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Weekly Column

Creationism: Why No Single Entity is Capable of Dictating the Future

Status: [CLOSED]
By Robert X. Cringely

How do you predict the future? That's easy. How do you create the future? That's hard.

Over the years, I've probably written a dozen columns about how to predict the future. The process is pretty simple, really. Just look for a logical vector from the past to the present, then use a bit of English to predict a second vector from the present to the future, because there is always a kink precisely at the point we call "today." Recalculate occasionally so the vector turns into a curve and converges on some date you've chosen in the future. What makes predicting the future easier than creating it is that only observation and thought are required, and that vector is the sum of all forces, seen and unseen. Creating the future, in contrast, requires lots of work, and all the forces generally have to be summoned or at least enticed by the creators, which makes it a combination of engineering, marketing and voodoo. Unseen forces, rather than being automatically integrated, are what kill you.

In high-tech, we like to look back at the days of Xerox PARC in the early 1970s as an idyllic period of future creation. Within three years, fewer than 100 people invented computer networking, client-server computing, graphical user interfaces, and laser printing. They did so by literally living in the future -- using Moore's Law to anticipate the probable performance of hardware 10 years in the future, then building that hardware, no matter how high the cost, and creating for it applications that represented the best way to get work done. Xerox PARC created many things, but one of the most important was a creative culture that was software-based because it had to be. The hardware was all cobbled from eyes of newt and sealing wax -- materials that probably wouldn't be used in real products a decade hence - but the software was real. And it changed the way technologies were developed.

But it didn't create the future.

What Xerox PARC did was to help make the future (today's present) possible. Those people laid out a vision of the future, but except maybe for the laser printer, they did little to actually make it happen.

This is just a long way of getting around to another look at last week's column on inflection points, of which I pointed out four: Microsoft's apparent betrayal of its hardware OEMs with the Xbox 360, Google's apparent power grab with its Google Web Accelerator, Yahoo's big play to dominate subscription music services, and the final pieces coming together for Apple's video download strategy. These may turn out to be inflection points or not -- I don't really know. And whatever they are, they are at best attempts to influence the future, because that's a huge (and very difficult to control) part of creating the future. No entity is powerful enough to make the future do anything. All we can do is nudge.

Even the most powerful industrialists with the biggest bets on a particular version of the future can at most influence where things are going. We saw Bill Gates do that recently when he predicted the ultimate demise of the iPod at the hands of mobile phones. Because we'll eventually all carry phones, Bill argued, and because smarter and smarter phones will do more than just make phone calls, we'll have no need for an iPod. That's the impeccable logic of a man who makes mobile phone software and has no horse in the portable music player race. He's trying to influence the future, not predict it. That's a subtle difference, I'll grant you, but it is a difference. And if you'll look at Bill's record for predicting the future, it is mainly about influencing, and therefore, hasn't been very accurate. Mine is better.

So is the Xbox 360 a betrayal of Microsoft's hardware OEMs or not? Jim Allchin said recently that it wasn't intended to be a home media center -- that would be left to the Media Center version of Windows. Intentions are all about positioning, not reality. While Microsoft may say the Xbox isn't a media center, it appears to be one and Microsoft will be thrilled if the public recognizes it as such. It might also be positioned as a component in a media center strategy involving a PC, but if that's not a direction the market takes, will Microsoft suddenly stop making Xboxes? Of course not.

So while the Xbox may not be perceived by HP and Dell as a frontal assault on their PC businesses, nobody will be surprised if it becomes that. And it isn't lost on Intel that the XBox uses a PowerPC processor or three.

Just as any company that would like to help define the future, Microsoft is throwing products onto the market and making pronouncements intended to affect the market, but only time will tell what will actually happen.

The same for Google and its Google Web Accelerator. Readers were doubtful about my idea that this was a land grab on Google's part. More likely it was market research or an effort to make Google's own spider programs work better by uncovering previously hidden web real estate. Maybe, maybe not. But Google thinks big and they don't do frivolous public betas.

What we can say about any public beta from Google is that it is a statement of direction and possibly an effort to influence the future. So let's think a bit further about where this accelerator thing could be going. Let's refine our vision a bit.

Google just bought land in the Columbia Gorge east of Portland, Oregon -- 30-plus acres with options on additional parcels. What the heck is that for? This is beautiful land outside any major city. Not enough land for a corporate campus, but that's okay, because there isn't much in the way of local housing, anyway. So what's it for?

