EPILOGUE

Thriving in the Spacious Foothills

There are three kinds of companies: companies that try to lead customers where they don’t want to go (these find the idea of being customer-led an insight); companies that listen to customers and then respond to their articulated needs (needs that are probably already being satisfied by more foresightful competitors); and companies that lead customers where they want to go but don’t know it yet. Companies that create the future do more than satisfy customers; they constantly amaze them.

—GARY HAMEL AND COIMBATORE KRISHNARAO PRAHALAD

So, who’s going to pay for all of this? It is instructive to compare the situation with that of who paid for the Internet. Economically, the Internet evolved in three distinct stages: Stage 1 was an invitation-only party, with the U.S. government picking up the tab. It was a fun time, while it lasted. Stage 2—the age of irrational exuberance—was paid for by investors who counted themselves among the smart money gang. They knew that fortunes were going to be made, and they weren’t about to miss the boat. It wasn’t exactly clear how the fortunes would be made, but it would sort itself out. It did sort itself out, but the process was a bit painful. Stage 3—after the bubble—was just business—the long mundane process of separating the wheat from the chaff with respect to the monetization of all those clever ideas.

Will the climb up Trillions Mountain exhibit this same pattern? Well, Stage 1, at least, is different. As we have seen, the laying of the foundations has basically had the characteristic of being self-funding. Unlike the early Internet, the proliferation of microprocessors has made economic sense from the beginning. The technology is cheap and useful, always a winning combination. So things have taken care of themselves—no government bootstrap was necessary. Nonetheless, we suspect, Stages 2 and 3 are likely to play out in pretty much the same way as they did last time. This closing section of our story takes a look at where things stand from a business perspective.

We have repeatedly employed a metaphor of climbing mountains to represent the familiar cycles of progress. Inevitably, we see long periods of local-hill-climbing within an established orthodoxy, punctuated by the occasional fundamental paradigm shift. The metaphor is rich, highlighting both the fact that each mountain is only so high, and also that higher mountains are very often clearly visible in the distance long before anyone other than adventurers is willing to journey to them.

But with the reader’s tolerance, we would like to push the metaphor one step further: The base of a mountain is very large, with much room for exploration and many diverse resources to discover and exploit. But as we climb higher, this becomes less and less true. Diversity wanes, as does the available real estate. Climbers soon find themselves crowded together and queued up—jostling for access to a diminishing number of viable routes upward.

So it is in the technology business. In the early days of the Internet, the possibilities were boundless. The hegemony of the client-server pattern was far from a done deal. Nobody knew how to make money—but only the naive believed that it couldn’t be done. Experimentation was the order of the day. We at MAYA—and the best of our colleagues—were very busy.

Slowly but inexorably, though, the horizons shrunk. Some footpaths became superhighways, while others—including some very worthy ones—were all but forgotten. A generation of technologists and marketers grew up among the crowds at the summit, never knowing the diversity that was once enjoyed down in the foothills. All they have ever known is cutthroat competition for a smaller and smaller range of alternative business models. Websites, smartphones, tablets, search engines—all are tethered to immense pseudo-cloud data centers. Facebook can succeed only by eating MySpace’s lunch. Twitter wins at AIM’s expense. Blogs and their formless commentaries supplant structured discussion groups. Often, superficial novelty trumps enduring quality. Everybody who wants to build a new fire tower up on the crowded mountaintop must displace somebody else’s tower.

This is starting to not be fun anymore.

Not only that, it’s unsafe. We know from the natural world that lack of diversity means loss of resiliency, and this is always a bad thing. In the increasingly monocultural world of centralized computing, a single mistake can set up global shockwaves—as we are starting to see in the recurring waves of virus attacks. On our current path, we are skirting genuine catastrophe. Centralized repositories, like the Library at Alexandria, tempt disaster.

