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Peter Cochrane's Hard Drive 1999 Costs realigned for nothing ONLY 50 years ago it was unthinkable that we would all have cars, TVs, telephones, mobile phones, cameras, wristwatches, hi-fi and PCs. It was inconceivable that we would enjoy such abundant functionality and quality at such low prices. The notion of commercial radio and television, hire purchase and the leasing of luxury items was also anathema in most of Europe. Yet, a generation later we have almost everything approaching the free. Mobile phones and wristwatches are given away, cars and PCs, TVs and other domestic appliances can be leased, and prices continue to fall in real terms. As a young man my father had to work for months to be able to afford a domestic radio; today people only work a few hours to enjoy a much better product. Free local phone calls have been the norm in America for decades. Of course, they are not really free, they are subsidised by long lines calls, a practice not generally adopted in Europe because of a history of government control. On the Internet, free email services are flourishing everywhere, paid for by advertising. Perhaps we will see the same happen to all information technology-based services as technology exponentially reduces the cost of provision, while rendering the cost of billing uneconomic. Would it be so irksome to listen to adverts at the start, finish, and mid-point of a telephone call? Perhaps it would be acceptable to live with such intrusions, with the option of paying to be advertising-free. There are many contemporary examples of products almost given away with the true cost recovered by some after-sales mechanism. Films for cameras, ink cartridges and paper for printers and copiers, batteries for portable devices, replacement parts for cars, and software upgrades can all be used to reduce the up-front purchase cost of hardware for the customer. Pay-per-view TV and pay-per-call mobile phones are just two extreme example of this philosophy, and part of the new economy of bits. So what about the PC and the laptop? Suppose PCs and laptops were to cost just 20 per cent of present prices - £200 instead of £1,000. Such a price tag would encourage everyone to buy, but not be profligate, and this would lead to greater software sales, a boost to electronic commerce, online advertising and services, and to everything associated with the sector. Most consumer goods are produced for a few pounds and sold for hundreds, so there is a massive opportunity to increase the scale of the market through raw usage. If the Internet service providers, software producers, ecommerce sites, and associated support industries banded together to cross-subsidise hardware costs, then every household could have a PC and every child could own a laptop. For our society to accelerate into the bit future we need funding models that reflect the new enabling value sets, which are predominantly based on bits, not atoms. Free PCs are unlikely in the strict sense, but we can expect to see prices fall well below those for TV, hi-fi, washing machines and other domestic goods. The economy of bits will see an accelerating utility lead to information technology prices approaching zero. Peter Cochrane holds the Collier Chair for the Public Understanding of Science & Technology at the University of Bristol. His home page is: |
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