I’ve heard the saying in the headline attributed to Confucius and legendary former New York Yankee’s manager Casey Stengel. No matter. It rings true.
Weather forecasters are far from perfect in predicting the weather for the next day here in Boston, even with all their data and computer models. Expecting that us social prognosticators can predict winning products, technologies and business models five years down the road has proven as inaccurate as you would expect—probably worse than chance.
I bring this up because among those of us immersed in thinking about the shape of an institution like the media there is a tendency to sometimes believe that we have insights beyond the bare outlines of where the technology is taking us. And we thus are frustrated that the incumbent players, who we know are protecting their turf and who we exhort to think more strategically do not seem to take us seriously. Perhaps there is good reason.
On the one hand it is fairly easy to predict the overall trends and outlines: We can be very certain that information has become digitally stored and processed and will be even more so. We can be comfortable that wireless will become more a mainstream piece of the distribution channels of that information. But it turns dicer to predict what the exact products will look like, which, if any, of multiple wireless technologies will emerge as the “winner” and even less possible to predict the social and cultural outcomes of the inevitable changes. As a result, we really can’t say with even the certainly of a 24 hour weather forecaster who and what will be the winners and losers 10 years—even five years—from today.
Let me give you an example of how hard predicting technology winners can be—and the stakes involved. In the early 1980s a well regarded market research firm called Predicasts (now buried deep within Gale Thomson ) issued a report on the market for home video five years out. It looked at the market for the still new videocassette recorders and the even more nascent video disc player market. The latter, if you are too young to recall, consisted of a model just hitting the market from RCA (remember that consumer electronics juggernaut?) that used a stylus on a platter that looked like a 33 rpm record as well as a new optical laser version from Phillips that also used a 12” disc that held one hour of video.
Predicasts had a graph that I’ve approximately recreated below that showed the total number of video players they predicted would be sold annually by 1987 (I believe my original notes are buried in a folder deep inside a storage locker). With the accuracy of hindsight, Predicast’s forecast of the number of home video devices that would be sold about five years out was pretty close to the actual—in the 800,000 plus range. But what a disaster was their breakdown of the market: They expected VCRs to quickly peak while the video disc format, which was barely on the market when they made their prediction, was hailed to be the winning technology.
From an academic perspective one might say “So what?” They got the general outlines right. But making actual business and investment decisions based on their miscalculation could have been very expensive for manufacturers of the hardware, the tapes, investors, Hollywood studios, retailers or even some consumers.
If one took a very long perspective one could say that the Predicast’s analysis was sound: optical disks, in the form of much smaller, high capacity and far less expensive DVDs in the middle of this decade have supplanted VCRs as the pre-eminent home video device—for the time being. But Predicasts was more than 15 years off in their timing.
We could pursue a similar analysis about videotext. Knight Ridder and Times Mirror Co. both newspaper publishers, invested in early on line information services that were very much a forerunner of what the Internet has wrought in terms of types of content and services: news, sports, email, electronic banking, shopping. But those services were expensive nonstarters. The technology (2400 baud modems, pricey set-top boxes as adjuncts to a TV screen display) wasn’t ready, the architecture was costly (circuit switched dial-up) and the business model wrong (user subscription proprietary closed systems ). Expensive when predications are off by about 20 years.
More recently the telephone companies—more specifically the cell phone providers—made an expensive and huge bet on 3G—the third generation cell phone spectrum capable of digital broadband transmission. They believed in the prediction of the future of wireless and bet billions to obtain the bandwidth. But they didn’t account for other wireless technologies like 80211.x—Wi-Fi. Now there’s Wi-MAX. Other pieces of spectrum, such as 700 MHz that will become available when broadcasters return UHF spectrum to the FCC in three or four years, may be used. So while wireless is in our future, it would be difficult if not foolhardy to predict who might be the winners and losers a decade hence.
One criterion I hope we have gleaned from the plight of the many technological innovations that have come and gone is that those that rely on expensive infrastructure and/or governmental regulation (or deregulation) are much slower to happen—if at all—than the existence of the technology itself would suggest. Wi-Fi, which relies on unregulated spectrum, snuck in under the tent while the big telco providers and other players waited, sued, appealed and waited some more for various regulations, auctions and court decisions, and then required an investment of many billions of dollars. The Internet bloomed where videotext system languished in part because it did not require much in the way of new investment or expensive equipment at start-up. It used the existing switched telephone infrastructure and the PC’s that were already widespread on home and office desktops.
I know—and you know—that the shape of the media is changing. We know that many pieces of the future are going to get smaller, faster, cheaper or better. We know that current media players need to adjust or wither. But we can’t very well predict the timing (ask Knight Ridder) of which technologies will be part of the mix at any time beyond a few years, other than in broad strokes.
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