Missing posters (was RE: How Moore's law stabbed us in the back)

ThosStew@aol.com ThosStew@aol.com
Thu, 3 Jan 2002 08:59:59 EST


In a message dated 1/2/2002 8:17:14 PM, sherry@timesten.com writes:

>I haven't been around that long, so I wouldn't know who's come and gone.
>However, I wonder if the fact that these posts are highly indexed (they
>turnup in any google search based on author name/email) contributes to this.


No, they always were indexed. Fact is the signal to noise ratio has worsened, 
no matter whose subjective standards you apply. FoRK is less reliably useful 
(though still useful) to me as a window to who's smartest and what's coolest 
in technology. It always has, always will have, a tendency to run off the 
rails into stuff about libertarian political philosophy, inter alia, but for 
much of last year it was likely to contain little but that. It seems, 
actually, to be returning to something a little better right now. 

And Adam's maligned post is, it seems to me, a pretty interesting one, though 
his train of thought chugs into the wrong (despairing) station. Fact is that 
Moore's Law does cut the price of a given amount of computing power in half 
every six quarters, and that companies have to increase demand, cut costs, or 
add features at a rate that tries to keep up, but may be inevitably doomed. 
My first computer cost about $4000 and had all of 4, or was it 8, megs of 
RAM. My most recent cost $1600 and I don't know how much it has--a gig or 
two. It's very fucking hard to maintain margins in a case like that. A few 
years ago I heard a Canadian HPer point out that for much of the company's 
low-end product line, parts in the box were now 70%  of total cost. The 
margin squeeze was becoming unbearable--and this was long enough ago that 
Dell was just an obnoxious pimply kid in Austin as far as HP was concerned.

A whole realm of computing--all the PC stuff--is indeed moving into a 
low-margin column. For many years the increasing size of the market made the 
margin squeeze bearable--who cared if your margins dropped by 50% if your 
volume increased by the same amount? We have long passed that point now, and 
for the last few years one PC maker after another has been clobbered--Compaq, 
now HP, Gateway, etc., etc. That whole segment of the industry, and stuff 
directly tied to it, will have to pretend it's selling to Wal-Mart, and 
rejigger its business model and structures accordingly. 
    Competing on price is a terrible thing, even if you win. It's 
exceptionally painful. Margin comes from uniqueness, and the PC industry is 
no longer where uniqueness can reliably be found; in fact, people don't want 
it: They want PCs to be like one another, standardized, substituable for one 
another. Moore's Law is certainly one of the causes of the profit problem. On 
the other hand, to say that the only cost left to be cut is labor is 
_probably_ wrong: those are already highly-automated factories. Given that HP 
70% number, there's more cost to be cut by working the supply chain; there's 
also a different revenue model to be pursued (vide IBM) by adding people at 
the other (service and consulting) end. 

Should Adam take up ironworking? Probably not. There are those, certainly not 
I among them, who would argue that he uses his mouth like a blowtorch, but 
OSHA rules don't permit that practice on construction sites, though 
wolf-whistles are still permitted.However, the series of posts last year, 
looking for the Next Big Thing, are relevant here. In the last few years 
we've seen the PC business erode and at lot of e-businss implode. We've seen 
wireless explode. If G3 works, it will continue to do so; otherwise, it's PC 
city for handset makers; I dunno about margins for service providers. If 
broadband ever happens, there's another source of explosion. P to P, people 
on this list hope and pray, is another possible explosion. That's better work 
than ironmongering, though in the post Sept 11 climate, the word is that 
those guys, like cops and firemen, are all the rage with the Camille Paglia 
set.

Tom