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Trickle-Up Economics: How Consumers Turned Corporate Technology on its Head

To reduce operating costs and to get a leg up on their competitors, corporations and businesses have historically been among the first to evaluate and adopt expensive new technologies. With their deep pockets and hefty IT departments, large businesses often work closely with hardware and software vendors to get the newest, fastest, and most whiz-bang technology on the market. Tech-savvy executives, like the rest of us, also enjoy the bonuses and bragging rights they get for implementing a new IT platform or a game-changing information process.

Examples of this pattern are plentiful and stretch back many decades, beginning about the time a small New York company named IBM started making "business machines." Take its mainframe computers, for example. Large, expensive, and wickedly fast in their day, these behemoths gave insurance companies, banks, manufacturers, and government agencies the ability to process vast reams of data and transactions quickly and efficiently. IBM made boatloads of money on mainframe hardware, software, and maintenance and, along the way, established its reputation for innovation in semiconductors, data storage systems, networks, and many other products. In the business world, corporate dynasties and fiefdoms have been pretty good at protecting their own interests. The computational power and informational reach of computers was owned by corporations, not consumers, and some businesses wanted to keep it that way. Maybe this was through ignorance; maybe it was deliberate. In the words of Digital Equipment Corp. founder and misguided visionary Ken Olsen, "There is no reason for any individual to have a computer in his home."

Trickle Down or Trickle Up?
Fast-forward to 2009, where the trend of business-driven technology and leadership marches on, this time to the beat of a different drummer. In the past decade, business has embraced innovative and initially expensive new technologies such as IP telephony, networked computing, video conferencing, telepresence, streaming video, and digital signage. As with most technologies, the relationship between product and price is well-known and straightforward. As sales and manufacturing volume increase, costs decrease and product prices begin a gradual but steady decline. These lower prices, in turn, drive demand and increase adoption rates. Eventually, products become standardized and commoditization takes over; suddenly, these technologies are within the reach of poor, working-class consumers like you and me.

Chinks in the armor of trickle-down, corporate-driven technology, however, are starting to appear. Microprocessors now cost a pittance to make and are showing up in a dazzling array of consumer products ranging from digital cameras to iPods to GPS navigation units to even running shoes. Today, a typical automobile contains dozens of microprocessors, which it uses to control everything from engine timing and fuel delivery to digitally enhanced sound systems. On another consumer front, high-speed internet connectivity is nearly ubiquitous, and throngs of innovative web-based services and applications are available at our fingertips. The most successful of these services fall into a few primary categories; chief among them are digital communications, digital media, and social networking, which are all targeted at the consumer market. In a dramatic role reversal, the huge success of products and services such as the iPhone, Skype, YouTube, Facebook, and Hulu hasn’t escaped corporate notice. Now, the industry is looking closely at consumers and Generation Y for its Next Big Idea.

Trends
As I write this, I’m sitting in my home office surrounded by a vast arsenal of digital technology and tools. A crisp, brilliant 21" display with a 1920 x 1080 pixel resolution hovers over my desk. Two printers sit nearby—one black-and-white laser printer for the grunt work and a 2400 dpi color inkjet printer for the good stuff. A high-speed cable modem with a 30Mbps download rate keeps me connected to the internet and enables a whole suite of web- and cloud-based applications. My local Wi-Fi network glues it all together and allows me to roam through the house at will. This hoard of technology didn’t require a team of software engineers, months of Beta testing, and a corporate P.O. to get everything up and running. It’s all off-the-shelf hardware and software, which is available around the corner at any local Staples or Best Buy. Only a decade or two ago, this amount of computing and visualization power on a desktop would be the stuff of science fiction. Credit goes out to the hardware and software companies for building consumer products this advanced, affordable, and reliable.

As I see it, we’re all sitting at the nexus of three powerful global trends: technological, economic, and social. These trends will shape our working habits, lifestyle, and leisure pursuits in the years to come.

Figure 1
Figure 1

TechnologySince the advent of the microprocessor, digital technology has continued its inexorable march forward. While we can all thank Intel and AMD for some of this progress, it’s not just microprocessors that have gotten speedier and more powerful. Hard drives have gotten bigger, faster, cheaper, and more fault tolerant—now to the point where they are affordable for backup storage. RAM memory is cheap and abundant, and flash memory has come down in price so much that it has replaced disk drives in portable music players and netbook computers.

For multimedia applications and streaming video, the story gets even better. Remember 8-bit color graphics cards and that grainy, postage stamp-sized streaming video image of a decade ago? The standard issue these days is something like a dedicated ATI Radeon HD 4670 graphics processor with 256MB of graphics memory, hardware MPEG video decode acceleration, and 30-bit color display processing. All this behind-the-scenes graphics power makes it easy to render video in glorious full-screen 1080p high-definition right on your desktop. Built-in multimedia support doesn’t stop there, however. Add-on or built-in high-resolution web cams are commonplace, as are encode/decode software codecs that can handle two-way video. Although PCs started out as "business" machines (thanks again, IBM), one could argue that these days PCs have a lot less to do with business and a lot more to do with entertainment, access to information, and sheer sensory enjoyment. It’s not just in the home office where consumer technology is moving forward in great leaps and bounds. Today’s typical cable set-top box and HD TV have much of the same video, display, and storage capabilities as a home PC.

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