Forget Moore's law, but not because it's merely a commitment by the semiconductor industry to drive silicon gate technology forward 67 percent a year.
Forget Moore's law, but not because it isn't true. On the contrary, Moore's law may be the truest "truth" about human events over the last half- century. In fact, while our understanding of the cosmos, particle physics, and brain chemistry gets revised almost by the month, Moore's law--so fragile, so on the razor's edge of knowledge, so at the mercy of human weakness--clicks on with the precision of an atomic clock. Indeed, there are days when Moore's law seems the only thing we can still believe in.
Forget Moore's law because it is unhealthy. Because it has become our obsession. Because high tech has become fixated on it at the expense of everything else--especially business strategy. It is precisely this fixation, at the cost of other considerations like profit, product, and market, that led to the dot-com bubble and bust.
Forget Moore's law because there are more important things to worry about--like restoring the lost vitality of the electronics industry. The only people who ought to be obsessing about Moore's law are the folks working in the semiconductor industry, and Gordon Moore himself has suggested that even in the chip business his law hasn't always been a helpful fixation. Lately, some disturbing new trends support his case.
But most of all, forget Moore's law because it has become dangerous. It is a runaway train, roaring down a path to disaster, picking up speed at every turn, and we are now going faster than human beings can endure. If we don't figure out how to get off this train soon, we may destroy an industry.
* * * *
An extraordinary announcement was made a couple of months ago, one that may mark a turning point in the high-tech story. It may be the single most important news item in the digital world since the implosions of Cisco Systems and Yahoo almost two years ago.
It was a statement by Eric Schmidt, CEO of Google. His words were both simple and devastating: when asked how the 64-bit Itanium, the new megaprocessor from Intel and Hewlett-Packard, would affect Google, Mr. Schmidt replied that it wouldn't. Google had no intention of buying the superchip. Rather, he said, the company intends to build its future servers with smaller, cheaper processors.
Most who know Google dismissed Mr. Schmidt's words as yet another example of the company's notoriously militant not-invented-here mentality. The company has always assembled its own motherboards. Hell, Google would probably grow its own silicon crystals if it could. Meanwhile, computer-industry analysts saw Mr. Schmidt's remarks as a potential death knell for Sun Microsystems, Cisco, and, ultimately, for PCs as well. If one of the world's largest consumers of routers has decided to step off the express train of ever-larger CPUs, the implications could be devastating.
But few people realized that Mr. Schmidt's announcement was even more far-reaching than that. In essence, what he said was that Google, the hottest young company in technology, had committed the ultimate apostasy: it had declared its independence from Moore's law.
Not completely, of course, because that would be impossible, but a selective independence. Often forgotten is that Moore's law has three variables: price, density, and performance, each of which contributes to the 100 percent improvement the law promises every couple years. But in practice, technology leaders have always stuck with the density track, adding ever more computing power to their products for the same price. Thus, each new generation of Pentiums and Athlons inevitably leads to new generations of PCs, routers, and game machines. Nobody gets excited that 8088 prices have now fallen to, say, 50 cents, making cardboard box cameras 12 cents cheaper--after all, that's 1974 technology.
But Mr. Schmidt's announcement changes all that. "We aren't interested in getting maximum power for a high price," he says. "What we're looking for is maximum functionality and that's a whole different thing." Each of Google's thousands of motherboards (a computer's main circuit board) are designed for the quick switching of components. Even the power supply is held on with Velcro straps: if it burns out, it can be replaced quickly. Recently, when the expensive top-end disk drives used by the motherboards proved inadequate, Google tossed out thousands and replaced them with cheaper, better models.
"It's all about what works," says one Google technician.
* * * *
One person who understands the implications of Mr. Schmidt's announcement sits in the Hobee's restaurant in Sunnyvale, California, stabbing at his tuna salad.
Probably no one over the last decade has been a greater beneficiary--or been more at the mercy--of Moore's law than Marc Andreessen. As the young cofounder of Netscape Communications, he was the Internet's first superstar, the poster boy of the Web's genesis. Netscape's 1995 IPO made Mr. Andreessen rich and set off the dot-com boom.
