Casualities on Information Superhighway: Tradition-Bound Firms in the Slow Lane
LAST week, as investors and technologists gawked at the failure of Bell Atlantic Corporation's merger with Tele-Communications Inc., Nathan Myhrvold was delivering a talk with the prophetic title ``Road Kill on the Information Superhighway.''
Mr. Myhrvold, who heads Microsoft Corporation's futuristic advanced-technology division, says he expects more dollars to be lost than won as companies rush to link the computer, telephone, and television industries in a grand ``digital convergence.''
He likens the current situation to historic gold rushes: ``Almost invariably, there was a net loss,'' even as many struck it rich.
Yet this does not mean businesses can afford to remain aloof, Myhrvold argues. Microchip technology will overtake current patterns in numerous industries, he told students at the University of Washington. The computing power available at a given price has roughly doubled each year, and the trend should continue for at least 20 years, he says.
``It's an exponential growth process.... Anything which grows more slowly than computing will be overwhelmed,'' Myhrvold says. This will test tradition-bound companies, he argues, because ``most everyday thinking is based on linear [growth].''
Myhrvold, a physicist by training who studied with cosmologist Steven Hawking, lists some of the items today that appear threatened by the digital revolution: the postage stamp, the filing cabinet, and the fax machine.
Among changes he foresees:
Smaller phone bills. As telephone and cable-TV companies compete to offer ``video on demand'' through fiber-optic cables, the new delivery capacity should dramatically reduce prices for voice traffic. Yet Myhrvold acknowledges consumers will pay $100 billion to upgrade to a high-capacity digital network.
Lighter pocketbooks. ``Smart cards'' with computer memory may replace many items such as keys and bank cards.
Fewer middlemen. The distribution chain is shrinking. For example, in terms of technology, there is no reason why an individual cannot buy or sell stock on any exchange without a broker.
Expansion of publishing. The means of distributing information is expanding, and costs are falling. ``Publishing in this world is depositing something on the net,'' Myhrvold says, referring to electronic bulletin boards.