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TECH TALK: Technology’s Next Markets: Wave Theory

October 11th, 2002 · 1 Comment

Merrill Lynch and Mark Stahlman talk about Waves when it comes to Technology.

Writes Steve Milunovich in a Merill Lynch report entitled The Coming Era of Managed Computing:

We believe that the industry evolves in waves of 10-15 years. Thinking about the industry this way leads to these conclusions:

1. Each wave results in a ten-fold increase in the number of users. The move to 1 billion users could mean the consumerization of technology. Moreover, the industry is moving from a network of computers to a network of things.

2. Each wave has been led by a different set of vendors. Because competitive advantage periods are short as a result of required competencies changing, vendors have not been dominant in consecutive waves.

3. Each wave begins with a period of euphoria that is followed by a difficult transition we call the WaveTransition. There has also been an economic recession early in each wave.

An extension of our Wave Theory suggests two critical trends: the industry is adopting true standards and this network wave is about integration. As a result, the technology matters less but managing technology matters more. Cost of acquisition will give way to cost of operation. Enterprise Hardware is entering the era of Managed Computing. Hardware is quickly commoditizing, value is shifting up the stack, and solutions vendors should win. As manageability becomes critical, watch for the rise of grid and utility computing. Systems integrators may be the new general contractors.

Mark Stahlman talks about the coming of the sixth wave, after the mainframes (1960s),mini-computers (1970s), PCs and workstations (1980s) and the Internet (1990s). He writes:

Just as in the previous five waves of Moore’s Law driven growth, there is basic dilemma facing every potential participant. Innovation implies conflict. Innovation obsoletes earlier innovations. Each wave draws from the collapse of the previous wave and sets itself up as a major improvement over and against all the earlier waves.

Personal computers (the third wave) crusaded to bring computing to the masses. And, minicomputers (the second wave) forcefully broke the stranglehold of the mainframe priesthood (the first wave). Workstations (the fourth wave) deeply integrated networks into computer design and use, while thumbing their noses at both standalone OC’s and monolithic Minis.

The Internet made these networks universal … overturning the economics of all the previous waves. In the wave vs. wave process, many more first through fourth wave companies went out of business than those who survived. And, as in all previous waves entirely new companies built billion-dollar revenue bases and became the new “industrial” leaders.

Once again, the building of completely new leaders is likely to happen in the sixth wave.

The sixth wave of computing/networking growth, the next wave will be driven by what computer researchers call “Human-Centered Technology” (HCT). Taking advantage of the exponential increase in “complexity” Moore described in 1965, we will begin to build computer/networking systems that reverse the current relationship between humans and computing machines. For the first time the humans will be in charge. And, the machines will be taking the orders.

So, what will be the next wave in technology? While I do agree with what Milunovich and Stahlman have to say, they have only looked at technology from the viewpoint of its existing markets that of the consumers and enterprises in the developed markets. Little of this applies to the worlds emerging markets. These markets are the technological equivalent of the New World that Christopher Columbus set out to find.

Next Week: Technologys Next Markets (continued)

Tags: Tech Talk

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