Christopher Herot's Weblog

Have we seen this movie before?

With all the excitement that is building around the forthcoming tablet computers or smartbooks from Apple, Google, Lenovo and others, I was reminded of a chart that Palm co-founder Donna Dubinsky once drew for me to explain why Palm succeeded after the Apple Newton failed:

 

Her theory was that due to the tradeoffs of functionality and size, there were certain form factors that were popular with consumers. Things that fell in between these optimum sizes were doomed to fail. Hence, we will wear a wrist watch and carry a cell phone, but hardly anyone carries a pocket watch. Similarly, devices such as the Apple Newton and numerous tablet computers that have come since were too large to fit in a pocket but not powerful enough to displace the laptop computer.

Some of these categories have shifted over time.  Among recent graduates, wristwatches are less popular now that cell phones can tell time, and laptop computers are selling faster than desktops. The PDA category itself seems to be in danger as most of its functions have been absorbed into the cell phone (and the cell phone has grown to the maximum size that will fit in a pocket).

Meanwhile, netbook computers are a rapidly growing category that have redefined the low end of the laptop market, but they didn't catch on until they could run Windows.

So the challenge that Google, Apple, etc. will face is whether people will carry a device that does not fit in their pocket but also doesn't run all of the applications they could run on their laptop. Apple has shown with the iPhone that it is possible to introduce a new, incompatible platform and Google is on the way to doing the same with Android, but will the range of applications these platforms offer be enough to get people to leave their laptops and netbooks at home? We'll probably see a few billion dollars spent before we get the answer to that question. In the meantime, if we get inexpensive, always-connected wireless access across a broad range of devices we'll be better off no matter how the contest is ultimately decided.

Unspecified Security Risk - fail!

I recently got this message from Vista.

What, exactly, does Microsoft expect you to do about an "unspecified security risk?"

Internet Connectivity and Economic Growth

I recently made reference to a widely quoted World Bank report that claimed that 10 points per 100 in Internet penetration translates into 1.21% GDP growth - more for developing countries. One of my colleagues challenged me to show that this was causation and not correlation. There have been many studies on the effects of investments in transportation, energy, and telecommunications, and the the argument for a parallel effect on broadband deployment seems plausible, but tracking down the source of this statistic proved elusive.  Most of the places that quoted this statistic cited an "unpublished report" by the World Bank, but I tracked down the author, Senior Economist Christine Zhen-Wei Qian and she was kind enough to send me the report.

The paper, Telecommunications and Economic Growth, starts be reviewing the extensive literature on the effects of improvements in various forms of infrastructure on economic growth in the late 20th century, which show a strong positive effect from wireline telecommunications in the 1970s and from mobile communications much later, especially in developing countries.

The analysis looked at the GDP growth in 120 countries between 1980 and 2006, regressing it on measures of initial GDP, ratio of investment to GDP, primary school enrollment and penetration of telecommunication services. The coefficients for telecommunications penetration were all positive and significant, suggesting that in developed economies an average of 10 broadband subscribers per 100 people would have resulted in a 0.43 to 1.21 percentage point increase in per capita GDP growth, while in developing countries the improvement would be about a 1.38 percentage point increase for each 10 percent increase in penetration.

Of course the results are ultimately determined by what the public and private sectors do with this opportunity, but the report suggests that the effects of investment in Internet connectivity will be even larger than what was previously observed with telecommunications in general.