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This chapter is from the book

DIGITIZING AMERICA THE SMALL WAY

Americans have personalized, and made portable, great amounts of information that they carry around with them. The most obvious case is the laptop, which has become almost ubiquitous among business executives, students, consultants, engineers, and information processing workers. Those machines have more horsepower and memory than the big boxy systems of the 1940s and early 1950s. Their capacities grow each year by roughly 40 percent or more, making it possible either to carry more data around in a bag or to perform more complex applications than ever before. With the advent of speech recognition at the end of the 1990s, the demand for more capacity on these little machines simply skyrocketed. Satisfying that demand became easier when, beginning in 1998, IBM, Intel, and others began a round of new technical introductions that made it possible to carry ever-increasing amounts of data. These introductions ranged from really small disk drives from IBM that, in theory, could put a PC on your watch in a few years, to more powerful Intel microprocessors, such as the Pentium III.

But the story of the laptop is simply a direct extension of what people had done with terminals connected to large mainframes since the 1960s and 1970s, and with the applications that were brought over to personal computers in the 1980s and 1990s. New applications were also put on these machines, but so far it remains essentially a story about making existing types of uses more portable.

The real news now lies in a whole class of devices that rely on information technology for very specific uses. Increasingly in technical circles, these are being called information appliances and their uses pervasive computing. They are gizmos that have embedded in them things like computer chips and panels on which information is displayed. Some are passive and tell you whatever they are generating in the way of information, while others are interactive and present results of instructions you have given them. The concept is an old one. An example of the first is a digital alarm clock, of the second a handheld calculator. Examples of new ones are, for the first, ovens reporting the temperature of cooked food, of the second, digital language translators. What is important to realize about these new devices is the fact that Americans are buying and using them in quantity. They work, they are inexpensive, and are useful in adding information that Americans find useful. Most important for our story, they represent a very large part of the future of computing, because over the next generation we will see computing power embedded in a vast number of existing and new devices that will make them interactive, intelligent, and functionally more diverse. Many are already designed to link to the Internet to receive and transmit information. For that reason, understanding America's love affair with such devices is an important story to tell.

Because of their variety, we can illustrate this pattern of affection and use by looking briefly at several case studies of devices widely familiar today: handheld calculators, digital watches, pagers, and personal digital assistants (PDAs). It is almost easy to ignore these little devices because so many Americans have them; indeed many have old ones in bottom desk drawers that died due to their owners not replacing batteries! There are many others in wide circulation, such as fax machines, digital cameras, and programmable breadmakers. But looking at the first four mentioned demonstrates the pattern of adoption and use in the United States.

Handheld calculators came onto the American market in the early 1970s. Texas Instruments—one of the two firms that first patented the integrated circuit—produced the most popular and least expensive hand calculators of the decade. Their devices did simple mathematical calculations (adding, subtracting, multiplying, and dividing). Later they acquired the ability to store information and to perform higher mathematical functions. These were the devices that first came into the hands of business professionals for as little as $45 each. In the early 1970s, Hewlett-Packard—an American firm with a long history of working with advanced electronics—produced devices more suitable for their customers—scientists and engineers—that could perform a large variety of engineering and mathematical calculations. To put these in perspective, they cost up to $700 each, when TI was selling simple-function devices for $45. Both product lines were American in origin and did extraordinarily well. Over the next 20 years, TI broadened its product line to include models that did engineering, scientific, and other advanced calculations (even programming), while H-P came out with devices that did simple math functions. Other vendors from all over the world entered the marketplace, particularly East Asian consumer electronics manufacturers. Over time, the cost of these devices shrank dramatically and their size diminished, while their capacity to do more complex work and store information rose.

We went from a situation where only scientists, engineers, accountants, and salesmen of large capital goods used these devices in the early to mid-1970s, to the point by the early 1990s where schools were allowing children to rely on the same tools to do math homework. Teachers, school boards, and parents debated and argued about the value of using such tools in class. Many feared children would stop learning the basics of mathematics, but eventually the critics succumbed. The Luddites lost, kids use calculators today, just like they increasingly rely on personal computers to do research on the Internet. Calculators are now ubiquitous in most age groups, from middle school students to senior citizens.

