Utility Computing

[via Nicholas Carr] Washington Post writes:

For years, economic historians have drawn the parallel between the productivity revolution spurred by the development of electric power at the turn of the 20th century and development of computers and the Internet at the turn of the 21st. Carr simply builds on that analogy.

In the early years of electricity, he notes, manufacturing companies generated their own power from dynamos they purchased from General Electric or Westinghouse. But in the 1890s, Samuel Insull, an adviser to Thomas Edison, came up with the insight that he could provide electricity more efficiently, even for the biggest users, from centralized plants that realized economies of scale. The company he founded, Chicago’s Commonwealth Edison, would become one of the country’s biggest and most successful enterprises, lowering the price of electricity and serving as the model for the power industry for more than a century.

I suspect, however, that Carr is on to something, and that there will be an important place in business history — and the Forbes 500 list — for whoever figures out how to become the Insull of computing. An equally intriguing question is whether he’ll be a Sam or a Sanjay.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.