The Radial Tire Lesson for Silicon Valley
Smartphones and computers last longer than ever. Can their makers adapt?
In the 1980s and ’90s, technology was changing so fast that a new
computer was almost disposable. You upgraded every few years. But as
innovation slowed, they lasted longer, which meant fewer people buying
computers.
Bill Gates
was worried about this all the way back in 1991. “When radial
tires were invented,” he said in an interview, “people didn’t start
driving their cars a lot more, and so that means the need for production
capacity went way down, and things got all messed up. The tire industry
is still messed up.”
During the dot-com boom, Mr. Gates invoked
the analogy again. “Every time I read about optic fibers or wireless, I
say to myself, ‘Wow, that sounds like radial tires,’ ” he said. “When
they got radial tires did people drive four times as much just because
the tires lasted longer? No, the industry shrank.”
That fear has
come true. When was the last time you upgraded your PC? Exactly. They
run and run. Sales of personal computers peaked in 2011 at 365 million.
Five years later, only 260 million shipped, down almost 30%. Tech
companies continue to post relentless performance increases and cost
improvements, except they show up elsewhere—in cloud computing,
artificial intelligence and speech recognition.
It’s true that
tablet computers caused some of the PC’s decline, but they’ve peaked,
too.
Steve Jobs
introduced the iPad in 2010. Sixty-eight million were sold in
2014. Last year Apple moved barely 45 million, down a third. The company
is on pace to sell even fewer this year. These tablets don’t wear out,
and the new ones don’t have enough additional features or applications
to entice users to upgrade. It’s a radial tire.
(WSJ.com)
