The Far-Reaching
Implications
of the Cyber Revolution
By Carter Henderson
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he on-rushing Cyber Age is giving the United States newfound power and riches
reminiscent of the coming of the Agricultural and Industrial Ages and, if anything, is
gathering speed. The future is being redesigned, and all we can do to grasp its immensity
is to look at some of the ways it's actually happening.
Let's begin with a company called Computer Motion in Santa Barbara,
California, that has developed a robotically-controlled system that allows surgeons to
perform previously impossible operations on patients under anesthesia thousands of miles
away through incisions hardly bigger than a human hair. A surgeon in the U.S. has already
used the system to remove a patient's gall bladder in France, and it's expected they'll
soon be able to perform delicate coronary surgery on patients without cracking open their
chests and stopping their hearts.
IBM plans to invest billions to design computers and networking systems
to "adjust to changing workloads, recognize faults and repair themselves without
human intervention." One reason for IBM's sizeable investment in such
self-actualizing computers is the widening gap between the already enormous and growing
amount of technology its customers have to manage and the limited number of people who
really understand what it takes to keep an e-business alive.
"Our customers will have roughly 10 to 20 times more technology to
manage over the next five years," predicts IBM's top hardware technology strategist.
Among the breakthroughs making this possible is the coming of a new breed of transistors
developed by Lucent Technologies Bell Labs in Murray Hill, New Jersey, which are no bigger
than a single molecule. So small, in fact that about 10 million could fit on the head of a
pin.
The University of California at Berkeley reported recently that the
amount of data we humans generated in approximately 300,000 years is being produced in
just two and a half years today. And only about 20% of that, adds Infoworld
magazine, "resides in relational databases; the rest is in a combination of flat
files, audio, video, prerelational, and unstructured formats—not to mention the
mountains of paper-based digital data just waiting to be digested."
At the Massachusetts Institute of Technology's Artificial Intelligence
Laboratory they're striving to build robots with social skills and human-like expressions
we can relate to. One, named Cog, resembles a human infant, and another, called Kismet, is
designed to interact with us through its body posture and facial expressions. This raises
some perplexing questions, which Dr. Anne Foerst, director of M.I.T's God and Computers
project, has courage enough to ask. She wonders, for example, if a robot with human
attributes should be treated with dignity even though it's just "a mechanistic
thing?"
The Rise of the Invisible Store
Downtowns once filled with stores have seen them migrate to shopping malls and
now to the World Wide Web. All kinds of businesses have been rushing online with more on
the way.
Three picked at random are:
- AutoTrader.com:" The Biggest, Best, Used Car
Site on the Planet. More than 1.5 million listing, updated daily."
- Quotesmith.com: "It's the only place on
earth where you can get instant insurance quotes from our 300 top-rated companies."
- Mall.com: "You'll find all your favorite name
brand stores at one address. And get the stuff you want, when you want it.
Gary Wright, corporate demographer for Procter & Gamble in
Cincinnati, Ohio, believes the growth of e-commerce along with the Internet's
lightening-fast speed will lead to the online ordering of lower priced nonperishable
products, from peanut butter to coffee filters. Wright sees retailers becoming
"bundlers" combining customers' orders into large packages for delivery to their
doorsteps. He believes this will lead to mergers between retailing and home delivery
giants such as Federal Express. Online information agents will instantly select the best
deals available by rigorously comparing prices among competing suppliers.
Ryan Mathews, a futurist at First Matter LLC in Detroit, told American
Demographics magazine he's convinced that by 2050 computers will be as smart as
people, thanks to embedded chip technology. This will allow them to replenish
non-perishable products (like paper towels and dog food) that are running low on a
customer's continuous household replenishment list by automatically reordering them. If
the system turns up a comparable but less expensive substitute, it will switch over to it
instantly.
Chris Ertel, demographer-in-residence at the Global Business Network in
Emeryville, Califomia, believes the automatic reordering of non-perishables will be a
godsend for young families. A big reason, he says, is that taking in one's parents will be
the law of the land by 2025. The surge in life expectancy powered by nonstop biomedical
advances will, in his opinion, mean that women can look forward to living to 90 and men to
85. A 35-year-old woman in 2025, Ertel notes, may end up caring for her mother longer than
her mother cared for her when she was growing up.
Efficiency Has Its Price
One of the newest cyber-driven developments is the use of "business
intelligence soft ware," or "BI," which allows companies to slash their
costs while actually increasing their efficiency. Staples office supply stores, for
example, had long devoted precious floor space to desks, file cabinets and other furniture
that did more for its bottom line than inexpensive pens and paper. But BI software
revealed this strategy was a mistake since the costs of storage, distribution, handling,
damage, labor etc., not to mention employing sales people who could intelligently discuss
these big ticket items with customers, made them considerably less attractive than every
day inexpensive office supplies.
