Microsoft Still Risks Becoming “Road Kill on the Information Highway”

BallmerSteveNewEra.jpg

“Steve Ballmer is the second Microsoft chief executive to butt his head against the view that a new era in technology brings a new market leader.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 4) The Yahoo affair obscures the larger story: Microsoft’s long, long struggle — since 1993 — to maintain its leadership position while the Internet grew ubiquitous. Mr. Ballmer, who joined Microsoft in 1980 as its 15th employee, and Bill Gates, his mentor who will retire next month as a full-time Microsoft employee, have certainly tried their best to avert the inevitable decline of the company’s influence.

In 2000, Mr. Ballmer credited Mr. Gates for noting that no company in the computer business had ever stayed on top through what Mr. Gates called “a major paradigm shift.” The two men wanted Microsoft to be the first company to achieve that goal. An interesting challenge, but some problems are of a size that dwarf the abilities of multibillionaire mortals.
In a 1995 internal memo, “The Internet Tidal Wave,” Mr. Gates alerted company employees to the Internet’s potential to be a disruptive force. This was two years before Clayton M. Christensen, the Harvard Business School professor, published “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail” (1997). The professor presented what would become a widely noted framework to explain how seemingly well-managed companies could do most everything to prepare for the arrival of disruptive new technology but still lose market leadership.
It’s Google, of course, that has developed the musculature to step forward and lay claim to being Microsoft’s successor as industry leader in the Internet era. If there had been any way Microsoft could have prepared for this day, it had ample time to do so. In 1993, fully five years before Google’s founding and two years before Mr. Gates’s memo, Nathan P. Myhrvold, then Microsoft’s chief technology officer, wrote his own memo, “Road Kill on the Information Highway.” It spelled out in prescient detail how each of many industries would be flattened by the build-out of digital networks, and it said that the PC software business would be no exception.

For the full commentary, see:
RANDALL STROSS. “Digital Domain; The Computer Industry Comes With Built-In Term Limits.” The New York Times, SundayBusiness Section (Sun., May 18, 2008): 4.

Leapfrog Competition in the Smartphone Industry

SmartphoneMarketShareGrasphic.gif

Source of graphic: online version of the NYT article quoted and cited below.

(p. C1) In recent years Palm lost its way. Its share of the smartphone market has been halved to about 16.9 percent over the last two years. First, Research in Motion found the sweet spot of business users with its BlackBerry. More recently, Apple grabbed consumers’ fancy with the iPhone.

Palm has tried to innovate beyond the five-year-old Treo with little effect. It announced with great fanfare last year that it would build the Foleo, a cross between a smartphone and notebook computer, only to cancel the project three months later. While cellphone makers like Samsung, LG and R.I.M. brought out products to compete with the iPhone, Palm has told Treo loyalists and investors to be patient. They will need to be. Palm’s stock price is down 90 percent since its high in March 2000.
Mr. Rubinstein, the executive chairman, said he is convinced he can bring Palm back. “Everyone is trying to make an iPhone killer,” he said. “We are trying to make a killer Palm product.”

For the full story, see:
LAURA M. HOLSON. “Palm, Once a Leader, Seeks Path in Smartphone Jungle.” The New York Times (Weds., August 20, 2008): C1 & C5.

ColliganRubensteinPalmExecs.jpg “Ed Colligan, left, Palm’s chief executive, and Jon Rubinstein, the executive chairman, who was hired to revive the company.” Source of caption and photo: online version of the NYT article quoted and cited above.

Good Laws Protect the Innovator

James Burke writes well, and what he writes is often stimulating, and thought-provoking. On the other hand, some of what he writes is exasperating—he writes in sweeping generalities, and often his ‘connections’ are exaggerations, giving no weight (or even mention) to alternative, equally plausible accounts.
But on balance, I enjoy listening to him. Here is one of the bits I especially liked:

(p. 19) Because the rule of law exists, and above all because it encourages and protects acts of innovation with patent legislation, we in the modern world expect that tomorrow will be better than today. Our view of the universe is essentially optimistic because of the marriage between law and innovation. Law gives an individual the confidence to explore, to risk, to venture into the unknown, in the knowledge that he, as an innovator, will be protected by society.

Source:
Burke, James. The Day the Universe Changed: How Galileo’s Telescope Changed the Truth and Other Events in History That Dramatically Altered Our Understanding of the World. Back Bay Books, 1995.

“The Value Conferred on Mankind by the Unknown Inventor of the Plough”

Who will attempt to calculate the value conferred on mankind by the unknown inventor of the plough?

