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
"The PC model will prove itself once again."
-- Bill Gates (CEO of Microsoft),
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
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 StrategyWhat 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 ZeroA 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