This high-tech driven efficiency can also be seen in a collection of
low-cost, Internet-based businesses run by the British EasyGroup whose sole purpose in
life is to cut costs and sidestep the middleman. So it stalks pay-as-you-go businesses
from movie tickets and hotel rooms to rental cars and cruises. These businesses have high
fixed costs making them vulnerable to its use of standard, off-the-shelf technology to
fine tune its rental prices on these highly perishable items which can be ordered at
cut-rate prices over the Internet.
A perfect example is its EasyCar rental centers, typically run by one
employee in a van with a laptop operating out of leased space in a parking lot. This
allows it to adjust its rates depending on demand, giving it a utilization rate for its
cars of more than 90%, considerably out shining those enjoyed by Hertz and Avis. The same
applies to movies, where EasyGroup customers print out their tickets at home or from
terminals and are admitted by a bar-code scanner at the theater.
If this is what tomorrow holds, it puts service jobs once reasonable
safe from automation into the same fix as manufacturing jobs. And with the US economy
already under attack from persistent unemployment and a soaring national debt, this does
not bode well for the future.
These high-tech changes are bound to continue, moving in the direction
of ever-greater reliance on Cyber Era advances to reduce the time and energy needed to get
things done, while opening up entirely new vistas to explore.
The future of shopping, perhaps for the first time since the advent of
the superstore, has moved into the realm of speculation with implications for all
concerned, from consumers to legislators. And since consumers account for two-thirds of
the economy, this is worth a second look.
For example:
- How much longer will rising energy prices force consumers to cut back on
other expenditures from new cars to holidays in Europe?
- Will the pleasures of hands-on shopping in neighborhood shopping malls be
seriously eroded by the antiseptic convenience of shopping via computer?
- How will increasing competition among online suppliers benefit consumers?
- What aspects of online shopping such as erosion of privacy might concern
consumers enough to trigger legislative action?
The growth of video surveillance systems watching us around the clock in
stores, restaurants, train stations, schools and even street comers has reached the point
where it's setting off alarms at the American Civil Liberties Union. The ACLU worries that
these electronic people watchers will become so commonplace they'll be able to keep track
of us 24 hours a day with a few simple computer commands.
The city of Tampa, Florida, has gone even further and installed
surveillance cameras that scan people's faces and match them with a data base whose memory
is packed with some 30,000 pictures of those wanted by the police.
The coming of 24-hour surveillance appears unstoppable. The money and
merchandise lost to common thieves is already so large (and growing) that it's easy to
justify countermeasures which are powerful, yet relatively inexpensive. Business is
booming for the providers of these Orwellian watchdogs. Their sales more than tripled,
from $285 million in 1990 to some $1 billion today, with the Security Industry Association
predicting they'll hit $1.6 billion by 2005.
Are Banks an Endangered Species?
The Federal Reserve Bank of New York's March 2000 Bulletin on
"Current Issues In Economics and Finance" was devoted to "The Emerging Role
of Banks in E-ommerce." The report, written by John Wenninger, pointed out that
"many banks are beginning to deliver credit and deposit products
electronically," that "some large banks are developing products designed
exclusively for e-commerce," and that "they are finding that new opportunities
bring new operational and strategic risks."
The article noted that banks are following the lead of other companies
conducting business online "as a means of expanding markets, improving customer
service, reducing costs, and enhancing productivity." At the same time, it said,
"e-commerce is increasing the banks' exposure to technological problems, not to
mention tough new e-commerce competitors, whose impact may prove very serious
indeed—possibly life threatening."
If the banks fail to respond to this threat, says the New York Fed,
"they may be consigned to a largely secondary role as commerce shifts toward
electronics over time." Should this happen, it warns, "they would have little
chance to engage independently with buyers and sellers, or to offer their own products in
the electronic marketplace." But if they do embrace the Internet, it added, it
"should be in a position both to market traditional banking products more efficiently
and to develop and sell new products sought by e-commerce participants."
It's been estimated that between six and seven million people currently
bank online, with more ready to log on. This deepening interest in online banking, says
the New York Fed, suggests that banks "may increasingly function as facilitators of
online commerce and see a decline in their long-standing role as financial
intermediaries." Banks are already planning to offer their valuable, if endangered,
business customers, new services such as "supersites" where sellers can display
their products, or help smaller firms set up the interactive Web sites and payment systems
they need to engage in e-commerce."
