This has always been one of my favorite albums, but not just because of the music (or the words):
The music must change
For we're chewing a bone
We soared like the sparrow hawk flied
Then we dropped like a stone
Like the tide and the waves
Growing slowly in range
Crushing mountains as old as the Earth
So the music must change
Look at the picture again. This is 1978, at the dawn of the PC era. This is the band in front of just some of the equipment they need to perform. Think of all the money that cost.
Now consider how much it would cost today, and how big it would have to be. It would probably pack in a suitcase, and cost just a few thousand dollars.
I thought of that when reading Kevin Werbach's review of an Eli Noam column in the Financial Times, bemoaning the lack of credible business models, predicting monopoly.
Kevin writes, "There is a basic structural disconnect in the economics of information industries, with painful consequences." Exactly. We live in the world of the suitcase. There are many industries today living like The Who did in 1978. That will kill you, man. (Both John Entwhistle, standing at left, and Keith Moon, wearing the horse-riding outfit, have since died of drug overdoses.) Who Are You, indeed?
Let me give you just one example.
The picture is courtesy of an expert on cable-laying and it's a good illustration of the problem. To pay for these guys to erect these poles and maintain wires over them, you're looking at a 20-30 year depreciation schedule. Even if they're giving you broadband, that's how long it will take to pay for all this hard work. You have to capitalize them.
Wi-Fi can deliver the same service without that expense. With Wi-Max you can run signals across mountaintops, line-of-sight, then deliver them directly from the pole.
Where is the value in what these guys are doing? It's the pole. The wire itself has no real value. Neither, in fact, does the right-of-way. Neither do those cleared trees. So long as the pole is higher than what surrounds it, keep the forest.
The same is becoming true in urban and suburban environments. Cable was lain based on 20-30 year depreciation, but its actual value (thanks to competition) is collapsing much, much faster. You can already replace it with stuff that pays for itself in three years. It's becoming worthless.
This is just one example of what Noam is talking about, but there are many others, as I've pointed out. When the cost of PC software is higher than PC hardware, the software business must change its business model.
There are huge structural impediments in the way of technological change, but if we don't push those impediments aside, then others will. China or India, which don't have this huge telecomm plant, will. Maybe South Africa will, or Vietnam. There are lots of smart people in Vietnam.
We don't have a choice, anymore than the "dinosaur rock" bands of the past had a choice, between holding onto the past or facing the future.
But death always leads into life
Like the street fighter swallows the knife
Am I so crazy to feel that it's here prearranged
No, it's not pre-arranged. Think of it as Milo Minderbinder did in Catch-22. Think of it as evolution in action.