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Expect the same fate for many more tech companies. Although not many people realize, tech is a _mature_ sector of the U.S. economy now - it grows at about 3% a

by vtail 10y ago

Expect the same fate for many more tech companies. Although not many people realize, tech is a _mature_ sector of the U.S. economy now - it grows at about 3% a year, pretty much in line with GDP. But the perception is different - just ask your friends - and the reason for this is that there are highly visible _pockets of growth_, like Uber/SpaceX/name-your-favorite-unicorn, and people often extrapolate their growth to the rest of the industry. Now what happens with many tech companies is that they often have a product with exceptional margins and double-digit growth rate, and it makes sense to invest all the available resources into it - better from ROIC perspective - ignoring all the alternatives which either lack volume or high margin to look attractive. This inevitably leads to problems once your exceptional product stops growing, and you realize you have barely invested in anything else. Just much like Intel with x86 and ARM chips, or Qualcomm, or EMC, or RIM, ... - the list goes on and on. Even when you look at Google, most of their resources are invested into search/ad business, so when that's stops growing - or, rather, they got all the share from the TV and start growing at a GDP rate - they will be in the same boat. Edit: typos.

PaulHoule 10y ago
That's not entirely true. Intel has invested in plenty of things that haven't worked out, for instance, Itanic, Ultrabooks, Realsense, etc. Also companies like Intel and Microsoft have bought into the Clayton Christensen theory of "disruption" to the point where they really are throwing their existing customers under the bus. That is, Windows 8 was perceived as a tablet operating system, Intel only sells high-end chips under the Xeon brand, etc. Had Intel stuck more piggishly to making better PC's, we might have mainstream water-cooled desktops running at 5Ghz+ and more reasons for people to upgrade.
- vtail 10y ago
  According to Wikipedia[1], Intel set aside "$300m over 3-4 years" to invest in Ultrabooks, so $100m/year. Contrast that to ~$8B they spend on R&D each year[2]. So it was a relatively small bet for them. I'm not saying tech companies never invest in anything outside of their core products. It's just often those projects are given low internal priority precisely because their (presumed) impact to the bottom line will be small. [1] https://en.m.wikipedia.org/wiki/Ultrabook https://en.m.wikipedia.org/wiki/Ultrabook [2] https://ycharts.com/companies/INTC/r_and_d_expense https://ycharts.com/companies/INTC/r_and_d_expense edit: typos
  - AndyNemmity 10y ago
    And small bets rarely materialize into anything useful. They end up being great marketing, and worth the cost in the marketing spend so others think you are being innovative while you continue to do the same stuff you always have.
  - ChuckMcM 10y ago
    I'll just note that a startup of 10 - 100 people that raised $300M over 3-4 years would be a big deal. Innovation isn't about ideas, its about finding ways to execute against those ideas in a way that others haven't or ideally can't.
    - vtail 10y ago
      Sure, but important difference is that 10-100 people startup that raised $300m behaves way differently than an internal department of a major tech firm that has decided to invest into a side project: authority to make decisions, willingness to take on risk, speed of innovation - everything is very different between the two.
      - udkl 10y ago
        Cisco and it's spinning out approach comes to mind. They probably got this right. Amazon is another company that is innovating disruptively despite it's size.
    - udkl 10y ago
      I think your definition of innovation makes sense only in the context of corporate or SV innovation. In a more general context, innovation takes on the other meaning.
- minikites 10y ago
  > Had Intel stuck more piggishly to making better PC's, we might have mainstream water-cooled desktops running at 5Ghz+ and more reasons for people to upgrade. Can you think of what those reasons might be? I can't. My office computer is an i5-3570 and it sits idle most of the time because it's just not that hard to have Outlook and Firefox open. A/V work and AAA gaming drive upgrades now like they always have, what other reasons would there be for Intel to push beyond their current efforts like you suggest?
  - tracker1 10y ago
    I think that higher resolution displays are probably the leading reason behind gamer upgrades today. Pushing 3-4x the pixels is a lot of overhead compared to the decade before UHD. Another reason really is power consumption. There's been a lot of effort to reducing the power envelope in CPUs, this investment would have happened even without a gamer segment. Servers are probably Intel's single biggest market today, and the companies running these miles of racks of servers are demanding more cores and lower per-core power. That goes in line with mobile improvements too. Intel is a perfectly reasonable cpu option for tablets today, within 3-4 years they'll probably have something suitable for phones. I've always liked the concept of a phone with everything that you dock into a workstation, or a laptop form factor to use, but as a phone it's still great. There's a lot of possibility there. More than that, with the likes of services that go beyond echo, we may see the watch form factor take over from phones... relying on larger systems in your home/office/car to fill the void. Who knows where things will go.
  - yourapostasy 10y ago