Electronic commerce also presents brick and mortar banks with possibly
life threatening problems if they don't react quickly enough. One is the need to increase
their e-business to customers as their old, long-standing lines decline in importance.
Another, in the opinion of the New York Fed, is that banks may have to "scale back
the size or alter the scope of their branch networks and devote more resources to the
development and maintenance of computer networks and software. The precise role that banks
ultimately play in e-commerce," the New York Fed concludes, "will depend in
large part on how well they manage the strategic and operational risks associated with
doing business in the electronic marketplace."
What's transforming banking is also remaking securities markets, says
Alfted R. Berkeley III, president of Wall Street's Nasdaq market. "It will
exist," he contends, "as a virtual rather than a geographic entity, since
technology makes it possible for people to work anywhere."
This can be seen in Coos Bay, Oregon, which was once the largest wood
products shipping port in the world, but no more. The area's logging and fishing
industries have been declining, putting the area's unemployment rate in double digits.
Dozens of these tough, bearded men who once earned their danger-packed livings in the
great outdoors are now comfortably seated in cubicles wearing headsets and peering into
computer screens as employees of CyberRep. Their workday now consists of answering
questions phoned in over a toll-free help line 24 hours a day seven days a week for
customers such as AT&T and Nextel Communications.
The Cyber Age Embraces the Environment
The Center for Energy and Climate Solutions outside Washington, D.C. is a nonprofit think
tank that's taken a long, hard look at the e-commerce revolution and concluded that in
addition to everything else it's also "generating enormous environmental benefits. By
reducing the amount of energy and materials consumed by business—often
dramatically—and increasing over all productivity, the Internet stands to
revolutionize the relationship between economic growth and the environment."
Dr. Joseph Romm, executive director of the Center, told me in a recent
conversation that "The Internet economy could allow a very different type of growth
than we have seen in the past. It means there is also a new energy economy that will have
profound impacts on not only the environment, but also on economic forecasting. The
Internet can turn buildings into Web sites," he added, "and replace warehouses
with supply chain software. It can turn paper and CDs into electrons, and replace trucks
with fiber optic cable. This means significant energy savings." Among the Center's
major findings:
- The Internet could save 2.7 million tons of paper every year beginning
this year despite the still growing use of office paper. The resulting annual cut in
global warming pollution equals some 10 million tons of carbon dioxide. Both figures could
double by 2008.
- The ratio of building energy per book sold in traditional bookstores
versus the online retailer Amazon.com is 16 to 1. Internet shopping also burns up less
energy to deliver a package to your house. Shipping 10 pounds of packages by overnight air
- the most energy-intensive delivery mode - uses 40% less fuel than driving roundtrip to
the mall. Ground shipping by truck uses just one-tenth the energy of driving yourself.
- By 2007 the Internet could avoid the need for some 5% of commercial
building space, including up to 1.5 billion square feet of retail space, 1 billion square
feet of warehouses, and as much as 2 billion square feet of commercial office space, the
equivalent of almost 450 Sears Towers.
"If this pattern holds," concludes Dr. Romm, "it would
double the average rate of energy intensity gams for the next decade."
In The Age of Spiritual Machines: When Computers Exceed Human
Intelligence, Ray Kurzweil, who, among other things, is the brains behind the
Kurzweil Reading Machine, sees age-old paper under increasing pressure, if not on the way
out.
"It is now 2009," says Kurzweil, and "Computer displays
have all the display qualities of paper - high resolution, high content, large viewing
angle, and no flicker. Books, magazines, and newspapers are now routinely read on displays
that are the size of, well, small books. The majority of reading is done on displays,
although the 'installed base' of paper documents is still formidable. The generation of
paper documents is dwindling, however, as the books and other papers of largely
twentieth-century vintage are being rapidly scanned and stored. Documents circa 2009
routinely include embedded moving images and sounds."
Kurzweil stepped further into the future during an interview with The
Industry Standard when he said that what excites him the most about the future is
"The very fact that the rate of technological progress is accelerating exponentially.
We'll see 20,000 years of progress in the next 100 years. By the end of this decade,"
he added, "computers will disappear. They'll be imbedded in our clothes, in our
eyeglasses. Just by walking around, we'll have augmented visual reality."
A few months later Kurzweil told Forbes that "Machines will match
human intelligence in the ways that humans are now superior within 30 years.
Non-biological intelligence," he continued, "will then combine these human
skills with the speed, memory, and knowledge-sharing ability that machines already excel
in. It will be a formidable combination."