Source:
Say, Jean-Baptiste. A Treatise on Political Economy. Philadelphia: Lippincott, Grambo & Co., 1855; translator C. R. Prinsep, ed. Clement C. Biddle. Fourth-fifth edition.
First published: 1803, in French.
The quotation is from BOOK I, CHAPTER VI “Of Operations Alike Common To All Branches of Industry.”
Full text is posted at: http://www.econlib.org/library/Say/sayT.html
(Note: Say is one of the earliest economists to recognize the importance of entrepreneurs. Today he is best known for his Say’s Law. He lived from 1767-1832.)

L.E.D.’s as the Next Leapfrog Advance in Light


A few years ago I presented a paper at the meetings of Society for Social Studies of Science in which I mentioned Nordhaus’s wonderful paper in which he measures advances in technology that produce illumination. Some of the technologies represent leapfrog advances that are part of Schumpeter’s process of creative destruction.
At the end of my presentation, a member of the audience gave me a reference to the new L.E.D. light technology that he suggested was the next leapfrog advance. (Alas, I do not remember his name.)

(p. C3) L.E.D. bulbs, with their brighter light and longer life, have already replaced standard bulbs in many of the nation’s traffic lights. Indeed, the red, green and yellow signals are — aside from the tiny blinking red light on a DVD player, a cellphone or another electronic device — probably the most familiar application of the technology.

But it is showing up in more prominent spots. The ball that descends in Times Square on New Year’s Eve is illuminated with L.E.D.’s. And the managers of the Empire State Building are considering a proposal to light it with L.E.D. fixtures, which would allow them to remotely change the building’s colors to one of millions of variations.
. . .
The problem, though, is the price. A standard 60-watt incandescent usually costs less than $1. An equivalent compact fluorescent is about $2. But in Europe this September, Philips, the Dutch company dealing in consumer electronics, health care machines and lighting, is to introduce the Ledino, its first L.E.D. replacement for a standard incandescent. Priced at $107 a bulb, it is unlikely to have more than a few takers.
“L.E.D. performance is there, but the price is not,” said Kevin Dowling, a Philips Lighting vice president . . .
. . .
“The Marcus Center lighting will require no maintenance for 15 years,” Mr. Gregory said. “That’s a dream for a lighting designer.”
But he does not expect standard bulbs to disappear totally. Just as the invention of the light bulb did not completely kill the candle and kerosene lamp markets, Mr. Gregory said, “there will always be a need for incandescent bulbs. They will never totally go away.”
“The way an incandescent bulb plays on the face on a Broadway makeup mirror,” he said, “you can never duplicate that.”

For the full story, see:
ERIC A. TAUB. “Fans of L.E.D.’s Say This Bulb’s Time Has Come.” The New York Times (Mon., July 28, 2008): C3.
(Note: ellipses added.)

The reference to the Nordhaus paper is:
Nordhaus, William D. “Do Real-Output and Real-Wage Measures Capture Reality? The History of Light Suggests Not.” In The Economics of New Goods, edited by Robert J. Gordon and Timothy F. Bresnahan, Chicago: University of Chicago Press for National Bureau of Economic Research, 1997, pp. 29-66.

LEDsNewYearsBallFullSpectrum.jpg “The full spectrum of color, design and programming available for the Times Square ball.” Source of the caption and photo: online version of the NYT article quoted and cited above.

Chinese Prometheus: Executing the Inventor of Airplane

Here is a significant claim from “an elderly Chinese professor” (p. 76) who was talking to Robert Payne in 1943. Payne was “a writer and teacher who befriended Needham in China.” The passage is quoted in an entertaining new book by Simon Winchester.

(p. 77) “. . .; we invented an airplane, and quite rightly executed the inventor; . . . “

Source:
Winchester, Simon. The Man Who Loved China: The Fantastic Story of the Eccentric Scientist Who Unlocked the Mysteries of the Middle Kingdom. New York: HarperCollins Publishers, Inc., 2008.

Winchester does not document his source for the quote, but it is presumably one of these two books by Payne, that are listed in Winchester’s bibliography:
Payne, Robert. Chinese Diaries 1941-1946. New York: Weybright and Talley, 1945.
Payne, Robert. Chungking Diary. London: Weybright and Talley, 1945.