    >> we might have mainstream water-cooled desktops running at 5Ghz+ and more reasons for people to upgrade. > Can you think of what those reasons might be? Some applications that I would want that might need to wait for high-cpu (some high-memory and/or high-disk) to become more mainstream, since I want them all to run locally until FTTH reaches my part of the boonies: A scanner I can literally wave a piece of paper at, have it process all of the ultra-high speed video frame grabs into a high-dpi scan, then reconstitute the scan into an appropriate LibreOffice document or PDF, with better OCR and better vectorization of raster pictures. Then I auto-file all my invoices, bills, statements, receipts, etc. A personal digital assistant that transcribes, annotates, indexes and categorizes all of my conversations across all mediums (voice, text, chat, social, etc.). This doesn't need to be ML-fancy at first (except for the voice recognition piece), just lots of memory+cpu+disk to drive intensive, continuous indexing. A millimeter-accurate 3D positioning system, using differential GPS off of a geodetic mark on my property, with relays of signals to indoors. This would drive my robotic chicken tractor, curb edger, and vacuum cleaner. I could keep a detailed inventory of household items with this, then query the house computer over a voice link the next time I forgot where I set down $thing (some RFID and 3D positioning integration needed here). Outside, it keeps track of exactly where various pipes, outlets, irrigation heads, etc. are located. A software-defined radio that scans for chatter on interesting bands like police and fire, performs voice recognition on them, and pings me when it hears keywords about my neighborhood, street, nearby streets, or region when combined with other keywords (like "tornado"). A house computer that can tell whether or not I'm in the house or not, if I'm asleep, getting ready to sleep, or still undergoing my morning routine, at my computer, at my tablet, on my phone, etc. And do this for all occupants and visitors. Lots of visual recognition from lots of camera input. For myself, I want this information to drive what information is presented to me, when, and in what context. Bloomberg Radio after I've been up for 10 minutes, and after I've put on my headset, before my first call (incoming or outgoing). A process that continuously combs through my Emacs Org agenda, and compares against my current "state". If I'm driving away from the house, and confirm a query from the computer that I'm going out to buy groceries and run errands for the day (the query is launched by continuously-computed probability cones narrowing possible agenda matches against my GPS position until a threshhold is met), and no one else is in the house, then automatically put the house HVAC system into energy-conserving mode. A dumb robotic mechanics driven by updateable software in my desktop computer to fold my laundry, turn over my compost bed, rotate stop valves monthly/quarterly (otherwise they freeze in place, the primary challenge the automatic flood sensors face today), change HVAC filters, open and file incoming snail mail, etc. Intensive AR to turn nearly all parts of my house into smart surfaces. "What's inside that drawer?" "What's behind that wall?" "What's inside that freezer?" If we are talking only about pure desktop applications constrained to the physical desktop/laptop computer itself, then yes, you may have a point. However, when we include extending the reach of those systems to our environment, and there is an explosion of data to crunch, then today's typical consumer desktop computer (4-8 GB RAM, 2-3 GHz x86_64, 2-4 TB at the top end) doesn't have the capacity to manage all of those demands simultaneously.
- x0x0 10y ago
  Here's Intel's problem (and my apologies, I'm regurgitating a study I read a couple years ago and I can't find a link.) Basically, Intel needs to sell huge numbers of chips in order to make their numbers, ie giant investments in fabs, work. While Xeon may generate all the profits, they still need to sell millions of low end pc chips to pool costs. If that stops happening, even assuming they sell the same xeons for the same prices, the R&D costs to make those fabs eat them.
  - fiatmoney 10y ago
    "Investment in (new) fabs" only makes sense if volumes are increasing or manufacturing processes are changing. Volumes are projected as flat for the foreseeable future, and as far as anyone can tell process tech is near stagnating as well.
    - x0x0 10y ago
      Investments also are to research and build out that fab tech to stay ahead of Samsung tmsc et al
- mtgx 10y ago
  > Also companies like Intel and Microsoft have bought into the Clayton Christensen theory of "disruption" to the point where they really are throwing their existing customers under the bus. They could've fooled me. Clayton's theory wouldn't recommend changing Windows to adapt to the mobile form factor. It also wouldn't recommend Intel investing what are now probably over $10 billion in Atom and in making x86 work for mobile. Quite the opposite. It would tell Microsoft to create a new operating system that is dedicated for those form factors, and it would tell Intel to adopt ARM on their own. Both should also be done under an isolated division, so they have no "conflicts of interest" with the incumbent products, whether it's about product features (like say Intel refusing to make Atom too strong so it doesn't encroach on Core territory), or setting up expensive (and unsustainable) infrastructure to compete against the leaner competitors. I would also say both Microsoft and Intel failed in these markets because they were also late to try and become players in those markets, which is what the disruptive theory always warns incumbents about. It may be difficult to remember now, but even Windows 8 was considered "late" for the mobile market. So was Windows Phone 7 compared to iOS and Android. Same goes for Atom "catching up" to ARM chips in performance/low power (though not in price, a typical failure of a disrupted incumbent). If the "Wintel" monopoly wasn't so strong, you'd already see Celerons and Pentiums be replaced by ARM chips in notebooks and hybrids and whatnot, because those chips are the same ones that failed against ARM in mobile.
  - udkl 10y ago
