I've found this chart, drawing on data from David Nyeís Electrifying America and R.B. Duboffís "Electric Power in American Manufacturing, 1889-1958," useful in explaining how a critical business resource - electricity, in this case - can quickly go from being supplied privately, by individual users, to being supplied as a shared utility.

In 1910, most of the electricity used in the United States was generated by private generators owned and maintained by manufacturers. Each factory had its own powerplant. Just 20 years later, most of those private generators had been shut down, as companies came to embrace the superior economics of the utility model.

IT's next.

11:14:28 AM    comment   

First story:

Youíve probably never have heard of Washington Wentworth Sheffield, but youíve almost certainly been relying on his invention ever since you were a child. Heís the guy who, back in 1892, created the toothpaste tube. Up to then, toothpaste had been sold in porcelain jars. A family would buy one, and every morning and evening mom, dad and all the little ones would stick their respective toothbrushes into it. Sheffield, a dentist, was disgusted by the unsanitary practice. Having seen flexible metal tubes used for food, he decided to find out if people would buy toothpaste dispensed the same way. He was soon a very wealthy man.

Second story:

Seventy years ago, a young truck driver named Malcom McLean found himself sitting on a New Jersey dock all day, waiting for a gang of slow-moving longshoremen to get around to unloading his rig. As the hours wore on, his annoyance turned into inspiration. He began to wonder whether there wasnít some way to speed the process of transferring cargo. Instead of unloading his trailer, box by box, and then reloading everything, box by box, into the hold of a ship, why couldnít the whole trailer be hoisted directly onto the shipís deck? Why couldnít you fashion a type of container that could be carried with equal ease by trucks, trains and ships? Two decades later, McLean's company, Sea-Land, launched the first containership, the Ideal X, on a voyage from Newark to Houston. The world would never be the same.

Moral:

When companies want to think "outside the box," they often form high-powered brainstorming teams filled with creative thinkers. Usually, those teams fail. Either their pie-in-the-sky ideas go nowhere, or they end up proposing modest improvements that pull in a little more money but fall well short of the breakthroughs they set out to achieve. The stories of Washington Wentworth Sheffield and Malcom McLean indicate a possible reason for the failures. True breakthroughs seem to come not from teams but from individuals and not from professional innovators but from regular people who get frustrated or annoyed by some problem while pursuing their regular jobs. It's the individual closest to a problem, in other words, that's most likely to come up with a great new idea for solving it. So if you really want out-of-the-box thinking, find the poor sap who's suffering the most from being stuck inside the box.

11:14:14 AM    comment   

What's the best way to give poor people, particularly those in the Third World, access to the power of modern computing and communications? Some argue for developing and distributing dirt-cheap personal computers. But there may be a better way: giving people a personal "virtual desktop" that they can tap into through shared PCs.

It's a similar model to the one that's allowed telephone service to reach even the poorest and most remote populations. You can't sell everyone a phone - most people in these places can't afford one. Rather you bring one or two mobile phones into a village and rent them out call by call. Similarly, with existing utility-computing technologies, you can allow individuals to maintain their files and applications in a distant data center and tap into it through a shared PC or thin-client machine. Individuals can rent time on the shared PC for a little bit of money - and their data and apps will always be there, just as they left them.

An innovative little company named SimDesk has been pursuing this model, on a limited scale, for a while now. It provides users with storage space, computing power and a set of free applications that can be accessed over the Internet. One U.S. city, Houston, and one state, Indiana, already offer the service to their citizens. (Chicago is in the process of rolling it out.) If you live in these places, you can do sophisticated computing without having to spend hundreds of dollars to buy a PC, a bunch of programs and Internet access. You just go into a public library, sit at a terminal and log into what is, in effect, your own computer.

The utility model brought cheap electricity to the masses. Maybe it can do the same for computing.

