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The Challenge with Buying Technology by Steve Gutzman

Technology – information or otherwise – has always been a tough subject to discuss, to explain, to comprehend, to predict, and most important, to buy.  Why is that?  One reason is that it is very difficult to predict its usefulness, longevity, or value over time.  Even the people who develop technology have a tough time with this.  Some examples …

“The world potential market for copying machines is 5,000 at most.”  These are the words of an IBM executive in 1959 to the eventual founders of Xerox, saying the photocopier had no market large enough to justify production.

“There is no reason anyone would want a computer in their home.”  Such is a comment from Ken Olson, the president, chairman, and founder of Digital Equipment Corp., a manufacturer of big business mainframe computers, as he argued against the personal computer in 1977.

“There is practically no chance communications space satellites will be used to provide better telephone, telegraph, television, or radio service inside the United States.”  This was Thomas Craven, Federal Communications Commission member, in 1961.  The first commercial communications satellite went into service in 1965.
But there have been some predictions that proved to be pretty accurate and quite relevant to our industry.

Moore’s Law, which was coined by Intel co-founder Gordon Moore in 1965, states that the number of transistors on a chip doubles every 24 months.  It has been the guiding principle of the high-tech industry and explains why that sector has been able to consistently announce products that are smaller, more powerful, and less costly than their predecessors – a price-performance curve that other industries can’t come close to.  The interesting thing about Moore’s Law is that it is not a law of physics.  Rather, it is just an uncannily accurate observation on what engineers and computer scientists, when organized properly, can do with silicon.

Gilder’s Law, named after the visionary author George Gilder, states that bandwidth grows at least three times faster than computer power.  This means that if computer power doubles every 24 months, then communication power doubles every eight months.  The backbone bandwidth on a single cable is now a thousand times greater than the average monthly traffic exchange across the entire global Internet five years ago.

And finally, Metcalf’s Law, named after Robert Metcalf, an originator of Ethernet and the founder of 3Com, states that the value of a network is proportional to the square of the number of users; so, as a network grows, the value of being connected to it grows exponentially, while the cost per user remains the same or is even reduced.

Whether examined separately or collectively, these three laws are driving our industry to new heights.  But they also present some big challenges for those of us who are in the “buying trenches,” for we have to figure out how to put all this breakthrough technology to good use.

What we know about the world doubles every 10 years, and information technology is leading the way.  Magnetic nanodots will soon enable storage of over one billion pages of information in a chip that is one square inch in size.  This will be followed by imaginary interfaces, iMAX at home, content-centric networking, massively parallel cortical simulators, and quantum computers.  The pace of technology invention is accelerating exponentially, and how we buy it must keep pace.  And as we will see, not only is technology changing rapidly, but our vendors are also more sophisticated in how they bring their solutions to the marketplace and in the selling techniques they use.  Therefore, we cannot rely on the old tried-and-true buying techniques of yesteryear.  We must continually upgrade our buying skills, techniques, and processes.

Remember, if you don’t have a plan on how to buy technology, you will default to the vendors’ plan on how they sell technology.