    This is inline with what Stanford professor John Ousterhout says about the evolution (and necessary death) of software : "The most important component of evolution is death Or, said another way, it's easier to create a new organism than to change an existing one. Most organisms are highly resistant to change, but when they die it becomes possible for new and improved organisms to take their place. This rule applies to social structures such as corporations as well as biological organisms: very few companies are capable of making significant changes in their culture or business model, so it is good for companies eventually to go out of business, thereby opening space for better companies in the future. Computer software is a counter-example to this rule, with ironic results. Software is incredibly malleable: it can be updated with new versions relatively easily to fix problems and add new features. It is easier to change existing software than to build new software, so software tends to live a long time. To a first approximation, software doesn't die (compare this to the hardware in a computer, which is completely repaced every few years). At the same time, it is difficult to make major structural improvements to software once it has been shipped, so mistakes in early versions of the program often live forever. As a result, software tends to live too long: just good enough to discourage replacement, but slowly rotting away with more and more problems that are hard to fix. I wonder if the overall quality of computer software would improve if there were a way of forcing all software to be replaced after some period of time." https://www.quora.com/What-are-the-most-profound-life-lessons-from-Stanford-Professor-John-Ousterhout/answer/Anant-Bhardwaj https://www.quora.com/What-are-the-most-profound-life-lesson...
- tw04 10y ago
  In what way did Itanium not work out? It isn't in every PC sold, but it was never intended to be. It was intended to replace Sparc/power/alpha. While they didn't get Sun or IBM on board, they did get HP, and the chip is profitable. It's not going to drive the future of the company, but it's not like they didn't make money on the investment... it turned it's first profit 7 years ago and has been making money for them since.
  - throwaway2048 10y ago
    https://commons.wikimedia.org/wiki/File:Itanium_Sales_Forecasts_edit.png https://commons.wikimedia.org/wiki/File:Itanium_Sales_Foreca... It was intended to be the x86 sucessor.
    - tw04 10y ago
      No, it was intended to be the "Big Iron" CPU replacement. They never had any intention of bringing it to the desktop which is why they delayed as long as they did in x64. They wanted 64-bit to be a long-term differentiator between server class and desktop class CPUs. Hence the forecast being Servers sold a year...
      - guard-of-terra 10y ago
        "No, it was intended to be the "Big Iron" CPU replacement" All the computer press was pretty sure it would replace x86. Microsoft released Windows port for Itanium, which was unseen of them.
      - zurn 10y ago
        They planned to keep x86 as 32-bit which means gradual phase out (complemented by x86 emulation on Itanium).
- kevin_thibedeau 10y ago
  They could have been a major ARM vendor if they had gotten over their NIH attitude, seen the writing on the wall, and kept on with StrongARM/XScale.
tdaltonc 10y ago
Do you mean "information technology" instead of "technology"? Because I don't know what you could mean by "technology is mature." Jets are technology, they were new, now they're mature. Same for any technology (including CRISPR, looms, routers, and rockets). Parts of IT are mature, but a lot of smart people clearly think that parts of IT still have the potential for big returns.
- moomin 10y ago
  Since he said "tech", rather than "technology", I'd have thought that clear.
  - tdaltonc 10y ago
    CRISPR isn't tech?
nemild 10y ago
You're partially citing some of Clayton Christensen's observations in the Innovator's Dilemma (which Andy Grove, Intel's former CEO, used to refer to): https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
- vtail 10y ago
  Of course - most of what I wrote is an opinion shared by many people, I don't want to claim originality here :). A related anecdote - at my previous job, I was at an annual sales conference event, where Mr. Christensen was an invited speaker. Both before and after his speech, the management kept bragging about "how unique we are", "how fat our margins are", and "how none of our low-cost competitors could match our offering", despite real mid-to-long term danger to their core business, completely ignoring the innovators dilemma, or hoping that it's not applicable to them. It was almost painful to watch. My prediction is that my old company will get disrupted and ceased to play such an important role in just 5-7 years.
- rektide 10y ago
  By all means most people would do well to pick up Innovator's Dilemna! Wikipedia also has pretty good coverage of Clayton's Disruptive Innovation theory (what most of the book discusses) directly as well: https://en.wikipedia.org/wiki/Disruptive_innovation#Theory https://en.wikipedia.org/wiki/Disruptive_innovation#Theory 'Letting your company get chased upmarket,' is a pretty good synopsis: yielding ground rather than trying to get competitive. Clayton talks about the steel industry as a common example, with big "integrated steel" companies not adopting mini-mill tech that allowed for lower capital investment costs, and a big price reduction, first at some quality limitations to protect high margin integrated business, but with the low end market ongoingly overtaking more market up until they "won". I am curious though- Intel is still charging ~$281 for your run of the mill, very boring grade laptop chip. In some ways, it seems like their obstinacy is finally proving it's payoff, even as they abandon market segments. Which is both how disruptive innovation continues to happen- with the low-level market getting eatten out from under them with Rockchip and MediaTek chromebooks, and perhaps gaining more ground- but it also seems to have proven to some degrees how effective their protectionism has been, that they have not had to get competitive on laptop pricing. Making chips Apple would've wanted would have put Intel at a remarkably different price:performance scale than what they've stood on.
drzaiusapelord 10y ago
