9: Deep Impact: Technology and Disruptive Innovation
A bit of history: "silicon valley" in California got its name far ahead of the emergence of the Internet, or even computers. It got the name back in the 1960's, when a group of companies specializing in consumer electronics (primarily, radios and television sets) sprang up in the same area. So "silicon" referred to transistors, not circuit boards, and it's noted that there was a boom, and a corresponding stock bubble, base on the electronics hype.
(EN: what this has to do with anything is unclear, but it's an interesting bit of trivia nonetheless.)
Moore's Law
"Moore's Law" is the asserting that computing power will double every two years, which was first documented in a 1970 paper by an electrical engineering professor. At that time, technology was primitive, and "doubling" processing speeds in an era where measurements were in bytes and hertz (not gigabytes and megahertz) wasn't all that astounding.
In the present age, Moore's Law has run out of steam - electronics have approached terminal velocity. Partly, this is because of the laws of physics, and we've reached the point where things are about as small and fast as they can possibly be (the speed at which electric current flows is a fixed number). Mostly, it's because things are now as small and fast as they need to be in order to accomplish their intended functions (once a video can be downloaded faster than it can be played, any additional speed is of no value to the practical application).
Engineers are still seeking to boost the processing speed and storage capacity of electronic devices, but it's largely background noise to the consumer in most regards.
Materials Science
Many of the recent innovations in personal electronics have come not from data processing and storage, but from device design, as driven by materials science - enabling a device to be used in different ways. Three specific areas the author intends to explore are touch, flexibility, and battery.
Touch technology is an attempt to give the user greater capabilities in terms of interacting with small devices, breaking away from the keyboard-and-mouse input devices of the personal computer (because a keypad small enough for a mobile device is difficult to use). The author then goes off on a tangent about screen display technology (small, high-resolution, glare resistant, power efficient) and the notion of 3-D display technology, and doesn't return to the potential of touch technology itself.
In terms of flexibility, it's noted that 'electronic paper" was originally developed in 1970 (using electricity to change the content of a membrane, then wipe it and display something else), but the cost was prohibitive. Given the advances in flat-screen monitors and laptops, we may not be far from having a paper-thin, flexible display monitor. This author discusses this in terms of replacing print publications, and enabling the user to carry a larger display screen with them (EN: though it seems to me that a larger screen would not enhance mobile technology - you couldn't use it "on the go" but would need to stop and sit down to unroll a thing display.)
Battery power is currently the critical factor in mobile computing. Given that devices aren't plugged into an external power source, power must be built-in, small enough to be portable, powerful enough to enable the device to be used for a reasonable amount of time between recharging, and making charge cycles faster. There has been considerable advancement in this area (partially thanks to hybrid automobiles), but it still has a long way to go. (EN: also, this is a problem that's not necessarily solved by the battery itself, but by other components - e.g., if the display screen uses half as much power, it's as good as a battery that stores twice as much power.)
Technology Adoption
The author returns to the notion of adoption cycles, presenting a few interesting facts: it took nearly 70 years for the automobile to reach 50 million users, 50 years for the telephone to reach the same audience, 30 years for credit cards, 20 years for the ATM, 10 years for debit cards, 65 years for PayPal accounts, and two years for mobile banking. It's projected that the next wave of technologies will reach "critical mass" in a matter of months.
(EN: the author states this with a sense of awe and wonder - but it's the result of three phenomena: the existing infrastructure, speed of communication, and the affluence of the average citizen. Millions of people learn about the latest iPhone the very day it's announced, and can afford to upgrade right away, and order online. A much different scene from the 1800's - how did people learn of the telephone? How many could afford it? How easy was it to get one installed?)
Implications for Business
At the time the book was published, the financial industry the world over suffered from the greatest economic crisis since the Great Depression, resulted in a wave of governmental and regulatory involvement, and a hemorrhage of consumer confidence in traditional institutions.
For the latter reason more than the former, banks can no longer count upon customer complacency. The recent economic upheaval undermines the sense of confidence and trust in traditional channels - the branch bank no longer offers safety and security - and it's anticipated that customers will be less reluctant to try new channels, and new companies, being that the old channel and company has lost the perception of being a safe harbor.
Given the adoption rate of new technology, it should be clear to detractors that electronic and mobile banking is neither a gimmick nor a fad, but is a viable channel that, for some customers, is the channel of choice. It will not go away, and customers will not be returning to the branch office in droves.
(EN: I'll stop here - the author continues to lay it on very thick, but this has more to do with consumer confidence than the topic of the present chapter: technology. In that regard, the key point is that technology has provided, and will continue to provide, new channels for customers to interact with their bank, and that customers will adopt these channels and expect service to be provided through them.)