Question

Discuss the implications of Moore's law and faster, cheaper computing on a firm's ability to establish a sustainable competitive advantage.

Answer 1

Moore’s law was never a physical law, but a self-fulfilling prophecy—a triumph of central planning by which the technology industry co-ordinated and synchronised its actions. Its demise will make the rate of technological progress less predictable; there are likely to be bumps in the road as new performance-enhancing technologies arrive in fits and starts. But given that most people judge their computing devices on the availability of capabilities and features, rather than processing speed, it may not feel like much of a slowdown to consumers.

For companies, the end of Moore’s law will be disguised by the shift to cloud computing. Already, firms are upgrading PCs less often, and have stopped operating their own e-mail servers. This model depends, however, on fast and reliable connectivity. That will strengthen demand for improvements to broadband infrastructure: those with poor connectivity will be less able to benefit as improvements in computing increasingly happen inside cloud providers’ data centres.

For the technology industry itself, the decline of Moore’s law strengthens the logic for centralised cloud computing, already dominated by a few big firms: Amazon, Google, Microsoft, Alibaba, Baidu and Tencent. They are working hard to improve the performance of their cloud infrastructure. And they are hunting for startups touting new tricks: Google bought Deepmind, the British firm that built AlphaGo, in 2014.

For more than 50 years, the seemingly inexorable shrinking of transistors made computers steadily cheaper and more capable. As Moore’s law fades, progress will be less metronomic. But computers and other devices will continue to become more powerful—just in different and more varied ways.