>and it makes sense to invest all the available resources into it - better from ROIC perspective Also, not every tech company can compete in other realms of tech. How could intel really break into mobile? A non-ARM chip means lots of testing and cross compiling for .1% marketshare that no one will do. Or worse, battery and performance draining hacks to get ARM compiled binaries to run on x86. There's an ASUS (?) phone series that does this. Its terrible and panned by cell phone reviewers. I think this is a lot more deterministic than we care to admit. I don't care how much "leadership" and "grit" and "listening to your customers" intel could have done better, its clear that they couldn't break the ARM mobile monopoly because no one can. Becoming a 3rd or 4th tier ARM producer amongst many would have probably gone to shit as well. Its easy to arm-chair quarterback companies but the reality is that there isn't a lot of 'win-win' paths in business. Sometimes you just can't enter a new market or beat the new hot startup regardless of what you do. Lastly, no one questions mass hirings that don't seem sustainable, but we all freak out when mass layoffs are announced. Its incredible how we think jobs only make sense as permanent fixtures, when in reality they're subjected to the same market forces everything else is. If anything, intel's biggest screw up was hiring too many people too quickly.
- IOT_Apprentice 10y ago
  What if Intel had replaced Samsung as the fab for Apple's A series chips, getting to produce ~75 million units a quarter and starving Samsung of that revenue? Seems like it would have aligned well for Apple and Intel.
nostrademons 10y ago
What counts as tech? Is AirBnB tech, or hospitality? Is Uber tech, or transportation? Is the Apple Watch tech, or a watch? Is SpaceX tech, or aerospace? Is Tesla tech or automotive? Is Instacart tech or groceries? Are Twitter/Medium/Wordpress tech or media? Not a rhetorical question, I'd actually like to know what's included in the 3% growth figure. I could believe it if tech is defined as "companies that sell computer hardware or softare", but it seems very low if tech is defined as "companies that provide a service using software or hardware that wasn't possible a decade ago."
- vtail 10y ago
  That's a GREAT question. Information Technology is $5.6T market, and telecommunications services is another $1.8T [1]. Uber and AirBnB, which I believe ARE tech companies, are under $90B combined, so ~2% of IT sector. SpaceX is aerospace: ~$12B valuation vs ~$600B Aerospace & Defense industry size, and Tesla is automotive, $28B vs ~$750B Auto + components market. Note that Uber, AirBnB, SpaceX and Tesla are probably the biggest unicorns out there. But you are raising an important point - many industries will be redefined when new competitors are using IT much more heavily. Still, that growth mostly comes from existing players, and I believe the growth of the IT sector itself is limited now. [1] https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jhtml https://eresearch.fidelity.com/eresearch/markets_sectors/sec... edit: typos, minor clarifications.
  - adventured 10y ago
    Uber, Airbnb, SpaceX, Tesla are not unicorns any more than Google, Facebook, Netflix, Priceline and Amazon are. Uber is seven years old, Airbnb is coming up on eight years old, SpaceX is 14 years old, Tesla is 13 years old. And they're all very substantial enterprises at this point. I'd suggest that companies of that size and operational maturity should be considered to be well beyond the semi-early stage billion dollar valuation companies that have tended to get the unicorn tag. They were unicorns, now they're just like Netflix or any other established company.
    - 10y ago
erikpukinskis 10y ago
> tech is a _mature_ sector of the U.S. economy I disagree. What I see is a boom/bust cycle as major technological shifts lead to growth and then consolidation: Mainframes are invented, an ecosystem of small players flourish, the market grows an order of magnitude or two, the technology finds product/market fit, the market consolidates around a single major player (IBM). Defeatism settles in amongst entrepreneurs as more and more opportunities are swallowed up by Big Blue. The PC is invented, an ecosystem of small companies flourish, the market grows an order of magnitude or two, and then consolidates around a single player (Microsoft). Defeatism settles in amongst entrepreneurs as more and more opportunities are swallowed up by Embrace and Extend. The internet is invented, an ecosystem of small companies flourish, the market grows an order of magnitude or two, and then consolidates around... well, now there are more players. Now there's Google and Facebook and Apple. Defeatism settles in among device inventors as the iPhone/Android hegemony seems unassailable. Some people think VR will be another land grab that fuels an order of magnitude jump in the tech market, and AI. I don't think that's crazy. Personally, I think there's a massive economic explosion waiting to happen in making programming tools more accessible to average people (Wordpress/Squarespace/Salesforce/etc are beating on that door, but no one knows how to get through it yet). So I guess what I'm saying is I agree with you, but I think this is a trough. There are more peaks ahead.
- jsprogrammer 10y ago
  Gordon Bell analyzed [0] computing markets decades ago and found that a market forms around a new computing class roughly every 10 years. If we mark today's smartphone as the most recent market, we should expect another major platform market to open up very soon. My guess is that it will be a hybrid platform, combining resources over the network. [0] https://en.m.wikipedia.org/wiki/Bell%27s_law_of_computer_classes https://en.m.wikipedia.org/wiki/Bell%27s_law_of_computer_cla... Here is a keynote Gordon gave discussing some of his analyses: https://youtu.be/Z-4X6dkESEk https://youtu.be/Z-4X6dkESEk
- sedachv 10y ago
  > Personally, I think there's a massive economic explosion waiting to happen in making programming tools more accessible to average people (Wordpress/Squarespace/Salesforce/etc are beating on that door, but no one knows how to get through it yet). If you look back, that was always the hope when personal computers got introduced and has been ever since. It never seems to pan out: BASIC on micros didn't do it, Excel/FoxPro/Access didn't do it, HTML didn't do it (RIP Geocities).