They almost instantly became the things to have. The first wave of small calculators were the size of a paperback book, used integrated circuits, and arrived on the American market in 1970. But they were still very expensive—over $400 each and thus toys for the rich—but for the Christmas season in 1971, Bowmar Brain offered a device for less than $250, magically crossing what marketing experts call a "price point" where the number of Americans who could afford the product rose sharply. By the end of 1975, one could buy a hand-held calculator for less than $50; today for less than $10. They had moved from being the toy of the rich, to a practical device, to a stocking stuffer, and all within less than two decades.

However, Paul Ceruzzi, a historian of computing at the Smithsonian Institution, has reminded us not to forget the programmable version of these machines because they were "ingenious pieces of engineering." The HP-65, introduced in 1974 for sale at what now would seem an outrageous price of $795, represented an enormous increase in portable functionality that appealed to technical workers such as engineers and software programmers. Within this little device, which could fit in a shirt pocket, you could compute logarithms and trigonometric functions; these are the same calculations a high school student could perform on their $49.95 engineering calculator in the mid-1990s. Calculators were the first American mass-consumer products to include logic chips. The huge demand for these gizmos made it possible for manufacturers to recapture R&D and manufacturing costs, learn how to mass produce such devices, and thus drive down the cost for consumers in response to intense competition. So the productivity bumps that users experienced, suppliers also shared. Ceruzzi uncovered a second, just as important, effect on users, particularly with the programmable models: they "unleashed the force of personal creativity and energy of masses of individuals. This force had already created the hacker culture at MIT and Stanford."26 For at least that community, the programmable calculator introduced the concept of portable computing, independent of the rules imposed by a university or corporate data center. The personal computer came within a few years afterward and again the hacker community enthusiastically embraced the new technology on both coasts of the United States.

Digital watches originated in the United States for the same reasons as hand-held calculators. To make a watch digital required a profound knowledge of integrated circuits and how to manufacture chip-based devices. That knowledge remained an almost American exclusive during the first decade of its existence, despite the fact that a few European and Japanese firms had licensed or developed some chip technology on their own. But American consumers were not terribly interested in this special body of knowledge housed in such firms as Texas Instruments, H-P, or Fairchild.

First, let's review the basics. A digital watch or clock is a device that displays time as numbers on a screen, unlike our analog watches that simply show an arm pointed more or less at a number to roughly indicate the time. A digital watch tells you it is exactly 11:01 AM, and some even the seconds as they go by. They are an information processing machine because they give us data. Almost everyone today has a watch of some sort, with digital watches more popular than the old analog ones. It is a mature technology, despite the fact that it has a computer chip running it, and is subject to the marketing and buying whims of Americans. They are sold as jewelry, as a tool essential for daily activity, and as items of fashion. They can cost thousands of dollars, or as little as $10. Both will be accurate to within 10–20 parts per million, which is an elegant way of saying to within one or two seconds a day. The most expensive watches are mechanical, the least expensive are digital. In time, Americans could buy digital watches that had additional functions, such as alarms to remind them of appointments, keep track of calendars, even telephone numbers. Now we are on the verge of having personal computers on our wrists, and the first of these devices are just appearing in the United States, which is also the initial market for these new computational products.

The first digital watches were a gamble; firms bringing them to market had no clue if they would sell. Even worse, as TI would quickly learn, it did not know how to make profits from these because with rapid introductions of new devices by competitors, prices often fell faster than manufacturers could react. This problem had many of the same characteristics that had plagued the calculator business, only more intense. The first watches were developed and sold by manufacturers of semiconductors; eventually manufacturing spread to many other types of producers around the world. Initially, the vast majority of electronic watches were invented and sold in the United States, nearly 250,000 of them in 1973 alone. In that year such a watch would have cost roughly $250. Two years later, production climbed to 3 million watches per year, each selling for about $150. The next year, TI and National Semiconductor offered watches to the American public for $20 each, $10 the following year.27 This extraordinary drop in costs, along with very high reliability, almost knocked out the Swiss watch industry, radically changed the market for watches, and altered how Americans treated their time pieces.

Walk into a watch repair shop today and look around. Half the clocks for sale are digital, the other half analog, most are decorative pieces for use in offices and homes. Now look at the watches in the glass cabinets. On a rack similar to the type used to sell postcards are quintessential American manufacturers like Timex, offering really outstanding watches for between $10 and $75. To repair a digital watch is almost not worth it, you throw it away and buy a new one. Ask the watch repairperson what they work on and they will tell you predigital watches from family heirlooms to collector pieces. In the 1980s the digital watch went global. In that decade, even elementary school children had watches; their parents normally did not get their first time pieces until they were in high school and even then, often only as a graduation present and usually only in middle or upper class families.

