by Dana Blankenhorn
  Volume VII, No. XLVI

This Week's Clue: Worldwar

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This Week's Clue: Microsoft And The Stifling Of Innovation
SSP (Shameless Self Promotion)
SP (Shameless Promotion)
Linux' New Face
Breaking Through Moore's Roadblock
The Day "Free TV" Died
Clued-in, Clueless

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For the Week of November 17, 2003

In Harry Turtledove's seven-book (so far) Worldwar series, a race of lizards comes from space to invade Earth at the peak of World War II. The invaders have 21st century technology.

They are held to a draw because Earthlings adapt more quickly, and because they're ruthless. Washington and Chicago become atomic ash, but a united Earth discovers that ginger acts like cocaine on the invaders. Both sides end up corrupted and exhausted.

Ruthlessness, rapid adaptation and zealotry are also advantages to terrorists. We can take territory but can't hold it. At the same time they can hurt us where we live. They adapt organically, while we wait for chain-of-command decisions.

Adaptability, flexibility, and zealotry are also the keys to business success in the Internet Age. A company that can turn on a dime, that can apply a lot of talent quickly, and that can maintain fierce worker loyalty is going to win. This is how Microsoft beat IBM. This is how Wal-Mart crushed Sears. This is how JetBlue and Southwest are beating American and Delta. The challenge is keeping the competition vibrant. Once the new boss replaces the old boss, downtown disappears, and so do travel agents.

The same trends are apparent in the technology markets. Linux is adapting to the demands of the enterprise. Wireless chip specialists are (so far) holding up Intel and Motorola in defiance of Moore's Second Law. Amazon stock draws a multiple of infinity because it continues to innovate.

But as with the Terror War rapid change has a downside. China and India are stealing our industry because they have learned to adapt rapidly. Spammers and virus writers also adapt quickly, creating Moores's Law of Spam. The result, as in Turtledove's series, is that both sides lie exhausted and corrupted.

The present economic impasse has a lot in common with the world we faced a century ago. Then as now, new technology was serving mainly the powerful. But political forces emerged to do battle with it. And it's important to note that politics is part of a market economy.

The first force was Populism. It was born of deflation. Commodity prices fell in the wake of Wall Street scandals and the ability of markets to break down distance, creating a single national market tilted toward buyers. Populism could not survive in the cities, because city dwellers actually benefitted from falling prices.

The second movement was Progressivism. This was born of the Industrial Revolution. It was an attempt by eastern intellectuals to make markets work for the greater good, rather than the good of a few.

Third was the labor movement. Organized labor was being born in this age, and most of its battles were lost. In fact, the agitation of labor helped keep down the power of progressivism. The alliance among the farmers, intellectuals and working class was too uneasy to hold on the national stage.

Yet great things happened. From these movements came the progressive Income Tax, effective anti-trust laws, womens' suffrage, and the first stirrings of what would later become the New Deal. John D. Rockefeller II and Henry Ford also found that progressivism could be good for business (at least in the short term). Higher wages let people afford the goods they were making.

Progress, in other words, is messy, and it occurs on many fronts, often when you most seem beaten. A Democrat looking at the 1900 election returns would have been glum indeed, with McKinley retained and Congress firmly in the hands of Republicans. Yet progress came. McKinley himself was affected by the Progressive movement , Teddy Roosevelt carried forward a Progressive platform. Those regions which, like the South, preferred symbolism and racism to progress were simply bypassed. The "Sun Belt" would develop only alongside the Civil Rights movement.

Why am I boring you with this right now? The message is that history isn't written by Great Men, or by newspapers. It's written by everyone, and anyone who can use technology to pursue opportunity is a big part of it.

The First Internet Age is now over. Most people now have some form of Internet access. You can reach buyers or sellers using broadband, narrowband, an Internet Café or even (most often in Asia and Europe) through a cell phone. (In fact, in East Asia it's the cell phone that is the center of electronic life, not the PC.) This is having the same impact on markets that the railroads did in the 1890s. Prices are being systematically depressed. A race to the bottom has begun, this time in the distribution channel as well as production. Productivity is racing ahead .

But wages are not keeping pace. American workers cannot compete in a global economy. Muscles are being replaced by machines, brains by computers, and programming can be done from Bangalore for much less, even when the cost of bugs are factored in.

A century ago this spelled opportunity. It spelled opportunity for car makers, for cereal makers, for marketers, bankers, insurance companies and manufacturers.

It spells opportunity again. The area I point to most often is wireless broadband and always-on applications. I'm talking about things like RFID, about medical monitoring, about security, and about turning the vast streams of information you generate every day into valuable services that can help you live longer, and live more independently.

The next Henry Ford, the next Bill Gates, is waiting to be made, from the flood of new opportunities developing all around us. The key will be to provide value justifying higher wages, driving consumer demand for the very applications you're writing.

As it was before, so it will be again. And maybe this time we can avoid those entangling alliances that drove the last century under.


Shameless Self-Promotion

I work as a business analyst with Progressive Strategies, a New York research firm that has the ear of the world's top technology companies.

My last book, "The Blankenhorn Effect" won the Computer/Internet category in the 2003 Independent Publisher (IPPY) awards .

You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know. Remember: it's journalism that keeps the Clues coming...


Shameless Promotion

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Takes on the News

Linux' New Face

Linux wasn't corporate enough for enterprise computing. When an enterprise user called, he couldn't be assured that anyone would answer. And he couldn't buy a system to replace his mainframe from one seller who would stand behind the result.

So corporate buyers hesitated. And Microsoft swooped in.

Well, now Linux has a new face. . It's the face of Novell, which failed with Unix System V but now has another shot through its purchase of SUSE. It's also the face of RedHat, which is dropping its "free" Linux in favor of an "Enterprise" version charging an annual license .

This doesn't mean free Linux is dead. Far from it. The GPL lives . Linux can be adapted to client devices which are then sold-on for less than their Windows equivalents. And China is moving rapidly toward Linux, away from Windows, in order to gain technology independence.

All varieties of Linux are compatible at the kernel level, the level written by Linus Torvalds. The market is developing channels that are right for different types of users. Linux is now ready to move against Microsoft across a wide front.


Breaking Through Moore's Roadblock

Gordon Moore was a chemistry major. Moore's Roadblock is a basic problem of chemistry. As the distance between circuit lines decreases toward the atomic scale, the silicon of Intel's early etchings becomes an increasingly unreliable medium.

Intel has said it will change the medium to metal, starting in 2007. That is one way past Moore's Roadblock. But when you're no longer bound by the properties of silicon, you will see that it's not the only way past the roadblock. More will be found, to keep Moore's Law rolling along for decades to come.

The Day "Free TV" Died

Starting in 2005 the price of "free" TV will no longer be worth it. The "broadcast flag" will force people to buy new TVs, DVDs, and DVRs in order to gain the fair use rights they already have.

But why should they? Cable and satellite have their own schemes, which don't require new hardware. And there's really nothing on "free TV" worth watching anymore. I can't remember the last time I spent an evening watching prime time television. Cable (or something like it) has become a necessity across America.

So the FCC's move to regulate in order to "save" free television will have the perverse impact of killing it. The next "TV season" will be the last.


Clued-in, Clueless

Clued-in is IBM, which has chosen to center its wireless chip business in one plant. Centering all your expertise on one place is a great way to make magic happen. Vermont got lucky.

Clueless is the hoofaraw over consumer sales of a device that turns red lights green . It is, in fact, a great opportunity to add security to those systems, to create authentication on a new part of the World of Always-On. Authentication and identity are keys to all such applications.


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