by vtail 10y ago

PaulHoule 10y ago

That's not entirely true. Intel has invested in plenty of things that haven't worked out, for instance, Itanic, Ultrabooks, Realsense, etc. Also companies like Intel and Microsoft have bought into the Clayton Christensen theory of "disruption" to the point where they really are throwing their existing customers under the bus. That is, Windows 8 was perceived as a tablet operating system, Intel only sells high-end chips under the Xeon brand, etc. Had Intel stuck more piggishly to making better PC's, we might have mainstream water-cooled desktops running at 5Ghz+ and more reasons for people to upgrade.

vtail 10y ago
According to Wikipedia[1], Intel set aside "$300m over 3-4 years" to invest in Ultrabooks, so $100m/year. Contrast that to ~$8B they spend on R&D each year[2]. So it was a relatively small bet for them. I'm not saying tech companies never invest in anything outside of their core products. It's just often those projects are given low internal priority precisely because their (presumed) impact to the bottom line will be small. [1] https://en.m.wikipedia.org/wiki/Ultrabook https://en.m.wikipedia.org/wiki/Ultrabook [2] https://ycharts.com/companies/INTC/r_and_d_expense https://ycharts.com/companies/INTC/r_and_d_expense edit: typos
- AndyNemmity 10y ago
  And small bets rarely materialize into anything useful. They end up being great marketing, and worth the cost in the marketing spend so others think you are being innovative while you continue to do the same stuff you always have.
- ChuckMcM 10y ago
  I'll just note that a startup of 10 - 100 people that raised $300M over 3-4 years would be a big deal. Innovation isn't about ideas, its about finding ways to execute against those ideas in a way that others haven't or ideally can't.
  - vtail 10y ago
    Sure, but important difference is that 10-100 people startup that raised $300m behaves way differently than an internal department of a major tech firm that has decided to invest into a side project: authority to make decisions, willingness to take on risk, speed of innovation - everything is very different between the two.
    - udkl 10y ago
      Cisco and it's spinning out approach comes to mind. They probably got this right. Amazon is another company that is innovating disruptively despite it's size.
  - udkl 10y ago
    I think your definition of innovation makes sense only in the context of corporate or SV innovation. In a more general context, innovation takes on the other meaning.
minikites 10y ago
> Had Intel stuck more piggishly to making better PC's, we might have mainstream water-cooled desktops running at 5Ghz+ and more reasons for people to upgrade. Can you think of what those reasons might be? I can't. My office computer is an i5-3570 and it sits idle most of the time because it's just not that hard to have Outlook and Firefox open. A/V work and AAA gaming drive upgrades now like they always have, what other reasons would there be for Intel to push beyond their current efforts like you suggest?
- tracker1 10y ago
  I think that higher resolution displays are probably the leading reason behind gamer upgrades today. Pushing 3-4x the pixels is a lot of overhead compared to the decade before UHD. Another reason really is power consumption. There's been a lot of effort to reducing the power envelope in CPUs, this investment would have happened even without a gamer segment. Servers are probably Intel's single biggest market today, and the companies running these miles of racks of servers are demanding more cores and lower per-core power. That goes in line with mobile improvements too. Intel is a perfectly reasonable cpu option for tablets today, within 3-4 years they'll probably have something suitable for phones. I've always liked the concept of a phone with everything that you dock into a workstation, or a laptop form factor to use, but as a phone it's still great. There's a lot of possibility there. More than that, with the likes of services that go beyond echo, we may see the watch form factor take over from phones... relying on larger systems in your home/office/car to fill the void. Who knows where things will go.
- yourapostasy 10y ago
  >> we might have mainstream water-cooled desktops running at 5Ghz+ and more reasons for people to upgrade. > Can you think of what those reasons might be? Some applications that I would want that might need to wait for high-cpu (some high-memory and/or high-disk) to become more mainstream, since I want them all to run locally until FTTH reaches my part of the boonies: A scanner I can literally wave a piece of paper at, have it process all of the ultra-high speed video frame grabs into a high-dpi scan, then reconstitute the scan into an appropriate LibreOffice document or PDF, with better OCR and better vectorization of raster pictures. Then I auto-file all my invoices, bills, statements, receipts, etc. A personal digital assistant that transcribes, annotates, indexes and categorizes all of my conversations across all mediums (voice, text, chat, social, etc.). This doesn't need to be ML-fancy at first (except for the voice recognition piece), just lots of memory+cpu+disk to drive intensive, continuous indexing. A millimeter-accurate 3D positioning system, using differential GPS off of a geodetic mark on my property, with relays of signals to indoors. This would drive my robotic chicken tractor, curb edger, and vacuum cleaner. I could keep a detailed inventory of household items with this, then query the house computer over a voice link the next time I forgot where I set down $thing (some RFID and 3D positioning integration needed here). Outside, it keeps track of exactly where various pipes, outlets, irrigation heads, etc. are located. A software-defined radio that scans for chatter on interesting bands like police and fire, performs voice recognition on them, and pings me when it hears keywords about my neighborhood, street, nearby streets, or region when combined with other keywords (like "tornado"). A house computer that can tell whether or not I'm in the house or not, if I'm asleep, getting ready to sleep, or still undergoing my morning routine, at my computer, at my tablet, on my phone, etc. And do this for all occupants and visitors. Lots of visual recognition from lots of camera input. For myself, I want this information to drive what information is presented to me, when, and in what context. Bloomberg Radio after I've been up for 10 minutes, and after I've put on my headset, before my first call (incoming or outgoing). A process that continuously combs through my Emacs Org agenda, and compares against my current "state". If I'm driving away from the house, and confirm a query from the computer that I'm going out to buy groceries and run errands for the day (the query is launched by continuously-computed probability cones narrowing possible agenda matches against my GPS position until a