Pagers, like cellular phones, crept up on the observer of the American digital landscape. They both appeared on the market at about the same time, each in their own way helped people on the go to "stay in touch," mostly with their offices (early 1990s) and now with family members and friends as well. A pager is a device that broadcasts and receives radio signals, using a computer chip to handle telecommunications traffic. They are smaller than a pack of cigarettes, and often are clipped to one's belt. The first ones, which appeared in the mid- to late 1970s, simply let out a noise to let the owner know to call their paging service for a message. By the mid-1990s, they also could transmit information that appeared on a one- or two-line display screen. As the telecommunications infrastructure matured over the last two decades, along with the increased supply of radio channels provided by the U.S. Government, the amount of data that could be transmitted increased. Doctors, police, firemen, and other emergency personnel were early users. Executives, consultants, and managers became a second wave of users by the late 1980s, and today it is not uncommon to see children, homemakers, and retirees with them. Like the digital watch, they dropped in cost over time, increased in function, and became more reliable. Unlike the watch, however, they also required a paging service that could take messages for someone and then relay them to the pager. By the late 1990s, even that function had been automated with computer-based message switching systems and phonemail software.

The new device became very popular, especially in the 1990s. In the United States alone, in 1994 over 19 million Americans had one, and used over 2,000 paging services. Of the 19 million, about 9 million were mobile workers. 28 In those same years, sales of paging services expanded across the entire industrialized world. Just to give a sense of size, in 1995 the paging business reached $9 billion, the lion's share of which went to monthly service fees, not to the inexpensive little devices. Growth rates in the use of pagers all through the second half of the 1990s exceeded 15 percent each year, moving from annual U.S. revenues of some $3 billion in 1993 to more than double that figure by the end of the decade. Americans clearly like to "stay in touch." In short, pagers reflected the same pattern of diffusion into the American economy that cellular phones enjoyed in the second half of the 1990s.

But staying in touch meant acquiring ever-increasing amounts of data. The original "beep" to let one know that they had a message in time became a low-cost device for transmitting textual messages, like "call me at 744-5357." As the number of users increased, it became more cost-effective to exploit simultaneous innovations in computing technology to provide the additional function. In turn, these developments generated more demand to replace older devices with new ones. Today, one can get stock quotes sent routinely to a pager, along with short textual messages such as news headlines and notices that there are voice and e-mail messages waiting for you. By the mid-1990s, the cost of the paging services had also hit a magical price point—between $20 and $50 a month—making it very affordable for many Americans, about the cost of the regular monthly phone bill they had been used to paying for decades. Along with other telecommunications improvements, American manufacturers on the one hand, and users on the other, began to learn how to use such portable technology to access and transmit ever-increasing amounts of data no matter where they were. Pagers are now beginning to merge with computers, as their integrated circuits and memory systems become physically smaller and richer in function, and at costs equal to or less than what Americans are spending on existing technologies. What all this suggests is that the humble little pager may become the vehicle that brings us Dick Tracy capabilities in what economists like to refer to as the "convergence of technologies."

Finally, we have the case of the personal digital assistant, better known as a PDA. This is the latest of the low-end computing devices that allow people to carry a great deal of information, perform some of the functions that they do on a personal computer, and which bring people very close to personalized computing in their pockets. It is also an example of a technology that is converging rapidly with hand-held calculator functions, capabilities of the PC, and the pager.

A PDA is a hand-held computer that today is used to organize and carry information (e.g., telephone lists, appointment calendars), and serve as electronic books and notebooks. Also called palmtops because they fit in the palm of one's hand, they have little screens, often a small keypad like a hand-held calculator, and pen-based data entry to scribble notes. They also have wireless cellular phonelike transmission capabilities. People increasingly use them to access the Internet while "on the road." The simple ones are pagers with a great deal of function, the most advanced models are like miniature PCs. Americans use these devices in many industries and jobs, from trucking and consulting industries to fire protection and police work. These gizmos first appeared in the early 1990s and by the end of the decade began acquiring communications capabilities, allowing them to link home offices to the Internet. They can weigh as little as a handful of credit cards to more than a pound, be as small as a credit card or as big as an old-fashioned TI hand-held calculator of the 1970s. We are also on the verge of having voice-activated PDAs. Early providers were American firms with deep experience in computing and its base technologies: Apple and Motorola. Today there are dozens of providers all over the world. It is a device that has quietly jumped out of almost nowhere. In 1994, the year these gadgets really made their first big splash, 815,000 were shipped into the U.S. economy. Shipments jumped to over 1.1 million in 1995. Annual sales quadrupled by the end of the decade.29

