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Chapter: IT Forum
Section 1: Internet & Intranet Technologies
See also: Section 2: Object Oriented Technologies
Author # Title:  Click to visit article
Bill Gates and Michael Dertouzos
1 Excerpts from 'Friction-Free Capitalism and Electronic Bulldozers' in SPAN, March/April 1998; page 53.
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1. Excerpts from 'Friction-Free Capitalism and Electronic Bulldozers', by Bill Gates and Michael Dertouzos, in SPAN March/April 1998; page 53.
Michael Dertouzos::
By the year 2007, there will be half-a-billion to one billion interconnected computers. What will all these computers and the people behind them be doing? They will be doing all three things - buying, selling and freely exchanging information and "information work".

When we think of information, we tend to think of pictures, text or sound. This is information as a "noun". But there is also information as a "verb", or information work, which means data that are massaged and altered. It is done by computer programs like Microsoft Word and others, and it is done by people like accountants and tax clerks.

It turns out that the fraction of the industrial economy that consists of office workers who do information work is huge - about $9 trillion worth of work, or half the economy of the industrialized world. So, much of this new "network economy" will have information work as well as content like text and images flowing over it.

But there will also be free exchanges, things not measured in dollars. For example, I imagine there will one day be a virtual "peace corps" - a gigantic clearinghouse where the providers of help, and those who wish to receive help, can find their place over the World Wide Web. And the direction of help will not always go from wealthy to poor. For example, a Sri Lankan doctor could provide medical advice, through the network society, to a homeless person in San Francisco because it would be more affordable than the medical attention he might obtain locally.

In all these ways, the network movement enabled by the Internet will become fully integrated into our lives. It will be pretty much like breathing air. It will not be a "cyberspace out there" that we relate to; it will be in everything we do. And speech will be the dominant interface. We were born with ears and mouths, after all, not keyboards and mouses. The technology is adapting to that.

Three Forces: There are three fundamental forces shaping this network society:

The first is what I call "electronic bulldozers" - the ability of computers to offload human work from human brain; not creativity or complex things, but simple repetitive work such as processing or annotating. It is time we stopped using our brains for all the simple work and automate that part of human activity ...

The second force is "electronic proximity." This is the exciting part of the Web, which brings distant people closer together. It is amazing how big this force is. when humankind lived in villages, each person could reach another 200 people by walking. When the car came, that number increased by a factor of 1,000 to about 200,000 people who came within our proximity through driving. What is amazing is that this Information Age increases our ability to reach people by another factor of 1,000 to 200 million or more people. Of course, we won't reach them all - but we would be able to reach any one in that circle if we wanted.

This, of course, is both a good and bad thing. Congregations of like people, from seniors to surfers, can be in touch with each other irrespective of how far the are away from each other. Along with the heightened proximity, however, there will also be info crimes, info predators and info-terrorism that comes with the shrinking territory.

A great fear ha also arisen that this greater proximity will impose a universal culture on the world, that the dominant power in the world today will impose its culture on others. I don't think this will happen. This new technology has the very strange capability of simultaneously strengthening ethnicity and diversity.

I am a Greek, and half of all Greeks live outside Greece. Half the Jews are outside Israel. Half the Palestinians ... I could go on. As globalization expands, more people will be outside their countries or the main locales of their ethnic groups. This could lead, fifty years hence, to the very strange situation where the Greek nation is no longer consonant with a land mass, but is really an ethnic network. From nation to network. A frightening thought perhaps, unless we recall that the original meaning of the word ethnos describes a group of common origin regardless of their geographic location.

On the other side, diversity, let us look at what has really happened in the European Union. The bridge of a common language, English, has not obliterated national differences, but formed a thin cultural veneer that permits diverse people to communicate with each other. I expect the same to happen with this new medium. There will be no universal civilization, but a thin veneer of shared culture that is going to enable us to understand each other better because we can be in constant contact.

The third force is the emergence of brokers and middlemen. If, in 10 years time, we have one billion computers, each of them with between one thousand to one million pieces of information, we would have between one trillion and one quadrillion pieces of information.

But what is useful to me is not useful to some other person, and vice-versa. There is a huge amount of info-junk floating around. That is going to make brokers and middlemen necessary to match up the information this person wants with the information that person has.

Haves and Have-Nots: For all of this positive side, I do believe this information movement, left to its own devices, will increase the gap between rich and poor people, and rich and poor nations. Better information helps the rich more efficiently offer and obtain goods and services. This is the "friction-free capitalism" that Bill Gates talks about and it makes the rich richer. The poor can neither afford the technologies, nor can they afford to learn about them. So, they are left behind.

The information productivity gap both accelerates and widens. In the US, 10% of the GNP is devoted to purchases of computer hardware and software. Germany is around 7%. Bangladesh is 0.1%. Where will they find the money to buy the hardware and software, to pay for the education?

In summary, it is clear we are now in the third major socio-economic movement of human economic history. We should fear it no less than we did the agricultural and industrial movements that went before. We are, after all, the same ancient human beings. All that is changing is our set of tools. 

Bill Gates:
It has been said that the personal computer, like the telephone before it, gives people a new and better tool of communication. Actually, calling PCs "tools of communication" does not give an accurate sense of the full impact of the variety of things people will be able to do with them when connected up to the Internet.

