Clay Shirky's Writings About the Internet
Economics and Culture, Media and Community, Open Source

The Divide by Zero Era: The Arrival of the Free Computer

"I think there's a world market for about five computers."
                -- attr. Thomas J. Watson (IBM Chairman), 1945

"There is is no reason for any individual to have a computer in their
                -- Ken Olsen (President of Digital Equipment
                   Corporation), Convention of the World Future 
                   Society, 1977

"The PC model will prove itself once again."
                -- Bill Gates (CEO of Microsoft), 
                   COMDEX, 1998
Like Thomas Kuhn's famous idea of "paradigm shifts" in "The Structure of Scientific Revolutions", the computing industry has two basic modes - improvements in a given architecture, a kind of "normal computing", punctuated by introductions of new architectures or ideas, or "radical computing". Once a radical shift has been completed, the industry reverts to "normal computing", albeit organized around the new norm, and once that new kind of computing becomes better understood, it creates (or reveals) a new set of problems, problems which will someday require yet another radical shift.
The mainframe is introduced, then undergoes years of steady and rapid improvement. At the height of its powers, the mainframe solves all the problems within its domain, but gives rise to a new set of problems (problems of distributed computing, in this case), which couldn't even have been discovered without the mainframe solving the previous generation of problems. These new problems do not respond to the kinds of things the mainframe does well, the community casts about for new solutions, and slowly, the client-server model (in this case) is born.
This simplified view overstates the case, of course; in the real world these changes only appear neat and obvious after the fact. However, in spite of this muddiness, the most visible quality of such a shift is that it can be identified not just by changes in architecture, but by changes in user base. Put another way, real computing revolutions take place not when people are introduced to new kinds of computers but when computers are introduced to new kinds of people.

Failure to understand the timing of these of radical shifts is the underlying error made by all three of the computer executives quoted at the beginning of this article. Each of them dominated computing technology of their day, and each of them failed to see that "the computer" as they understood it (and manufactured it) was too limited to be an all-inclusive solution. In particular, they all approached their contemporary computing environment as if it was the last computing environment, but in computing ecology, there is no "last", there is just "next".

Scarcity Drives Strategy

What characterizes any computing era is scarcity. In the earliest days, everything was scarce, and building a computer was such a Herculean effort that had the price of hardware not plummeted, and expertise in building computers not skyrocketed, Watson's estimate of 5 computers would have made sense. However, price did plummet, expertise did skyrocket, and computers were introduced to a new class of businesses in the 60s and 70s that could never have imagined owning a computer in earlier decades.

This era of business expansion was still going strong in the late 70's, when Olsen made his famous prediction. The scarcity at the time was processing power - well into the 80s, there were computers which were calculating each user's cost for a second of CPU time. In this environment, it was impossible to imagine home computing. Such a thing would assume that CPU cycles would become so abundant that they would be free, an absurdity from Ken Olsen's point of view, which is why it took DEC by surprise.

We are now in the second decade of the "PC Model", which took advantage of the falling cost of CPU cycles to create distibuted computing through the spread of stand-alone boxes. After such a long time of living with the PC, we can see the problems it can't solve - it centralizes too much that should be distributed (most cycles are wasted on most PCs most of the time) and it distributes too much that should be centralized (a company contact list should be maintained and updated centrally, not given out in multiple copies, one per PC). Furthermore, the "Zero Maintenance Cost" hardware solutions that are being proposed - essentially pulling the hard drive out of a PC to make it an NC - are too little too late.

Divide by Zero

A computing era ends - computers break out of normal mode and spread outwards to new groups of users - when the the previous era's scarcity disappears. At that point the old era's calculations run into a divide by zero error - calculating "CPU cycles per dollar" becomes pointless when CPU cycles are abundant enough to be free, charging users per kilobyte of storage becomes pointless when the ordinary unit of drive storage is the gigabyte, and so on.

I believe that today we are seeing the end of the PC era because of another divide-by-zero error: Many people today wrongly assume that in the future you will continue to be able to charge money for computers. In the future, in the near future, the price of computers will fall to free, which will in turn open computer use to an enormously expanded population.

You can already see the traditional trade press strugling with these changes, since many of them still write about the "sub $1000 PC" at a time when there are several popular sub _$500_ PCs on offer, and no sign that the end of the price cutting is in sight. The emergence of free computers will be driven not just by falling costs on the supply side, but by financial advantages on the demand side - businesses will begin to treat computers as a service instead of a product, in the same way that mobile phone services give away the phone itself in order to sell a service plan. In the same way that falling price has democratized the mobile phone industry, free computers will open the net to people whose incomes don't include and extra $2000 of disposable income every two years.

