day 49

microsoft smells $$s 6: the many faces of technology

Last time we showed what consumers want in a network appliance machine. And of course the company that will give it to them will be Microsoft. Pegasus is the PDA OS from Microsoft that will wound Apple and kill off General Magic. A new product uses many technologies in combination. Each technology tracks a separate learning curve. Therefore, a new computing device will ride several learning curves - each one being a contributor to the overall learning curve of the device, itself. Table 1 lists some formulas used to model the learning curves of these fundamental technologies. A contemporary PDA uses all but the disk storage technology. Its overall learning curve will be the sum of individual curves.

Technology From 1970: P and B In 1995: Price Processors P=1370; B=.73 P=0.525 Disk Storage P=200,000; B=0.625 P=1000 Software (OS & Language) P=1046; B=0.956 P=340 Wireless P=58,622;B=0.60 P=0.17 Packaging P=7300; B=0.91 P=691 DRAM P=1371; B=0.675 P=0.07 Networking P=58,622; B=0.56 P=0.03

Table 1. Learning curve, L = P*B^t, for some fundamental technologies in the computer industry. These parameters are estimated by curve fitting data collected from 1970 to 1995. P is the value of the "barrier" to mainstreaming in the "1995" column. Table 1 reveals some very interesting secrets. First, software and packaging are major barriers to PDA advancement because they have high "prices", and low learning rates (a high value of B means little learning goes on - a low value of B equals a high learning rate. B ranges from zero to one). High values of P and B are bad news, preventing a product from achieving mainstream status. The result: not much bang for the buck.

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