Consumer behavior fit a now-all-too-familiar pattern. The first devices were bulky, expensive, and had little function. Over time, as they dropped in cost and their electronics miniaturized and function improved, demand increased. Corporate employees were typical initial users, but in time these were bought by other groups of consumers. Technologies converged so that the border between what a PDA is and a small laptop does blurred. These were high tech toys in the early to mid-1990s; now you can buy them at Best Buy and at Wal-Mart. Leading vendors included Casio, Tandy, Sharp, Motorola, and Apple. There were dozens of suppliers. The granddaddy of the early devices was Apple's Newton, introduced in 1992. 30

Reach into the pouch of the seat in front of you on most airplanes in the United States and you will inevitably find, in addition to the airline's magazine, a catalog for a wide variety of items. These can be purchased through the airline by using the GTE phone bolted onto the back of the same seat in front of each passenger. Delivery is promised for the next day at one's office or home. The catalog has a variety of clothes, golfing paraphernalia, and so forth, but also an enormous collection of digitally based computational devices. They sell well, and it seems that about every six months these catalogs have even more devices than before. These information appliances represent the next wave of gizmos being bought by Americans. Table 4.1 lists some items taken from an American Airlines catalog in 1999. What is remarkable is the variety of these digital devices being sold to a mass market. Every device listed has at least one computer chip in it and each is advertised to do only one or few things. Each is sold as being small, light, or compact, and is being bought under the same selling conditions as shirts, alarm clocks, decorated mailboxes, and bathrobes. So America's appetite for information appliances continuous unabated and widespread (at least with adults who use air travel).

Let's summarize the emerging trends for small devices. First, as Table 4.1 suggests, manufacturers are finding an extraordinary variety of uses for computer chips, ranging from digitizing existing devices (e.g., clocks) to inventing new uses (e.g., onboard automotive GPS tools). Second, these are now beginning to link to the Internet to receive instructions and information and later, probably to report results of actions taken (e.g., temperature changes in a house). Third, new functions are being merged (e.g., e-mail and cell phones and pagers). We saw the third trend displayed in the 1980s with another digitally driven set of tools: copiers, which could also serve as printers and fax machines. Go to any large consumer electronics show and ask the exhibitors what they have on the drawing board and you walk away convinced that we are extending computing power all over our homes and work places, and linking them to the Internet is just getting started. Many of these devices are being developed outside of the United States, primarily in East Asia and more specifically in Japan. In the 1980s and 1990s, the Japanese won mastery of the global consumer electronics business, along with all its insights (including how to apply digital technology to little devices profitably). We are now seeing the results of that success in the form of massive imports into the United States and Western Europe of Japanese high-tech products. This development did not slow down American purchases of these devices, beginning with television sets and stereo equipment in the late 1970s and all through the last quarter of the 20th century. There appears to be no letup with the new consumer information appliances.

Table 4.1 CONTEMPORARY "HIGH-TECH" CONSUMER PRODUCTS, CIRCA 1999*

Skagen sport watch

Mini FM scan radio

Radio-controlled weather

Thermometer cuff links   forecaster

Home weather station

Talking calendar clock

Personal audio system

Phone-Fun special effects machine

Star Trek digital recording

Sony Z5-D7 personal audio system  communicator

Tech-7 Ultrascopic video

AM/FM/SW radio  camera system

Six-language translator

Accu-Thumper foot massager

Jeep TV boom box

Video transfer system

Sony PMC-D305 micro

Alpha-7 pocket camera  component sound system

Meeting timer

Zeit-Arcon atomic desk clock

Business card file

Micro recorder

Voice announce caller-ID

Telephone information recorder

Electronic vehicle compass

Map Mate

Phone manager outbound call

Pocket TV


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