There are many factors going into making this shift away from the PC model possible - the obvious one is that for a significant and growing percentage of PC users, the browser is the primary interface and the Web is the world's largest hard drive, but there are other factors at work as well. I list three others here:

  • The bandwidth bottleneck has moved innovation to the server.
    A 500 Mhz chip with a 100 Mhz local bus is simply too fast for almost any home use of a computer. Multimedia is the videophone of the 90's, popular among manufacturers but not among consumers, who want a computer primarily for word processing, email, and Web use. The principal scarcity is no longer clock speed but bandwidth, and the industry is stuck at about 50 kilobits, where it will stay for at least the next 24 months. ADSL and cable modems will simply not take the pressure off the bandwidth to the home in time to save the PC - the action has moved from the local machine to the network, and all the innovation is going on the server, where new "applications you log into" are being unveiled on the Web daily. By the time bandwidth into the home is fast enough to require even today's processor speeds, the reign of the PC will be over.
  • Flat screens are the DRAM of the next decade.
    As CPU prices have fallen, the price of the monitor has become a larger and larger part of the total package. A $400 monitor is not such a big deal if a computer costs $2500, but for a computer that costs $400 it doubles the price. In 1998, flat screens have finally reached the home market. Since flat screens are made of transistors, their costs will fall the way chip costs do and they will finally join CPU, RAM, and storage in delivering increasing performance for decreasing cost year over year. By the middle of the next decade, flat screens prices per square inch will be as commodified as DRAM prices per megabyte are now.
  • Linux and Open Source software.
    Its hard to compete with free. Linux, the free Unix-like OS, makes the additional cost of an operating system zero, which opens up the US market for PCs (currently around 40% of the population) to a much greater segment of the population. Furthermore, since Linux can run all the basic computing apps (these days, there are actually only two, a word processor and a web browser, which also have Open Source versions) on 80486 architecture, it resuscitates a whole generation of previously obsolete equipment from the scrap heap. If a free operating system running free software on a 5 year old computer can do everything the average user needs, it switches the pressures on the computer industry from performance to price.

    The "Personal" is Removed from the Personal Computer.

    Even if the first generation of free computers are built on PC chassis, they won't be PCs. Unlike a "personal" computer, with its assumption of local ownership of both applications and data, these machines will be network clients, made to connect to the Web and run distributed applications. As these functions come to replace the local software, new interfaces will be invented based more on the browser than on the desktop metaphor, and as time goes on, even these devices will share the stage with other networking clients, such as PDAs, telephones, set-top boxes, and even toasters.

    Who will be in the vanguard of distributing the first free computers? The obvious organizations to do such a thing are people who have high fixed costs tied up in infrastructure, and high marketing costs but low technological costs for acquiring a customer. This means that any business that earns monthly or annual income from its clients and is susceptible to competition can give away a computer as part of a package deal for a long-term service contract, simultaneously increasing the potential pool of customers and getting loyal customers.

    If AOL knew it could keep a customer from leaving the service, they would happily give away a computer to get that customer. If it lowered service costs enough to have someone switch to electronic banking, Citibank could give away a computer to anyone who moved their account online, and so on, through stock brokerages, credit card companies and colleges. Anyone with an interest in moving its customers online, and in keeping them once they are there, will start to think about taking advantage of cheap computers and free operating systems, and these machines, free to the user, will change the complexion of the network population.

    Inasmuch those of us who were watching for the rise of network computing were betting on the rise of NCs as hardware, we were dead wrong. In retrospect, it is obvious that the NC was just a doppleganger of the PC with no hard drive. The real radical shift we are seeing is that there is no one hardware model coming next, that you can have network computing without needing a thing called a "network computer". The PC is falling victim to its own successes, as its ability to offer more speed for less money is about to cause a divide by zero error.

    A computer can't get cheaper than free, and once we get to free, computer ownership will expand outwards from people who can afford a computer to include people who have bank accounts, or people who have telephones, and finally to include everyone who has a TV. I won't predict what new uses these new groups of people will put their computers too, but I'm sure that the results will be as surprising to us as workstations were to Thomas Watson or PCs were to Ken Olsen.

    January 11, 1998

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