11:14:01 AM    comment   

Steve Andriole, a business professor at Villanova, argues in a Datamation column that labor shortages will increasingly push companies to outsource IT activities and, in time, shift to a utility model. Despite recent reports that "outsourcing does not save as much money as many people assumed," he writes, "the number of management information systems (MIS), information systems (IS), computer science (CS) and computer engineering (CE) majors has fallen so dramatically over the past few years that weíre likely to lose an entire generation of replacement technologists if present trends continue ñ and they show every sign of doing so. So as the previous generation continues to gray, there will be precious few new ones to keep the skills pipeline full. The obvious outcome is increased demand for the skills ñ wherever they happen to be."

Andriole also looks at my argument that we're approaching the end of corporate computing, as companies will increasingly shift from owning their own IT assets to renting most of the IT resources they need. "Long-term," he writes, "I think [Carr] is absolutely right. Initially, companies will purchase transaction processing services from centralized data centers managed by large technology providers, but over time companies will rent applications developed the old-fashioned way by the same old mega software vendors ... Eventually, as SOA proliferates, new software delivery and support models will develop from the old vendors as well as a host of new ones...The appeal of 'paying by the drink' is just too great to resist ñ especially since the alternative will still (and forever) require the care and feeding of increasingly difficult-to-find technology professionals."

Andriole's observations are in tune with what I'm hearing from some of the early adopters of the utility model. The CIO of one mid-sized company that recently closed down its data center and shifted its operations to an applications hosting company told me that while the move saved the firm about 20% of its IT costs, the real motivation lay on the people side. Finding, recruiting, motivating and holding onto skilled IT staffers had just become too much of a hassle. Another CIO, of a European financial services firm, said that he believes the best IT talent will inevitably move to the vendor side, where they have good prospects for advancing their careers. On the user side, he said, IT people no longer have many options to move up.

11:13:30 AM    comment   

"The world is too much with us," wrote William Wordsworth in 1807. Last week, at Kevin Werbach's Supernova conference, ex-Microsoft exec Linda Stone voiced a similar thought a little more prosaically. Bombarded by digital stimuli, we exist in a condition of "continuous partial attention," she said, according to a transcript posted by Nat Torkington. "With continuous partial attention, we keep the top-level item in focus and scan the periphery in case something more important emerges. Continuous partial attention is motivated by a desire not to miss opportunities. We want to ensure our place as a live node on the network; we feel alive when we're connected." Now there's already a lot of hooey here, but if Stone's saying that we live in a culture of distractedness, where input-processing takes precedence over contemplation, she's making a valid point.

But her argument gets awfully thin when she tries to broaden it. She links the continuous-partial-attention idea to what she sees as "20-year cycles" in which people act either collectively or individualistically. From 1945 to 1965, we were in a collective mode, putting our faith in big institutions like the government. From 1965 to 1985, we shifted to the individualistic mode, striving for self-expression. From 1985 to 2005, we shifted back to the collective, desiring to be networked. This is much too tidy. These alleged shifts in consciousness were nowhere near as abrupt or universal as Stone implies. Moreover, they are hardly evidence of natural 20-year cycles. Instead, they were precipitated by external events, particularly the end of World War II, which gave people trust in institutions and set off a long period of economic growth, and the start of the Vietnam War, which would undermine trust in insititutions and coincide with the start of an economic slowdown. And were, say, the late 50s really a period of collectivism while the late 60s were marked by individualism? A case could be made that it was exactly the opposite: the 50s were a time of a selfish concentration on one's personal situation while the 60s saw a flowering of collective thinking and activism.

As for the 1985-2005 period, that also marked a relatively peaceful time of fairly strong economic growth. People felt generally complacent about the future. But to call it an era of collectivism again seems a stretch. Did we really start "reaching out for a network" around 1985 because we had grown "narcissistic and lonely," as Stone argues? Does that mean we're less narcissistic and lonely now then we were 20 years ago? Why then has this era made us feel "promiscuous" and "empty," as Stone puts it? That seems like the outcome of an individualistic rather than a collective period.