threshhold is met), and no one else is in the house, then automatically put the house HVAC system into energy-conserving mode. A dumb robotic mechanics driven by updateable software in my desktop computer to fold my laundry, turn over my compost bed, rotate stop valves monthly/quarterly (otherwise they freeze in place, the primary challenge the automatic flood sensors face today), change HVAC filters, open and file incoming snail mail, etc. Intensive AR to turn nearly all parts of my house into smart surfaces. "What's inside that drawer?" "What's behind that wall?" "What's inside that freezer?" If we are talking only about pure desktop applications constrained to the physical desktop/laptop computer itself, then yes, you may have a point. However, when we include extending the reach of those systems to our environment, and there is an explosion of data to crunch, then today's typical consumer desktop computer (4-8 GB RAM, 2-3 GHz x86_64, 2-4 TB at the top end) doesn't have the capacity to manage all of those demands simultaneously.
x0x0 10y ago
Here's Intel's problem (and my apologies, I'm regurgitating a study I read a couple years ago and I can't find a link.) Basically, Intel needs to sell huge numbers of chips in order to make their numbers, ie giant investments in fabs, work. While Xeon may generate all the profits, they still need to sell millions of low end pc chips to pool costs. If that stops happening, even assuming they sell the same xeons for the same prices, the R&D costs to make those fabs eat them.
- fiatmoney 10y ago
  "Investment in (new) fabs" only makes sense if volumes are increasing or manufacturing processes are changing. Volumes are projected as flat for the foreseeable future, and as far as anyone can tell process tech is near stagnating as well.
  - x0x0 10y ago
    Investments also are to research and build out that fab tech to stay ahead of Samsung tmsc et al
mtgx 10y ago
> Also companies like Intel and Microsoft have bought into the Clayton Christensen theory of "disruption" to the point where they really are throwing their existing customers under the bus. They could've fooled me. Clayton's theory wouldn't recommend changing Windows to adapt to the mobile form factor. It also wouldn't recommend Intel investing what are now probably over $10 billion in Atom and in making x86 work for mobile. Quite the opposite. It would tell Microsoft to create a new operating system that is dedicated for those form factors, and it would tell Intel to adopt ARM on their own. Both should also be done under an isolated division, so they have no "conflicts of interest" with the incumbent products, whether it's about product features (like say Intel refusing to make Atom too strong so it doesn't encroach on Core territory), or setting up expensive (and unsustainable) infrastructure to compete against the leaner competitors. I would also say both Microsoft and Intel failed in these markets because they were also late to try and become players in those markets, which is what the disruptive theory always warns incumbents about. It may be difficult to remember now, but even Windows 8 was considered "late" for the mobile market. So was Windows Phone 7 compared to iOS and Android. Same goes for Atom "catching up" to ARM chips in performance/low power (though not in price, a typical failure of a disrupted incumbent). If the "Wintel" monopoly wasn't so strong, you'd already see Celerons and Pentiums be replaced by ARM chips in notebooks and hybrids and whatnot, because those chips are the same ones that failed against ARM in mobile.
- udkl 10y ago
  This is inline with what Stanford professor John Ousterhout says about the evolution (and necessary death) of software : "The most important component of evolution is death Or, said another way, it's easier to create a new organism than to change an existing one. Most organisms are highly resistant to change, but when they die it becomes possible for new and improved organisms to take their place. This rule applies to social structures such as corporations as well as biological organisms: very few companies are capable of making significant changes in their culture or business model, so it is good for companies eventually to go out of business, thereby opening space for better companies in the future. Computer software is a counter-example to this rule, with ironic results. Software is incredibly malleable: it can be updated with new versions relatively easily to fix problems and add new features. It is easier to change existing software than to build new software, so software tends to live a long time. To a first approximation, software doesn't die (compare this to the hardware in a computer, which is completely repaced every few years). At the same time, it is difficult to make major structural improvements to software once it has been shipped, so mistakes in early versions of the program often live forever. As a result, software tends to live too long: just good enough to discourage replacement, but slowly rotting away with more and more problems that are hard to fix. I wonder if the overall quality of computer software would improve if there were a way of forcing all software to be replaced after some period of time." https://www.quora.com/What-are-the-most-profound-life-lessons-from-Stanford-Professor-John-Ousterhout/answer/Anant-Bhardwaj https://www.quora.com/What-are-the-most-profound-life-lesson...
tw04 10y ago
In what way did Itanium not work out? It isn't in every PC sold, but it was never intended to be. It was intended to replace Sparc/power/alpha. While they didn't get Sun or IBM on board, they did get HP, and the chip is profitable. It's not going to drive the future of the company, but it's not like they didn't make money on the investment... it turned it's first profit 7 years ago and has been making money for them since.
- throwaway2048 10y ago
  https://commons.wikimedia.org/wiki/File:Itanium_Sales_Forecasts_edit.png https://commons.wikimedia.org/wiki/File:Itanium_Sales_Foreca... It was intended to be the x86 sucessor.
  - tw04 10y ago
    No, it was intended to be the "Big Iron" CPU replacement. They never had any intention of bringing it to the desktop which is why they delayed as long as they did in x64. They wanted 64-bit to be a long-term differentiator between server class and desktop class CPUs. Hence the forecast being Servers sold a year...
    - guard-of-terra 10y ago
      "No, it was intended to be the "Big Iron" CPU replacement" All the computer press was pretty sure it would replace x86. Microsoft released Windows port for Itanium, which was unseen of them.
    - zurn 10y ago
      They planned to keep x86 as 32-bit which means gradual phase out (complemented by x86 emulation on Itanium).
kevin_thibedeau 10y ago
They could have been a major ARM vendor if they had gotten over their NIH attitude, seen the writing on the wall, and kept on with StrongARM/XScale.

