Don’t get caught by Moore’s Law

Written on 30 April, 2010 by Jonathan Crossfield
Categories Small Business

Which came first – the customer or the salesman? Sure the answer may be obvious, but it goes to the heart of why some business models continually change in response to evolving consumer behaviour while others insist that what worked in business yesterday should continue to work today and should still hold true tomorrow. An industry that ignores the changing needs, expectations and behaviours of consumers, by enforcing an increasingly irrelevant business model, may find the struggle very hard going.

This constant rapid change in consumer behaviour may be a recent development – but it does have its roots in an observation from forty-five years ago. Moore’s Law, coined by Intel co-founder Gordon E. Moore back in 1965, put forward the suggestion that the amount of transistors that could be fitted onto an integrated circuit was increasing exponentially – doubling approximately every twenty months. Moore’s Law has continued to hold true, applying to processing speed, memory capacity and even pixels in a digital camera. This means smaller, more powerful devices arriving approximately every two years.

A few years ago, a 250MB hard drive was ample for home PC use. Now more and more people are plugging terabyte drives in to store their music, video and other large files, while 250MB is becoming pretty standard in the tiny mobile phone in your pocket! Moore’s Law at work.

This means massive innovations steamrolling through old business models every few years. Who can predict what gadgets will be possible with faster broadband speeds, greater processing power and massive memory storage? This rapid evolution is why many IT businesses are not designing products and services for the world we have today, but are already planning for the technical marvels of tomorrow, assuming that by the time they get to market Moore’s Law would have prepared the ground.

And each of these new innovations changes the consumer, usually in completely unexpected ways. The arrival of the mobile phone dramatically changed how everyone interacts and our expectations of constant connectivity wherever we are. Search engines changed forever the way we find what we want – pretty much the death of the Yellow Pages. Social media has created a massive societal shift in how we communicate, play and build relationships and has even replaced email for many in the younger generation.

So how will things look in another ten years? Or five? Or two? Any business will need to remain extremely agile to stay relevant to a world that keeps turning in time with Moore’s Law.