Different River

”You can never step in the same river twice.” –Heraclitus

January 12, 2005

Computer Industry Not Dead

Filed under: — Different River @ 1:54 pm

I don’t know about you, but I’ve been noticing for years that people have been predicting the imminent end of the “computer industry.” They predictions tend to alternate in their specifics. In the early years, people said home computers were just “toys” or “a fad” and nobody really needs one. Now, they predict the end of computer sales or sales growth (because everyone has one of these things nobody needs). Or they point out that no one really needs a faster computer any more (I read one of these shortly after buying my Pentium II/350 in 1998, and it feels awfully slow now!) and as soon as people realize this, sales will collapse. Or they take a cynical approach to technology, predicting an imminent end to Moore’s Law (the observation that computer power per dollar doubles about every year or two). A simple Google search produces such predictions of the end of computer improvement going back to 1980.

So it is nice to see at least one economist who is predicting that the computer industry is not even mature yet.

4 Responses to “Computer Industry Not Dead”

  1. Dave Schuler Says:

    Nonsense. The computer market in the United States is mature. Here’s the definition of a mature market: in order to secure a new customer you must displace a competitor. However the problems being experienced by the computer industry in this country (and it is experiencing problems—it’s actually contracted for the first time in its history) are not because the market is mature but because its chickens have come home to roost. Namely corporations are still digesting the goat they swallowed in the run-up to Y2K and Microsoft is a lousy standard-bearer for the industry. IBM has really got to start leading rather than divesting, playing loyal opposition, and following.

  2. Dave Schuler Says:

    And if it’s not clear: if it’s got a mature market the industry is mature. Period.

  3. Ben Says:

    Maybe the desktop PC market is mature. The computer hardware market (which is what everyone seems to mean) is not. It’s certainly not true that in order to secure a customer a competitor must be displaced; in fact, an awful lot of market is being created.

    A couple of years ago hardly anyone had heard of TiVo or ReplayTV; now PVRs represent a nascent opportunity that has only begun to climb out of obscurity. Real palmtop computing is skyrocketing. Perhaps big iron computing is being supplanted by other things but I’m not sorry to see them go; the big iron companies are the modern equivalent of buggy whip manufacturers.

    Either way, I at least agree with you in that Microsoft makes a lousy standard bearer for the industry.

  4. Dave Schuler Says:

    None of your examples are computers i.e. general purpose computing devices. They are special-purpose devices containing computers and I’ll agree that there continues to be growth in applying computers to solve new problems and make new special-purpose devices. In the U. S. mainframe sales are declining, midsize sales are slowing, PC sales are slowing, palmtop sales are slowing. It’s a mature market.

    Now if you extend your definition of computer to include the entire electronics industry I’ll agree with you.

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