Leapfrog Competition Among Three Firms in Jet-Engine Oligopoly

GearedTurboFanEnginePrattWhitney.jpg “Pratt & Whitney hopes its Geared Turbo Fan engine will defy skeptics and win it a spot on the next generation of jets from Boeing and Airbus.” Source of the caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Once every 20 years or so, the companies that make jet engines battle it out for a chance to power the next generation of single-aisle airplanes.
. . .
General Electric Co. unveiled plans to develop a new family of engine cores that it said would vault it ahead of United Technologies Corp.’s Pratt & Whitney, which has a two-year head start on a novel engine that promises to burn 12% less fuel than today’s best engines.
GE, which is working with French partner Safran SA, said its engine will have fewer moving parts than Pratt & Whitney’s, and will deliver equal or better performance. “We’ve been pretty quiet for the last couple of years, but we’ve been doing plenty of work in secret,” said GE Aviation President David Joyce, in an interview. “So be it. Game on.”
. . .
Besides GE and Pratt & Whitney, the other major player in the industry is Britain’s Rolls-Royce PLC. Hoping to dominate the market, all three companies plan to spend well over $1 billion on their new engines, stretching the limits of their technology. Developing fuel-efficient engines requires the use of exotic alloys and ceramic coatings that can cope with internal engine temperatures that would be above the melting points of untreated metal components.
The next generation of engines may look radically different from those used today. One design that GE and Rolls-Royce are exploring separately would have a double row of propellers at the (p. B3) back end of the engine, with no protective covering. Such an engine would be noisier and significantly slower than today’s planes. It also would have to be mounted at the rear of the airplane, but the companies say it would consume as much as 24% less fuel.
. . .
Pratt & Whitney had hoped to get a boost in the engine race by promoting a design called the Geared Turbo Fan. It uses a gearbox at the front of the engine that allow various fans and compressors to turn at different speeds for greater efficiency and less noise. . . .
. . .
The company has been working on the gear technology for almost 20 years, investing almost $1 billion so far, Mr. Finger said. He said that in addition to fuel and emissions savings, the new engine will cut noise by a factor of two and reduce maintenance by 40% because it will have fewer moving parts throughout the engine.

For the full story, see:
J. LYNN LUNSFORD and DANIEL MICHAELS. “Jet-Engine Makers Launch New War; Billions of Dollars at Stake in Race To Develop Efficient Power Source For Next Wave of Boeing, Airbus Planes.” The Wall Street Journal (Mon., July 14, 2008): B1 & B3.
(Note: ellipses added.)

GearedTurboFanEnginePrattWhitneyDiagram.jpg “GE is creating an engine with fewer moving parts than Pratt & Whitney’s design, and seeks to deliver equal or better performance.” Source of the caption and photo: online version of the WSJ article quoted and cited above.

For Some Purposes Leapfrogged Technologies Remain Better

CassetteRIPtombstone.jpg “Hachette’s audio department recently held a “funeral” for cassette tapes; an invitation is above.” Source of caption and photo: online version of the NYT article quoted and cited below.

The article quoted below mentions a feature of new “leapfrog” technologies that has received too little attention. The new product, overall, for most purposes, or for most important purposes, is better than the old product, but it may be that the new product lacks some features that the old product had, that had value. It is a step forward in most respects, but not in all respects.
I salute the observation in the last quoted paragraph below. When I am listening to a book, while walking Willy, some UPS truck often passes me, noisily making a sentence of two inaudible. If I’m listening to a cassette, I can back up a few sentences. If I’m listening to a CD, I have to back up at least a few minutes, and often many minutes (depending on how short the tracks are on the CD).
I remember an early word processor (can’t remember its name, maybe it was Wordmarc), that allowed you to type in the page number of a long document and then go directly to that page. I am currently writing a book using Microsoft Word. And in the vast majority of respects it is better than the word processor of yore. But every time I have to scroll and scroll and scroll, to get to a page, when I already know exactly which page I want, I irrationally curse Bill Gates.

Addendum posted 10/10/08:
Since this post was created on July 30, 2008, I have discovered that Word 2007 has the feature that I missed from Wordmarc, and I also learned that if I had invested more time in Word 2003, I might have discovered that by drilling down to an obscure option menu, it too could have been customized to have had the feature. (In Wordmarc the feature was real obvious.)

(p. C7) There was a funeral the other day in the Midtown offices of Hachette, the book publisher, to mourn the passing of what it called a “dear friend.” Nobody had actually died, except for a piece of technology, the cassette tape.

While the cassette was dumped long ago by the music industry, it has lived on among publishers of audio books. Many people prefer cassettes because they make it easy to pick up in the same place where the listener left off, or to rewind in case a certain sentence is missed. For Hachette, however, demand had slowed so much that it released its last book on cassette in June, with “Sail,” a novel by James Patterson and Howard Roughan.
The funeral at Hachette — an office party in the audio-book department — mirrored the broader demise of cassettes, which gave vinyl a run for its money before being eclipsed by the compact disc. (The CD, too, is in rapid decline, thanks to Internet music stores, but that is a different story.)
. . .
Cassette tapes’ tendency to hiss — and to melt in the summer and snap in the winter — turns off audiophiles. But for audio books, the cassette is an oddly elegant medium: you can eject it from your car, carry it home and stick it in a boombox, and it will pick up in the same place, an analog feat beyond the ability of the CD.