It is time to return to the diversity and myriad possibilities of the spacious foothills. And trust us: Trillions Mountain has them, and they are even more expansive than the last ones were. We will move beyond PC Peak and on to the land of pervasive computing. The PC will soon be gone and along with it the very idea of an operating system. (There will always, perhaps, be something that engineers will call an “OS.” What will vanish is the idea that users need to know anything about it, or even perceive it.) Powerful cell phones and tablets will still be there, but they will no longer be where the action is. The thought that all end-user computing would be stuffed into a “browser” (or any other single application framework) will soon seem absurd (the current apps craze is transitional in this regard). And, most importantly of all, the zeppelins will crash, and the skies will be cleared for The Real Cloud. Information will flow freely at last—often with no middleman.

How will money be made in this world? This question is understandably uppermost in the minds of many readers. Among the skeptical, the implication of the question is something like “We don’t want to go there unless you can tell us precisely how we’re going to prosper once we arrive.” Unfortunately, understandable or not, life doesn’t work that way. A lot of people didn’t want to “go” to the World Wide Web, either. They quickly discovered that they had no choice. Life is an adventure. Going there is not an option; it’s a done deal. We’re going there because “there” is the future.

Again, it is useful to reason by analogy from the last turn of the screw. Memory is rapidly fading of the genuine terror with which the computing orthodoxy viewed the web in 1995. And, for those who tried to break the wave, that terror proved well founded. But not for those who learned to ride it. Of the two dominant players in today’s computing industry, one (Google) didn’t even exist in 1995, and the other (Apple) was a laughingstock. Both firms achieved their subsequent miracles because they had a reality-based, rather than a faith-based, view of the future. They were by no means the only ones to understand the logic of that future. But they were among the few who had the wherewithal to act consistently according to the logic of that understanding.

How will money be made on Trillions Mountain? To be honest, we have no idea. Not if you mean, “Which specific firms and products and services will emerge as the dominant ones?” No one knows that. We wish we could give you some stock tips, but the companies likely don’t even exist yet. But, just like last time around, only the most naive will believe that the question “How will money be made?” has no answer. And they will be the ultimate losers. We have years of experimentation before us. But it will be profitable experimentation—even in the short run. What we can do is to attempt some reality-based reasoning about the question. If we focus on the aspects of tomorrow that must be true, and those that should be true, we can afford not to worry too much about the unpredictable details, at least for a little while. The following are a few big-picture considerations that we believe will inform the financial winners.

SEIZE THE LOW GROUND

If one accepts the mere premise of one trillion devices, then at least one additional conclusion follows inexorably: Unit costs will be very low. If we are to stay within the bounds of the gross national product, this is a matter of simple arithmetic. This is behind what is perhaps the single most important change in thinking that the winners on Trillions Mountain will have to achieve. Apple made it to the top of the heap by identifying (or, perhaps, creating) high-value, high-cost product categories and making them objects of desire. Such opportunities will always exist, but the action will increasingly move on to market segments in which the big dollars will be generated from selling low-cost devices and services in huge volumes.

This is good news, for it will be a democratizing force. Mounting a serious challenge to Apple in its core markets is a daunting challenge—it is a game for the big boys, and a new-start entrant is extremely implausible. But, the new market will be different, and not just because it is immature. Because we are talking about an ecology of devices, there will for a long time be opportunities for new ideas and new firms to get a foothold.

Can there be any doubt that if we can figure out how to build useful devices that don’t come with monthly subscription fees, then volumes will rise? To pick just one example, can’t we imagine filling in the gap between children’s “toys” and adult “devices?” Aren’t there educational and recreational possibilities that could not support monthly charges, but would be quite viable in a P2P environment? We believe that not only do such possibilities exist, but that they exist in vast numbers. And this is without mentioning similar green-fields to be found in other sectors, such as travel, home automation, health care, automotive, and a thousand others.

