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TECH TALK: Tech Trends: 2. IT Commoditisation

June 25th, 2004 · No Comments

Silicon, Storage and Bandwidth are available in plenty. As Duane Northcutt of Silicon Image puts it, the world of computing and communications is being impacted by the three forces of mega-gates, mega-bytes and mega-bits. Processing power doubles every 18 months, storage capacity every 9 months and available bandwidth every 12 months. This has been happening for some time now, and is likely to continue for the foreseeable future. The result is there for us to see. Google has built a massive platform with more than 100,000 commodity computers and is in a position to offer free services like email with a storage capacity of 1 GB email. The cost of 1 GB disk space has fallen to just about $1. In countries like Japan and Korea, bandwidth of the order of 30 Mbps is available for about $50.

Technology has become a commodity, leading many to ask if IT really matters. Understanding the key benefits of IT and developing a strategy to use it in business is necessary to extract value from IT. As Hal Varian wrote recently in the New York Times, It is not information technology itself that matters, but how you use it. Companies cannot afford to ignore information technology, or relegate it to the back burner. Commoditising it does not necessarily mean innovation slows. If anything, it could accelerate as more and more innovators experiment and tinker with those cheap, ubiquitous information technology commodities.

Global investment in technology continues. PC shipments are likely to rise to more than 175 million units this year, with about 100 million of these being replacements for older computers. Next year will see even higher numbers. There are more than a billion cellphones around the world, with 2004 seeing sales of more than 500 million phones which provide all kinds of functionality ranging from digital cameras, multimedia messaging, FM radio, TV and even some basic computing functions. Even India has wireless data networks (through Reliance Infocomm) in hundreds of cities with connectivity costs of as little as 40 paise (less than 1 cent) per minute. Seemingly, technology is ubiquitous and everywhere. Or is it?

In countries like India, adoption of IT still leaves a lot to be desired. Only the very top of the pyramid uses technology. There are four barriers which need to be overcome for these countries to benefit from the commoditisation of IT: the information barrier, on what technology can really do; the desirabaility barrier, through the availability of relevant and useful software and applications; the manageability barrier, so that IT can be easily deployed and leveraged; the affordabaility barrier, which makes it available at prices that local users can pay.

Next Week: Tech Trends (continued)


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