About Moore’s Law, Metcalfe’s Law and the IoT
Here’s why the IoT needs to shift from technology driven to value driven
In 1965, Intel co-founder Gordon Moore predicted that transistor density (and thus the performance) of microprocessors would double every 2 years. Take for example today’s iPhone 6, which is 3.5 times faster than the iPhone 1, while its price is 30% less than the first generation 7 years ago.
Note: “doubling every 2 years” suggests a parabola-shaped curve, but Moore’s growth function is almost always represented in a straight line ― complemented by a logarithmic scale on the Y-axis.
Although recent articles (such as the one in Nature) and chip-maker announcements (like the one by Intel) are suggesting that the evolution of silicon technology may be reaching its physical limit, Moore’s prediction has been driving Information and Communications Technology (ICT) evolution for the past 5 decades.
Several years after Moore’s famous observation, another technology pioneer, 3Com co-founder Bob Metcalfe, stated that the value of a network grows with the square of the number of network nodes (or devices, or applications, or users, …), while the costs follow a more or less linear function. Take for example a wireless network: if you have only 2 mobile devices, they’re only able to communicate with each other. However, if you have billions of connected devices and applications, opportunities rise dramatically.
So, Metcalfe’s Law is really about network growth, value creation, and customer acquisition rather than about technological innovation.
The combination of Moore’s and Metcalfe’s principles explains the evolution of communication networks and services, as well as the rise of the Internet of Things. The current IoT growth is enabled by hardware miniaturization, decreasing sensor costs, and ubiquitous wireless access capabilities that are empowering an explosive number of smart devices and applications (with a predicted CAGR of over >50% for the next 5 years.)
Unfortunately, general availability of state-of-the-art technology is not always a recipe for success. Some of the designated IoT “killer” devices and apps, mainly in the consumer domain with smart watches and connected thermostats as notorious examples, are still struggling for broad user adoption.
To explain their rather slow take-up, we have to take a look at the technology adoption lifecycle, and more specifically at the “chasm theory” that was developed by another Moore. In his book “Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers,” management consultant Geoffrey A. Moore writes about the gap that product marketers have to bridge for the take up of new technology by early enthusiasts and mass market adoption.
y combining the three preceding charts and admittedly visually cheating with axes, scales, and representations, I have come to the observation that the chasm is actually the point where the shift from a technology driven model to a value and customer experience driven business needs to take place. If this doesn’t happen, any new product or technology introduction is doomed to fail.
That’s still a serious challenge for many “connected things,” isn’t it?
Read more about Nokia’s vision for the IoT and how we help network operators and enterprises develop new revenue streams.
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