What will such a market reward? First on our list of answers to this question is simplicity. There are two reasons for this. The first one is that simplicity is cheaper. There are those who doubt this. They argue that the fixed overhead of, say, manufacturing an integrated circuit is so high that it will always pay to pack as much capability as possible into each one—that the complexity is free. But, if we have succeeded at making any single point in this book, we hope it is that complexity is never free. The calculations of the cram-in-everything-that-will-fit school of design ignore four critical points: (1) complex things are hard to get right. Simple things can be proven to be correct; complex things cannot; (2) simple things are inherently easier to use than complex things, and so will tend to sell better; (3) because they make fewer assumptions about how they will be used, simple things tend to have longer useful lifetimes than complex things, and so have more time to amortize their development costs; and (4) simple, less powerful devices can take advantage of emerging manufacturing techniques (which typically start their lives as technical underperformers) sooner and more expressively than can more complex, more demanding devices.

If these claims are correct, then the future will reward those who can resist the siren call of Moore’s Law and produce products and components that are designed to find their place in the evolving ecology, rather than attempting to dominate. Or, put differently, the very nature of dominance will be fundamentally different in the future.

MICROTRANSACTIONS AND THE RISE OF T-COMMERCE

A corollary to “seize the low ground” is “don’t disparage the pennies.” Trillions of devices implies quadrillions of transactions. In such a world, one does not have to make very much per transaction in order to make it up in volume. Even in today’s world of mere billions, we are rapidly learning how to monetize modest units of capability such as mini-applications for smart phones, and extra levels in online games. We saw this begin to emerge when simple bits of customization—like custom ring tones for cellular phones—became economically feasible to distribute electronically. In 2010 Zynga, a popular gaming platform made revenues of almost $600 million using a combination of advertising and the sale of in-game purchases. It has 58 million daily active users in 175 countries. In July 2011, Apple reported that over 15 billion apps had been downloaded by more than 200 million iPhones, iPads, and Ipod Touches. To date Apple has noted that they have paid out over $2.5 billion to application developers. When you have hundreds of millions of smartphones with the ability to complete monetary transactions at the touch of a button, impulse purchases costing a few cents at a time add up.

Imagine what happens when we move from e-commerce on the scale of billions of desktop computers and mobile devices, to commerce based on trillions of devices living in a rich sea of information. Think of this as t-commerce. The trick here, of course, is to figure out how to monetize transactions that are fundamentally out of our reach, because they are occurring, peer-to-peer style down in the capillaries of our information circulatory system. From where we sit today, this seems like an impossible challenge. But this is just an analogue of the challenge that our immediate predecessors faced in trying to figure out how anyone could possibly monetize the web. That seemed impossible, too, until Google showed us the way. We don’t have the answers here, but we think we understand the question.

STRANGE BEDFELLOWS

In Chapter 8 we noted that a connected washer and dryer might usefully come to know about movement in the laundry room. While that movement isn’t of particular value to the workings of the washing machine beyond triggering the illumination of the display, it may be very valuable to someone building an independent living product for eldercare. This is just one modest example from a nearly boundless space of possibilities. A water sensor in the basement of a house, manufactured by a home automation company to automatically turn off the water main in the event of a leak may have significant value to insurance companies looking to lower the cost of damage across their portfolio of homeowners.1 Will casually-networked motion sensors and security cameras prove to be disruptive to the home security industry as neighbors begin to form electronic neighborhood watch programs in which they volunteer to keep an eye on each other’s houses? When iPods suddenly became mandatory equipment for commuters and road-trippers, the automakers were caught with their pants down as consumers discovered how difficult it was to pipe external audio into their fancy, expensive car audio systems. When, a few years later, the most agile of the car companies started to offer iPod docks, the joke was that $40,000 cars had become accessories to $200 iPods. It wasn’t long before at least an audio-in jack was as essential a feature as a power jack (they used to be called cigarette lighters, but no more). Of course, this small example is just random, but it is portentous. The general point is that in the future, everything is going to be an accessory to everything else. Sometimes you’ll be the product, other times you’ll be the accessory. The liquidity that comes from a truly connected world will allow for any number of monetization schemes that today seem implausible.