But then Netscape, the epitome of a Moore's law company, ran into the marketing meat grinder of Microsoft and was left on the slaughterhouse floor. Shortly after that, Netscape was snapped up by that other marketing-over-innovation giant, America Online. Mr. Andreessen put in his time with Case & Company in northern Virginia, but by 1999 was back in the Valley, this time at a new startup called LoudCloud, a Web-based managed services company.
After an initial flurry of attention, LoudCloud disappeared from the public eye, a victim of both less-than-Netscape growth and the dot-com bust. Few even noticed when the company sold its services business to Electronic Data Systems last August and changed its name to Opsware.
But Mr. Andreessen doesn't mind lying low or that the working folks in the booths around him don't recognize him. After the roller coaster of the '90s, he too has stepped off the ride. These days he is moving quietly and thinking small.
Mr. Andreessen's epiphany about Moore's law came at the same time as Mr. Schmidt's. "When I read the Google announcement," he says, "I understood exactly where Mr. Schmidt was going. This is a fundamental, even revolutionary, change in the IT world, and most people don't even realize it yet. It's going to be disastrous for a lot of the big companies out there."
In selling the service side of LoudCloud and stripping down to, in Mr. Andreessen's words, "a software design house building the glue to hold all these thousands of low-cost servers together," Opsware has reconfigured itself for a post-Moore's law world. Its software is designed to automate everything that a server farm with endless racks of disposable CPUs would need, including deployment, scaling, changing, and reallocation of operations.
"The rules of this business are changing fast," Mr. Andreessen says, vehemently poking at his tuna salad. "When we come out of this downturn, high tech is going to look entirely different."
* * * *
A well-known rule about doing business in technology is that nobody ever bet against Moore's law and won. It is a rule proven true a thousand times each year. Over the last 40 years, a score of brave and brilliant, but foolhardy, companies have tried to get ahead of the law: Trilogy Systems and MicroUnity with their superchips and IBM with X-ray lithography. All have failed, often spectacularly, losing billions of dollars in the process.
Less obvious, and less interesting, are the tens of thousands of tech companies that trail the law and finally opt out of the chase altogether. Theirs is the world of weary industrial parks, forgotten trade shows, and unmotivated employees waiting for their stock options to vest. Their fate is the long, slow--and often quite comfortable--slide to inconsequence and oblivion.
But few have pointed out the fate of those companies that choose to live by Moore's law alone. These are the creatures of the booms and bubbles. We saw thousands of them four years ago--all of them are dead now.
After all, what was the dot-com bubble but an army of would-be entrepreneurs who saw a new industry emerging-- e-commerce--and founded companies with the sole strategy of intersecting that industry in 12 to 18 months at the point where Moore's law said it would be. Everything else--products, customers, revenue, and profits--was secondary to hitting that moving target, thus dominating the chosen market niche.
Abetting this single-minded chase were the venture capitalists, themselves fixated on Moore's law because of the simplicity of its arithmetic compared to the messy, unpredictable human side of business. And egging on the whole delusion were the stock markets and their millions of investors, willing to award the most impossible price/earnings ratios to those startups aiming at the most distant point of the law's trajectory.
It was all a delusion, we now know, just so much hocus-pocus made momentarily legitimate by its proximity to the unassailable law. Moore's law did hold for the Internet--it still does--but the market's narrow-minded obsession over it, and thus its ultimate abuse, only served to lead us astray and into disaster and recession.
The dot coms weren't alone. The same thing happened in telecommunications, where a messianic belief in "bandwidth"--the automatism of Moore's law in a different guise--led to one of the most expensive low-return build-outs in business history. And it is about to happen again in biotechnology, where variants of Moore's law are already popping up in such fields as bioinformatics and biochips.
* * * *
There is a once-famous, but now nearly forgotten, statement made in the early '60s by an executive at Texas Instruments. The executive said that when the electronics age was over and all the profits and losses were added up, the bottom line would be red.
The electronics age is nowhere near its end. The Semiconductor Industry Association's Technology Roadmap--yet another product of Mr. Moore's genius--shows few technological obstacles to the pace of change in semiconductors (i.e., Moore's law) until at least 2010. If the past is precedent, only a fool would bet against the chip industry maintaining its pace well into the middle of this century.