Continuing with her 20-year-cycle theme, Stone argues that we're now about to move back to a greater focus on individual fulfillment, in which people will seek to give their full attention to a small number of "meaningful connections" instead of giving cursory attention to myriad Blackberry hookups. "The next aphrodisiac is committed full-attention focus. In this new era, experiencing this engaged attention is to feel alive." The popularity of the iPod, in this view, is "as much about personal space as personalized playlists." This strikes me as pure hogwash. The iPod as a symbol of deepening attentiveness? Come on. Forget the 20-year cycles. What we've seen is a steady, continuing rise in the general level of distractedness as computing and communication technologies deliver an ever greater and faster-flowing stream of stimuli. And there's no end in sight.

What Stone is really expressing - and why it seems to have struck such a chord among the technorati - is middle-age fatigue and angst. The first generation of the PC/Internet avatars is getting older and becoming disillusioned with what they've wrought; the Silicon Age, it turns out, is no Golden Age. They're starting to yearn for something more. What's sad is that Stone and her compatriots still cling to the belief that technology will fill the personal void. "Trusted filters, trusted protectors, trusted concierges, human or technical, removing distractions and managing boundaries, filtering signal from noise, enabling meaningful connections, that make us feel secure, are the opportunity for the next generation," she says.

I'll let Wordsworth answer:

Great God! I'd rather be
A Pagan suckled in a creed outworn;
So might I, standing on this pleasant lea,
Have glimpses that would make me less forlorn;
Have sight of Proteus rising from the sea;
Or hear old Triton blow his wreathed horn.

11:13:16 AM    comment   

Larry Ellison just put another nail into the coffin of software sentimentality. A mere six months after Oracle's rancor-filled takeover of PeopleSoft, Ellison's company yesterday delivered strikingly strong financial results, not just in its database business but in applications as well. The numbers undercut the popular notion that mergers of software firms are horribly difficult, if not inherently doomed.

Because the value of software makers lies in the creativity of their "human assets," the old thinking went, you couldn't apply tough management discipline in quickly consolidating two organizations and ripping out redundancy. Cultural friction would get in the way; sensitive knowledge-workers would walk. Here's how IBM's Joe Marasco put it last year: "The largest single reason for failure when two software companies combine is cultural incompatibility. Even if the two cultures are similar, merging them can be difficult for a vast variety of technical reasons. Plus, if the two companies are located some distance from one another, there is insularity because of the separation. Whatever the root cause, in the face of fundamental incompatibility, most software mergers fail, plain and simple."

Ellison's approach flew in the face of the conventional wisdom. As he tells BusinessWeek, he applied GE's hard-nosed, to-hell-with-culture acquisition philosophy to combining the two big software houses: "We had a clear plan. A lot of things were done in 30 days, including integrating the two salesforces. The secret to these mergers is to make the hard decisions and move quickly. The problem with a lot of mergers in the tech industry is they're not real mergers. People don't eliminate duplication of effort. We wanted to get the economies immediately." It's the rip-mix-burn method, and it seems to have worked.

As we move to a more industrial approach to making business software (look at the Bangalore factories), we're also moving to a more industrial approach to software company management. The software business is maturing, and sentimentalism about creativity is being squeezed out. Here's Ellison again: "I think of this as the GE operational-excellence phase. Alfred Sloan was the consolidator in the auto industry. Ford had been the early winner, but General Motors got bigger. History repeats itself. It happened in railroads and cars. Now it's happening in software. And there, we're the consolidator. The magic in the software industry is called scale."

Don't get me wrong: There will also be an important place in software for entrepreneurship and innovation. They're just not the forces driving the business anymore.

10:49:39 AM    comment   

[Om Malik's Broadband Blog]
6:21:37 AM    comment   

From purportedly leaked internal documents, here's a first look at the Motorola iTunes phone. The most striking feature is clearly the scroll wheel, which could come into play for even non-music things like moving through stored phone numbers. There also appear to be dedicated buttons on the side—that's not quite as 'iPoddy' as one would hope.

Update: Mac Observer has a lot of details about how to expect this to work.
The Link of the Clickin' [MacObserver]

6:18:49 AM    comment