For the full story, see:
ANDREW ADAM NEWMAN. “Say So Long to an Old Companion: Cassette Tapes.” The New York Times (Mon., July 28, 2008): C7.
(Note: ellipsis added.)

Innovation Can Occur Even in Ancient Technologies

GlassMaking.jpg

“Making glass has long been energy-intensive, but soaring energy prices provide a strong incentive for that to change.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 4) Glassmaking is a based on old, stable technologies that require lots of materials and energy. The basic furnace, which melts sand into glass at extremely high temperatures, hasn’t undergone a fundamental change since the 1850s. Furnace designers have long contented themselves with small improvements, such as using pure oxygen to improve energy efficiency.
Today, glassmaking faces a technological upheaval that offers a reminder that “it is a mistake to assume that older technologies are less dynamic than new ones,” says David Edgerton, a historian at Imperial College in London and the author of “The Shock of the Old,” a history of the evolution of pre-electronic technologies in the 20th century.
. . .
Mr. Greenman sees a new willingness to innovate among glassmakers who, until recently, usually shunned technological advances because savings in materials and energy didn’t justify the costs of introducing new designs and processes.
“Many innovations were, frankly, thwarted by cost,” says C. Philip Ross, a consultant in Laguna Niguel, Calif., who has studied technological options for the industry. “There’s a lot of upside in revisiting old, discarded ideas.”
Glassmakers are searching for both small and large advances on three fronts: designing more efficient furnaces; creating much stronger glass; and using heat better.
. . .
The potential revolution in glass-making suggests a new model for innovation: Creators go back to the future, spending almost as much time retrieving once-discarded inventions as they do creating new ones.

For the full story, see:
G. PASCAL ZACHARY. “Ping; Starting to Think Outside the Jar.” The New York Times, SundayBusiness Section (Sun., June 15, 2008): 4.
(Note: ellipses added.)

Higher Prices to Operate Cars, Increases Demand for Segways

SegwayPizza.jpg

Using a Segway to deliver pizza. Source of photo: online version of the WSJ article quoted and cited below.

(p. B2) With gasoline prices and global warming on their minds, more Americans are getting out of their cars and riding to work — and riding on the job — on the once-maligned Segway.

Scott Hervey of Yorba Linda, Calif., bought one of the electric scooters on June 7 and has put 150 miles on it commuting to his custodian’s job at Disneyland, about 12 miles away. He had considered buying a Segway for four years, and gasoline prices finally drove him to do it. Now he “glides,” as Segway enthusiasts say, to work. “I like passing gas stations,” says the 54-year-old.
The two-wheeled Segway, a self-balancing vehicle that runs on a rechargeable battery, debuted amid massive hype in 2001. Tech icons like Steve Jobs, Apple Inc.’s chief executive officer, and Amazon.com Inc. CEO Jeff Bezos predicted it would change the way people lived. But critics panned the high-tech scooter for its $5,000 price tag and portrayed it as a toy for geeks and the rich. Some cities banned it from sidewalks because of safety concerns.
Today, the Segway is gaining converts. It plugs into a standard electrical outlet and can get up to 25 miles per charge.
Sales at the scooter’s maker, Segway Inc., have risen to an all-time high, says CEO Jim Norrod. The closely held Manchester, N.H., company doesn’t release detailed numbers. (A September 2006 recall showed the company had sold 23,500 Segways.) But Mr. Norrod says he expects sales this quarter to jump 50% from a year earlier, versus a 25% year-over-year increase in the first quarter.

For the full story, see:
STU WOO. “Segway Glides as Gasoline Jumps; Maligned Scooter Winning New Fans; $5,000 Price Tag.” The Wall Street Journal (Mon., June 16, 2008): B2.

When Embracing Science is a Matter of Life and Death

MonsantoStockValueChangeGraph.gif

Source of graph: online version of the WSJ article quoted and cited below.

(p. C1) The salad days of organic salad are wilting in favor of high-tech tomatoes.

As global food shortages threaten to ignite social and economic instability from Nigeria to India, the popular aversion to genetically modified foods is turning into more of a luxury for the wealthy than a practical option for the masses.
This trend is evident in the share price and earnings growth of Monsanto, the world leader in agricultural biotechnology by market share. Its stock has soared 22% this year, trading at a breathless 37 times estimated 2008 per-share earnings.

For the full story, see:
KAREN RICHARDSON. “AHEAD OF THE TAPE; Food Shortage Recasts Image of ‘Organic’.” The Wall Street Journal (Weds., June 25, 2008): C1.