Even now, at trade conferences, Advanced Micro Devices, IBM, and Intel calmly discuss the advent of terahertz chips, three-gate transistors, and 90-nanometer design features. Meanwhile, researchers at the University of Wisconsin at Madison have announced single-atom memory storage.
Yet even as the pace of newly announced technological wonders continues unabated, there is a growing sense among many high-tech thinkers that there are too many pieces on the chessboard of Moore's law, that the pace of business and society can no longer keep up with the physics.
The dot-com bubble, in which thousands of new companies, well-versed in Moore's law, saw where they needed to go but failed to make it, taught us an important lesson about the growing disconnect between the pace of change and our ability to cope with it. But the warning has been there for a quarter-century.
After all, corporate IT may moan about its legacy problems, but the electronics industry as a whole has the longest legacy trail of any industry in human history. Few people, even in technology, realize that the original 4- and 8-bit microprocessor architectures of the early '70s are still being built by the billions each year for use in everything from cameras to toys. We may be focusing on Pentium 4s, but its great-great-great-great-great grandfather, the 8008, is, quantitatively speaking, a greater part of our daily lives.
What's more, we haven't even spun out all of the potential applications of the 8080, Z80, or 6502, much less the 80386, DEC Alpha, or the first PowerPC. And that suggests that in its relentless pursuit of the power curve of Moore's law, at the expense of the much less interesting price curve, the entire electronics industry may be unknowingly trapping itself in a giant and attenuated version of the dot-com bubble--living years into the technological future, only to be painfully snapped back to the human and economic present.
That's what haunts Mr. Schmidt, even as he currently leads the hottest company in technology. It is also why he has privately circulated his thoughts on this very subject. After looking at precedents in the electrical and railroad industries in the early 20th century, the commoditization of ever-larger portions of the computer world, the lagging world of applications, the slowing demand for upgrades of existing technologies, the shortage of apparent new "killer apps," and the soaring costs of innovation, Mr. Schmidt soberly concludes: "Info-tech is absolutely indispensable, but not that great a business."
He isn't alone. Industry watcher Donald Luskin noted earlier this year that even Intel is finding itself being slowly crushed by Moore's law. He pointed out that just to keep its revenue level, Intel must convince its customers to double their power every 18 months or to stick with its current offerings and find twice as many customers.
That was a lot simpler five years ago, when the economy was strong, much of the market was still untapped, and wafer fabs, which double in price every four years (jokingly called "Moore's second law"), were a lot cheaper.
"That's why Intel's revenue growth just imploded, even as they ship record volume," said Mr. Luskin. "In this deep recession, Intel just can't keep up with the law named after its founder." Mr. Luskin wasn't talking about ever-more-powerful Pentiums--Intel can do that--but ever-hungrier customers. Even Intel can't manufacture them.
As Mr. Schmidt points out in his notes, with Intel's research and development costs doubling every 18 months (apparently R&D follows Moore's law as well), in another 20 years the company's R&D costs will be $31 trillion annually. Something must give long, long before then.
But give the last word to Mr. Moore himself, who once said, "Obviously, you can't just keep doubling every couple years. After a while the numbers just become absurd. You'd have the semiconductor industry alone bigger than the entire GDP of the world."
* * * *
Even as we emerge from the devastation of this last tech bust, we may well find ourselves facing an even greater and more dangerous challenge. Some of high tech's brightest minds are already looking for answers, but until now they've only begun to ask the right questions: How do we deal with a world in which the old financial models no longer work? What new business model do we put in their place? Is there one that still offers that chance for entrepreneurship and explosive growth that has made high tech the most thrilling of all industries? How do we disprove--or at least postpone--that cruel prediction about the fate of tech made many years ago by that Texas Instruments executive?
We cannot escape the rule of Moore's law, nor should we want to. It has brought us untold blessings, and it will bring us many more in the years to come. But even as we celebrate Mr. Moore's brilliant law, we must also free ourselves of its tyranny. Before it's too late, we somehow must put Moore's law in its place. We must learn to work beyond it, or at least in spite of it.
Somehow, even as we dance to its beat, we must learn to forget it.
Michael S. Malone is a former columnist for the New York Times, former editor of Forbes ASAP magazine and the author of The Microprocessor: A Biography (Springer-Verlag, 1995).