tdaltonc 10y ago

Do you mean "information technology" instead of "technology"? Because I don't know what you could mean by "technology is mature." Jets are technology, they were new, now they're mature. Same for any technology (including CRISPR, looms, routers, and rockets). Parts of IT are mature, but a lot of smart people clearly think that parts of IT still have the potential for big returns.

moomin 10y ago
Since he said "tech", rather than "technology", I'd have thought that clear.
- tdaltonc 10y ago
  CRISPR isn't tech?

nemild 10y ago

You're partially citing some of Clayton Christensen's observations in the Innovator's Dilemma (which Andy Grove, Intel's former CEO, used to refer to): https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma

vtail 10y ago
Of course - most of what I wrote is an opinion shared by many people, I don't want to claim originality here :). A related anecdote - at my previous job, I was at an annual sales conference event, where Mr. Christensen was an invited speaker. Both before and after his speech, the management kept bragging about "how unique we are", "how fat our margins are", and "how none of our low-cost competitors could match our offering", despite real mid-to-long term danger to their core business, completely ignoring the innovators dilemma, or hoping that it's not applicable to them. It was almost painful to watch. My prediction is that my old company will get disrupted and ceased to play such an important role in just 5-7 years.
rektide 10y ago
By all means most people would do well to pick up Innovator's Dilemna! Wikipedia also has pretty good coverage of Clayton's Disruptive Innovation theory (what most of the book discusses) directly as well: https://en.wikipedia.org/wiki/Disruptive_innovation#Theory https://en.wikipedia.org/wiki/Disruptive_innovation#Theory 'Letting your company get chased upmarket,' is a pretty good synopsis: yielding ground rather than trying to get competitive. Clayton talks about the steel industry as a common example, with big "integrated steel" companies not adopting mini-mill tech that allowed for lower capital investment costs, and a big price reduction, first at some quality limitations to protect high margin integrated business, but with the low end market ongoingly overtaking more market up until they "won". I am curious though- Intel is still charging ~$281 for your run of the mill, very boring grade laptop chip. In some ways, it seems like their obstinacy is finally proving it's payoff, even as they abandon market segments. Which is both how disruptive innovation continues to happen- with the low-level market getting eatten out from under them with Rockchip and MediaTek chromebooks, and perhaps gaining more ground- but it also seems to have proven to some degrees how effective their protectionism has been, that they have not had to get competitive on laptop pricing. Making chips Apple would've wanted would have put Intel at a remarkably different price:performance scale than what they've stood on.

drzaiusapelord 10y ago

>and it makes sense to invest all the available resources into it - better from ROIC perspective Also, not every tech company can compete in other realms of tech. How could intel really break into mobile? A non-ARM chip means lots of testing and cross compiling for .1% marketshare that no one will do. Or worse, battery and performance draining hacks to get ARM compiled binaries to run on x86. There's an ASUS (?) phone series that does this. Its terrible and panned by cell phone reviewers. I think this is a lot more deterministic than we care to admit. I don't care how much "leadership" and "grit" and "listening to your customers" intel could have done better, its clear that they couldn't break the ARM mobile monopoly because no one can. Becoming a 3rd or 4th tier ARM producer amongst many would have probably gone to shit as well. Its easy to arm-chair quarterback companies but the reality is that there isn't a lot of 'win-win' paths in business. Sometimes you just can't enter a new market or beat the new hot startup regardless of what you do. Lastly, no one questions mass hirings that don't seem sustainable, but we all freak out when mass layoffs are announced. Its incredible how we think jobs only make sense as permanent fixtures, when in reality they're subjected to the same market forces everything else is. If anything, intel's biggest screw up was hiring too many people too quickly.