It is probably for a data center -- a one million-plus square foot data center that could easily be inhabited by a million or more CPUs. The attraction for Google is reliable electrical power since their new property is not far from one of the many dams and powerhouses that make up the Bonneville Power System.

Now drop back to the Google Web Accelerator. Yes, it is just one of many Google initiatives. Yes, it can be circumvented in a number of ways. But Google is planning something big, so how could the Web Accelerator be a part of that?

What did Bill Gates say? That the iPod was at best a transitional technology to be supplanted by mobile phones? Well, it is true that we'll all eventually carry phones. And it is true that we are all wanting more and more information. And it is undeniably true that the current view of the World Wide Web from most so-called "Internet-enabled" mobile phones is pretty pitiful. Enter one possible version of the Google Web Accelerator as an intelligent web interface generator for mobile users. There is no other project I have heard of that could -- on-the-fly -- convert web content for this new interface, which happens to be used by more than a billion people worldwide.

One way to influence the future -- particularly if you are a rich player with little or no market share in a new segment -- is to dramatically underprice the competition, just as Yahoo has done to Real and Napster with its $6.99 per month Yahoo Music subscription service. Real contacted me this week to say that there is no way that $6.99 is Yahoo's actual cost to provide the service, so the company has to be losing money on every subscriber. But for a new entrant in the field -- one with essentially no subscribers -- the cost is really minimal.

In the publishing business, one measure that every executive knows is the marginal cost of acquiring a new subscriber. You'd be amazed at the cost, too, which in publishing is typically around the cost of a full-priced one-year subscription, which might be $10-$40 or more. That's why magazines work so hard to keep us RE-subscribing, because a retained subscriber is just as valuable as a new one, and a lot cheaper.

Now look again at Yahoo's music plan, and you can see that they are willing to pay a certain amount per subscriber, and that the easiest subscribers to get are those poached from another service, since they already believe in the concept. Yahoo's probable goal is two-fold: to take the lead in subscription music services, and to remove from the field completely one of its major competitors, probably Napster.

If Napster reduces its subscription price to compete with Yahoo, it will immediately start losing more money than Yahoo simply because it has more subscribers. More importantly, though, Napster's whole business plan gets squished and its ability to raise more money is diminished. Yahoo's pockets are deeper than Napster's and Real's, but Yahoo will probably settle for removing a single player from the field. The question then is whether the market will stick with Yahoo if it raises prices? THAT will determine where the future really lies.

Now to Apple. It is one thing for a Microsoft, with 95 percent market share (and then some), to try and influence the future, but very much another thing for an Apple, with around two percent. But maybe market share isn't all that important. I know that Steve Jobs is thinking in terms of his place in history, and he isn't even remotely satisfied with the current story. Bill Gates once told me that Steve could never win, but Steve doesn't know that, which is a decided advantage.

Apple's story is an example of seeding technology and having to wait to harvest. IPods help, of course, but there are still 20 times as many personal computers as iPods, so iPod is only part of the story. The bigger part is Apple's QuickTime, which they'll be happy to tell you is installed in more than 400 million devices, of which 98 percent are NOT made by Apple.

Apple, like Microsoft, wants to be in the content business. And even more than Microsoft, Apple has done a pretty fair job of seeding its technologies into industry standards. And finally, Apple has become a true consumer electronics manufacturer, which requires a mindset that opens a number of interesting possible futures.

Microsoft's vision of the future inevitably has at its center a device that costs at least $250 and averages closer to $500. Apple, as a software-centric maker of consumer electronic devices, can set its device price much lower, say around $125. That's a market intrinsically four times the size of the one envisioned by Microsoft. We saw this in last week's column, where it became clear that the endpoint of Apple's video strategy isn't a Mac or a PC at all, but a hardware decoder device the size of a pack of cards. That's a much easier sell, but it has to be backed up with Internet services to make it work.

These Internet services, based on QuickTime, are what Apple has spent so many years building and seeding in the marketplace. Apple doesn't need to increase Macintosh market share to be successful in the movie download business. Nor do they require a large end-user installed base to be a dominant player in back-end services. Apple's goal is to remake the entertainment business and so is Microsoft's, yet in the entertainment industry, where it counts, Apple's presence is as great or greater than Microsoft's. This didn't happen by chance, but is a clear result of Steve Jobs' attempt to create the future in his own image.

Only time will tell if it works.

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