been saying for quite some time that there’s no workable
business model for providing wireless hotspots for pay. That
point was central to my article, “Innovative Marketers Target
Unwired Customers,” published in the NetSuds
newsletter in May. There’s too much potential competition from
free providers for there ever to be any real money in providing
wireless Internet access to the public in anything but the controlled
environment of an airport or a hotel. What did this wonderful
bit of advice cost you? Nothing, nada, bupkis.
Of course, if you like to throw big money around, you could
have paid industry analyst group Forrester to advise you. They
recently declared that most of the money spent creating public
wireless access is being wasted. That bit of advice would have
cost $295 for a report or bigger bucks for a consulting contract.
Of course, Forrester throws in their tremendously unreliable
forecasts: 286 million Bluetooth-enabled phones, laptops, and
PDAs in Europe in 2008 compared with 53 million WLAN (wireless
network) devices – mostly laptops; only 7.7 million WLAN users
When you examine the basis for Forrester’s opinion, however,
you see that they don’t think there will be a lot of users (7.7
million) and thus that’s why the business models for wireless
hotspot providers will fail.
My reasoning is more basic. Only a fool backs a scheme whose
major competitor is free. Free access from coffee shops (like
the Twin Cities’ Dunn Bros., mentioned in the NetSuds article)
and grassroots groups that have sprung up in metropolitan areas
around the world will wipe out companies who try to make money
by providing these services.
Grassroots groups alone are a tremendous threat. These groups
have a missionary zeal to spread free access far and wide. In
fact, I fully expect some government somewhere to try to ban
them or tax them out of existence (a prediction
I made in March 2002).
Sorry, Forrester, the for-pay provision of wireless hotspots
anyplace other than controlled areas like airports and possibly
hotels is a non-starter. No one will ever make any significant
money doing it.
So if you’d like to get a jump on competitors who use high priced
analysts and hear now what Forrester will be predicting a few
months from now, just hire me and I’ll tell you.
Thanks to Prospective SNS Readers
Charlie Price and Orlin Melstrand for the pointers.
Return to Mike’s