IOT_Apprentice 10y ago
What if Intel had replaced Samsung as the fab for Apple's A series chips, getting to produce ~75 million units a quarter and starving Samsung of that revenue? Seems like it would have aligned well for Apple and Intel.

nostrademons 10y ago

What counts as tech? Is AirBnB tech, or hospitality? Is Uber tech, or transportation? Is the Apple Watch tech, or a watch? Is SpaceX tech, or aerospace? Is Tesla tech or automotive? Is Instacart tech or groceries? Are Twitter/Medium/Wordpress tech or media? Not a rhetorical question, I'd actually like to know what's included in the 3% growth figure. I could believe it if tech is defined as "companies that sell computer hardware or softare", but it seems very low if tech is defined as "companies that provide a service using software or hardware that wasn't possible a decade ago."

vtail 10y ago
That's a GREAT question. Information Technology is $5.6T market, and telecommunications services is another $1.8T [1]. Uber and AirBnB, which I believe ARE tech companies, are under $90B combined, so ~2% of IT sector. SpaceX is aerospace: ~$12B valuation vs ~$600B Aerospace & Defense industry size, and Tesla is automotive, $28B vs ~$750B Auto + components market. Note that Uber, AirBnB, SpaceX and Tesla are probably the biggest unicorns out there. But you are raising an important point - many industries will be redefined when new competitors are using IT much more heavily. Still, that growth mostly comes from existing players, and I believe the growth of the IT sector itself is limited now. [1] https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jhtml https://eresearch.fidelity.com/eresearch/markets_sectors/sec... edit: typos, minor clarifications.
- adventured 10y ago
  Uber, Airbnb, SpaceX, Tesla are not unicorns any more than Google, Facebook, Netflix, Priceline and Amazon are. Uber is seven years old, Airbnb is coming up on eight years old, SpaceX is 14 years old, Tesla is 13 years old. And they're all very substantial enterprises at this point. I'd suggest that companies of that size and operational maturity should be considered to be well beyond the semi-early stage billion dollar valuation companies that have tended to get the unicorn tag. They were unicorns, now they're just like Netflix or any other established company.
  - 10y ago

erikpukinskis 10y ago

> tech is a _mature_ sector of the U.S. economy I disagree. What I see is a boom/bust cycle as major technological shifts lead to growth and then consolidation: Mainframes are invented, an ecosystem of small players flourish, the market grows an order of magnitude or two, the technology finds product/market fit, the market consolidates around a single major player (IBM). Defeatism settles in amongst entrepreneurs as more and more opportunities are swallowed up by Big Blue. The PC is invented, an ecosystem of small companies flourish, the market grows an order of magnitude or two, and then consolidates around a single player (Microsoft). Defeatism settles in amongst entrepreneurs as more and more opportunities are swallowed up by Embrace and Extend. The internet is invented, an ecosystem of small companies flourish, the market grows an order of magnitude or two, and then consolidates around... well, now there are more players. Now there's Google and Facebook and Apple. Defeatism settles in among device inventors as the iPhone/Android hegemony seems unassailable. Some people think VR will be another land grab that fuels an order of magnitude jump in the tech market, and AI. I don't think that's crazy. Personally, I think there's a massive economic explosion waiting to happen in making programming tools more accessible to average people (Wordpress/Squarespace/Salesforce/etc are beating on that door, but no one knows how to get through it yet). So I guess what I'm saying is I agree with you, but I think this is a trough. There are more peaks ahead.

jsprogrammer 10y ago
Gordon Bell analyzed [0] computing markets decades ago and found that a market forms around a new computing class roughly every 10 years. If we mark today's smartphone as the most recent market, we should expect another major platform market to open up very soon. My guess is that it will be a hybrid platform, combining resources over the network. [0] https://en.m.wikipedia.org/wiki/Bell%27s_law_of_computer_classes https://en.m.wikipedia.org/wiki/Bell%27s_law_of_computer_cla... Here is a keynote Gordon gave discussing some of his analyses: https://youtu.be/Z-4X6dkESEk https://youtu.be/Z-4X6dkESEk
sedachv 10y ago
> Personally, I think there's a massive economic explosion waiting to happen in making programming tools more accessible to average people (Wordpress/Squarespace/Salesforce/etc are beating on that door, but no one knows how to get through it yet). If you look back, that was always the hope when personal computers got introduced and has been ever since. It never seems to pan out: BASIC on micros didn't do it, Excel/FoxPro/Access didn't do it, HTML didn't do it (RIP Geocities).