It may be more accurate to think in terms of those who live in a "Web lifestyle," and those who do not live in a Web lifestyle. What I mean by a "Web lifestyle" is someone who, several times a day, goes to the Web to check for or send E-mail and to search for any topic on which he or she needs information from airline tickets to the weather to the news. Those with a Web lifestyle take it as a given that they will turn to the Internet to be informed or to collaborate with others. 

Very few people are doing this today. To find large groups that meet the test of a Web lifestyle, you'd have to go to a university campus in the United States where the way to enroll for a course, to get in touch with friends, or just to order a pizza, is through the Web.

As those kids enter the economy as consumers and more and more people share the experience, they will demand that companies use the Web in creative ways, whether for paying bills, selling products or providing information.

The capacity of the Internet has been greatly overestimated for the next two to three years; that everyone will be buying a car or banking on the Net is a hype. If we look ahead over a 10-year period, I think the Internet is greatly underestimated.

A distinction that exists today where people may live in a Web lifestyle in their office well before they do as part of their home life, will disappear with convergence of "bandwidth" [the nearly infinite capacity of the optic fiber and satellite "pipes" to carry information - ed.] What is available for offices today will be available for homes tomorrow.

Some of the key breakthroughs that are necessary have not happened yet. For example, flat panel screens with wonderful resolution are not yet available. But many companies are working on these breakthroughs in both hardware and software - including visual and speech recognition and speech synthesis, which will be primary ways of working with a computer in future. What is needed for this to become a reality is a decent camera and good microphone devices, and enough volume of sales so that the extra cost of these build-ins on the computer will be on the order of $100 or less.

So, when we talk about where he PC is going, it is important to bear in mind the rapid innovation now taking place, particularly with respect to the interface with the Internet. A year ago people said the Internet and the PC didn't really go together. Now, when you buy a new PC, the Internet is only two clicks away. You merely pick the service provider you want ti use and are billed for that. Increasingly, everything you need is built into the computer so you don't have to go out and buy big programs.

People are now worried about the complexity of the PC, which is a very legitimate point whether the the issue is the time factor of reading through thick manuals or the difficulty of upgrading software. I have a very optimistic viewpoint here, partly through inside knowledge of research and development being done now, and partly from an understanding of what software can do.

In the next several years, we will, arrive at the point where a lot will be going on behind the keyboard in terms of interface with the Internet, but what the consumer has to do to utilize that complexity will be very straightforward. You will be able to just think of the document you want, of the topics you are interested in and your experience will be that it can be delivered from the PC.

Compete with Thyself: This is a very competitive business. No product out there today will be popular in three to four years. It is simply a question of whether the companies that make today's products are going to replace their own products, or whether someone else will.

When Intel Chairman Andy Grove looks 10 years out at the kind of chips his company will be making, he sees chips with 100 times the speed they have today. With that kind of capacity, software will become a reasonable assistant in helping you in every way in this information economy.

Friction-Free Capitalism: Above all, perhaps, the PC / Internet interface is going to very dramatically reduce the so-called "frictional costs of capitalism", the problem of matching buyers and sellers of goods and services. The market in consulting, for example, is very poorly mediated today. It is hard to find the right people. Instead of looking at all the possible consultants - their availability, their references and their price - you usually turn to a trusted friend and take his or her advice on whom to hire. Once this market becomes optimally efficient, your ability to collaborate with consultants at a distance will be very dramatic.

All this will bring capitalism to new levels of effectiveness on a global basis and really make the world a far smaller place.

The Gap:  Today, if you wanted to know someone's standard of living and income, and you could ask only one question, that question would be "What country do you live in?" Where you live today is the dominant factor that determines vast differences in wealth and poverty.

Ten years from now that will change. The education level will be a much greater indicator of wealth and poverty than the country where you live.

What does that mean concretely? Most jobs today are service jobs. With the World Wide Web, people from around the world will be able to bid for the best price and best qualifications to do those jobs. Networks will spring up to serve demand wherever it appears. You will be able to get video-conferenced legal advice from anywhere on the planet if you are willing to pay for it, and it fits your local needs.

So, everything will depend on the educational system in a given place. India and China make up much of the developing world and, in fact, both have pretty reasonable education systems. And, as is already evident, the motivation to become well educated in these areas is so dramatic that you may actually see a leapfrog situation over some of the presently advanced countries. And it may not take that long.

Where will the poor countries find resources to buy hardware and software and educate their kids? I guess it shows my faith in capitalism, but I believe middlemen will emerge who will find ways to equip Bangladesh with hardware and bring in software so they can take a 10% fee on the service work that those people will provide to the rest of the world and for themselves.

The power of capitalism to mediate the gap between rich and poor is pretty incredible. Indeed, I think, year by  year, the gap gets less.

There is however, a big role for government in laying down the infrastructure. And that may become both easier and cheaper when satellite systems with very high-speed bandwidth cover every part of the globe, reducing costs dramatically for linking up to worldwide networks.

The big question mark in my mind, I admit, is education. Will governments rise to the challenge? It is well worthwhile for governments and philanthropists to try to accelerate the change, to make sure it happens sooner than later.

Comment # 1: Received from
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