BIG DATA AND INFORMATION VISUALIZATION

Much has been made in recent years about the business benefit of strategic information. What used to be called data mining has moved into the mainstream and is driving significant business decisions. It goes by various names but the au courant term is “big data.” The focus of the field is how all the information we capture across countless transactions can be converted into value. The volume of raw data readily available as input to such processes is growing at an astounding rate. In the age of Trillions, we will have at our disposal a nearly boundless data feed from the physical world’s ground truth to the liquid realm of cyberspace.

In such a context, no skill will be more valuable than the creation of lucid, unbiased visualizations of complex information spaces. Indeed, at its core, the very notion of cyberspace is inseparably bound to that of visualization. Visualization is one of the key enablers by which people harness the power of information in business, in health care, in personal growth and security.

This is all fairly obvious. What is less obvious is that visualizations do not have to be mere pictures—one-way displays that we simply look at. The kinds of interactive, information-centric, two-way displays that we described in Chapter 2 have the potential to form the basis of a new kind of collaborative environment. The ability to collaborate with others “over” information in a facile way has been one of our most fruitful areas of research.2 When groups of people can comprehend information rendered in different forms, and watch each other manipulate it as they experiment with hypotheses and “what-if” tests, the quality of insight increases significantly.3 High performing teams—when given collaborative visualization tools—build information literacy and collaborative interplay as they tune their tools—and their teams—to fit their business process.

Such collaborators won’t all be humans either. Fostering a mixed dialogue between human and machine collaborators through a shared collaborative space will become critical to agile decision making. The simple fact is that people are good at some things, and machines are good at others. An architectural model of information will provide a common framework for such mixed dialogue and decision making.

THE TRILLIONS BUBBLE

Yes, there will be a bubble. There is always a bubble. Whether it is tulips or Internets, our enthusiasms and imagination (and greed) will always, for a while, get ahead of us. The story will be familiar. Millionaires will be minted overnight. Some of them will be just lucky—the beneficiaries of fortuitous timing. They will be the ones who get rich first, and good for them. But, there isn’t much to say about them. They are like the winners at a roulette table. Assuming that the game is honest, there is little to distinguish them from the losers.

What we find more interesting is the blackjack card-counters. They take the time to deeply understand the game, and thus can win consistently. What annoys the casinos about card counters is that they aren’t really cheaters. They are just smart, and it is hard to write rules against smart. Unlike in the casinos, in the marketplace being smart doesn’t get you thrown out of the game.

On Trillions Mountain, “smart” means understanding the architecture of a true cyberspace and the potential of a world where every manufactured thing is connected. Those that have, or acquire, that understanding—those who place their faith in Architecture—will take the bubble in stride. Many other players will rush in at exactly the wrong time, trying to be rapid followers. Money will flow from the pockets of the latter to the pockets of the former. Our hope is that this book will have helped you find yourself in the right group. After the Trillions bubble, just like the dot-com one, we will get down to the serious business of harvesting the true potential of what will be.

So, how will we make money? How will the era of pervasive computing play out commercially? Concretely and specifically, we don’t know, and neither does anyone else. What we do know, however, is that it will play out. In the next era of human life lived inside the information, old industries will perish, new industries will be born, and money will be made in ways presently unimaginable. When information truly flows freely, prosperity will flow freely, too. How exactly? That remains to be found out.

Let’s find out together.

1 It is worth noting here that the Underwriters Laboratories,—the premiere appliance safety organization in the United States—is a child of the self-interests of the insurance industry.

2 One of MAYA’s most significant projects involved its contribution to a situational awareness and collaboration solution for the U.S. military called Command Post of the Future, which has won numerous government awards, including the Defense Advanced Research Projects Agency (DARPA) 2004 award for Significant Technical Achievement and the 2009 award for “Outstanding Government Program.”

3 A DARPA-sponsored study of a four-day exercise conducted October 22–25, 2002, found that the radically different capabilities of Command Post of the Future increased decision making and mission planning effectiveness by 400 percent over the previous system. It also improved “Situational Awareness” by 300 percent.