Young Cybernauts Have an Epiphany
Kurzweil is an admittedly grand example of all the young cybernauts who are
making their considerable fortunes in Silicon Valley and in the process are having
life-changing epiphanies. They have awakened to the fact that Washington, D.C. is home to
the world's greatest concentration of power, and they want in. They figure that the
politicians—for whom money is oxygen—can be encouraged to see things their way
on issues from Internet taxation to visas for high-tech immigrant workers. But they've got
something else to attract politicians' attention - shares of stock in their companies'
glowing futures. "If you think there's a lot of money in politics now," says
billionaire Marc Andressen, who co-founded Netscape, "you haven't seen anything
yet."
What these new big money players want from Washington's power brokers,
at least to start, is access and connections in return for dependable infusions of cash
and stock options. "Priced today, politics is the bargain of the century," says
John Witchel who started San Francisco-based high-tech casualty Red Gorilla. "For $10
million you could do anything." "Candidates are already treated as commodities
to be invested in; we might as well slap logos on them," adds Simon Rosenberg,
founder and president of the New Democratic Network, supported by the Valley's new
super-rich.
A few months prior to the latest presidential election, a new
organization arrived on the scene called "Billionaires' for Bush (or Gore): Because
inequality is not growing fast enough." It proclaimed, "We're Bipartisan - We
Buy Republicans AND Democrats, 66 major corporations have already donated more than
$50,000 to BOTH Bush and Gore. When we buy BOTH candidates, we can't lose. We're already
in, no matter what happens on election day. Big Money United shall never be
defeated."
Cyber Age Super Salesman
Silicon Valley's Dr. Larry Smarr is one of the world's top computer
technologists, having contributed to the development of the Internet and then going on to
invent the graphical browser, which makes its riches accessible to millions. His latest,
and possibly greatest move, has been to convince California embattled Governor Gray Davis
to put him in charge of the new $300 million California Institute of Telecommunications
and Information Technology, being built with the help of funding from, among others, IBM,
Microsoft, Boeing, and Sun Microsystems. The new project's goal, Smarr says, is to speed
the emergence of the information grid he believes will have a far greater impact on our
daily lives than the all-pervasive electric power grid does today.
Smarr envisions the emergence of "an enchanted world" of
networked microprocessors during the next few years that will see the power of individual
computer processors grow at an exponential rate as the number of interconnected computers
and computing devices explodes. This kind of turbocharged computing power might allow
California to build a grid to more effectively control its massively complex traffic
system, says Smarr, since it will know where the fast rising number of cars with on-board
computers are headed.
Computers have metamorphosed from the University of Pennsylvania's ENIAC
built out of some 17,468 vacuum tubes with less number-crunching power than some of
today's laptops, into thumb-nail-size computer chips containing 42 million transistors.
Scientists hope to increase the power of super-computers a hundred times by 2005, and a
thousand-fold by 2010, resulting in the first petaflop machine capable of carrying out a
quadrillion (a thousand trillion) operations in a single second. A computer this powerful,
say scientists in a position to know, could handle any work we humans give it in no time,
leaving it nothing to think about except itself.
Yet even this is only a stopover on the road to devices the size of a
single atom packed with data on their orbiting electrons whose negligible cost virtually
turns information and access to it, into what economists call a "free good."
Ready to do whatever work there is to be done in a world where "cyberspace will merge
with physical space and disappear," according to Michael Dertouzos, director of the
M.I.T. Laboratory for Computer Science. "The Internet," adds cyber pioneer Jake
Winebaum, "is just 20% invented. The last 80% is happening how."
Bill Joy, former chief scientist at the high-tech juggernaut Sun
Microsystems, writing in Wired magazine, moves considerably beyond Clarke's view.
"Eventually," he says, "a stage may be reached at which the decisions
necessary to keep the system running will be so complex that human beings will be
incapable of making them intelligently. At that stage the machines will be in effective
control. And we won't be able to turn them off because," he concludes, "we will
be so dependent upon them that turning them off would amount to suicide. With the prospect
of human-level computing power in about 30 years," Joy adds, we may be "working
to create tools which will enable the construction of the technology that may replace our
species."
About the Author:
Carter Henderson is a former front-page editor and foreign correspondent for the Wall
Street Journal who regularly speaks about the coming of the Cyber Age to audiences
throughout the world, from the Harvard Business School to the London School of Economics.
He is a graduate of the University of Pennsylvania's Wharton business school and a member
of it's Alumni Board of Directors. This article is taken from his soon to be published
book, He Who Rides the Wild Elephant: Mastering the On-Rushing Cyber Age.
E-mail Chauthor@aol.com.
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