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Pick the winners, dump the losers: your guide to making better business, investment, and career decisions.How to see through technology hype!
A complete guide for investors, businesses, consumers, and other stakeholders.
Technology hype is annoying, at best. Technology Lost helps you do something about it. It's your complete guide to separating the hype from realityso you can make smarter decisions about what to buy, what to deploy, what to invest in, and when. Leading tech journalist and analyst Ron Schneiderman helps you answer the questions that matter most: Which technologies will really meet their promise? What are the tell-tale signs that a new technology's in trouble? Why do many technologies take so long to reach the market? And above all: Will consumers really pay for all this stuff?
You can no longer afford to accept technology hype on faith ... yet some technologies really do offer immense opportunities for profit. Technology Lost helps you pick the winners-and leave the losers for someone else!
Click here for a sample chapter for this book: 0130422037.pdf
Introduction: Riding the Hype Cycle.
1. You Can't Always Blame the Technology.
Technical Standards. Bureaucracy. Convergence. Interoperability. Regulatory Issues. Legislation. Mergers and Alliances. Investments. The VC Market. Litigation.
The E-Books Story: Not Exactly a Page-Turner. The WAP Flap. Biting into Bluetooth. Calling Big LEO. HDTV-Not a Pretty Picture. Information Appliances (Or Home on the Digital Range). Home Networks and Home Automation. DSL Takes Its Hits. Voice Recognition—So Much Talk. A Cry for Help.
Mobile Commerce Becomes a Tough Sell. Telematics Downshifts. GPS-The Sky's The Limit. The Data Game. Ready for My Closeup. Trade Shows: Walking the Walk. Have I Got an Article for You.
Over-the-Air Cellular Phone Repair. Get Smart (Cards). How Smart Is Artificial Intelligence? Playing (Wireless) Games.
Who Needs It? An Optical Illusion. More (or Less) Online Shopping. The Dot-Com Bomb. The Digital Divide.
Obeying the Law. A Real Learning Experience. Battery-Powered People. 3G and Thee. In This Corner. Improved Internet Access. And Fourth Generation (4G) Wireless? Technology Fatigue. Less Timely Timelines….
This book is about promise. It's also about expectations. It's about how new and emerging technologies and high-tech products and services are heavily promoted, sometimes for years, before making it in the marketplace, and then it may be too early or too late.
It often takes years for technologies to develop and even longer to win mass market acceptance. But the list of those that have not quite caught up with the hype, or "gained traction," as one business editor put it, is growing. "At some point," one high-circulation, high-tech magazine editorialized, "this industry has to deliver on its promises, with real products that do something useful and meaningful."
Hype per se isn't a bad thing, Randall Rothenberg, a contributing editor for Advertising Age, wrote in one of his columns. "But, like prescription medicine, you've got to know when to use it, lest you overdose. Unfortunately, expectations are usually high and delivery is often slow."
Technology is hard. It takes time, but so does the bureaucracy that inevitably surrounds and occasionally smothers new developments. Thirty-six years passed between the time AT&T announced the development of the concept for cellular communications and its introduction as a commercial service. Sixteen years lapsed between the first demonstration of the computer mouse and the time it was actually shipped with a PC.
Technologies continue to be developed and hyped as the "next big thing." We are assured that we need these new things. They will enrich our lives, make us more productive.
Indeed, we can't do without them. In 1975, McGraw-Hill brought in a bunch of IBM people to pitch the editors of Electronics magazine on their new computer terminals. The idea was to link the editors into a network and make it possible for them to actually set type as they were writing their articles. The IBMers were horrified when some of the magazine's editors said they were perfectly happy with typewriters, particularly when they discovered that some of the editors were still using manual typewriters, not IBM Selectrics. Electronics was an obvious starting point; getting all of its editors onboard (most of them had engineering backgrounds), writing their articles on IBM terminals, would lead to everyone else in the building eventually adopting the same technology. McGraw-Hill bought into the technology and became a natural showplace for IBM in the publishing community.
Sensor-laden automobiles rely almost entirely on electronics to operate; at least 40% of the value of today's cars, we're told, is in electronics. Car manufacturers pitch new features and functions with each new model year. What used to be options in automobile are increasingly standard features. They're there, whether you want them or not.
Consultants at the Gartner Group, a market research and technology consultancy, have looked closely at this phenomenon. They call it the hype cycle. The way Gartner sees it, when a new technology, like the Internet, gets pushed into high gear, the hype curve soars upward until it reaches a peak of "inflated expectations." It then begins to sink rapidly into a "trough of disillusionment" as less successful players drop out. It then begins to climb upward again to a new stable plateau as winners begin to emerge and the new technology is adopted by people who understand it and find it useful.
The Hype Cycle, introduced by the Gartner Group, has five phases. The Technology Trigger is a breakthrough, product launch, or other event that generates significant press industry interest. The Peak of Inflated Expectations usually results in unrealistic projections. The Trough of Disillusionment occurs when the technology does not live up to its over-inflated expectations. The Slope of Enlightenment happens when experimentation leads to an understanding of the technology's applicability, and the Plateau of Productivity occurs when the benefits of the technology are demonstrated and accepted. Source: Gartner Research.
Hype isn't among the words in the glossary provided by EmergingtechPR.com, a Web site for PR professionals with high-tech clients, but "buzz" made the list. It's defined as "A slang term that describes the excitement surrounding a company or product, often caused by extensive positive media coverage." The Random House dictionary defines hype as "v. 1. to stimulate, excite, or agitate. 2. to intensify (publicity) by ingenious or questionable methods. n. 3. an ingenious or questionable method used in publicity to intensify the effect." Several magazines that specialize in reporting on technology are so mindful of buzz or hype that they regularly devote editorial space to it. There's Wired magazine's "Hype List," which has taken on the task of "deflating this month's overblown memes." The Industry Standard used to feature a section called "The Buzz Stops Here" and promoted itself as "99.999% HYPE FREE" in its house ads (which didn't help much; the magazine folded in mid-2001).
UPSIDE features a similar column, called "Buzz Cuts." Ziff Davis Smart Business published an appropriately cynical page called the "Hype Detector" with several items per issue, such as, "So how come you don't have interactive TV yet?" Another technology magazine, Darwin, simply calls this section "Buzz," but also offers The Darwin Meter so it can actually rate the hype.
You can get closer to the source of much of the hype by checking PR Watch, a nonprofit quarterly publication that has been tracking public relations activities since 1993. In June 2001, PR Watch launched a free Web site feature called "Spin of the Day." Spin of the Day and PR Watch are published by the Center for Media and Democracy, a nonprofit tax-exempt organization based in Madison, Wisconsin. "The purpose of Spin of the Day (www.prwatch.org/cgi/spin.cgi)," says PR Watch editor Sheldon Rampton, "is to provide in a timely fashion to both journalists and citizens interested in tracking the often-hidden influence that public relations exerts on the news and public opinion."
Hidden influences? The Association of Competitive Technology (ACT) calls itself a national education and advocacy group for the technology industry, representing mostly small- and medium-sized companies. But according to a PR Watch Spin of the Day, it was created and funded by Microsoft to defend itself against U.S. Justice Department charges of antitrust violations. ACT applauded the late June 2001 appeals court ruling reversing the order to break up Microsoft within days of the court's decision. "The court got it right in rejecting the outrageous notion that integration is harmful to consumers and the industry," said ACT President Jonathan Zuck, in a PR Newswire release. "Tight integration among related areas of the IT industry promotes competition by enabling low-cost competitors to go toe-to-toe with a high-priced incumbent. Integration has always been an important part of innovation," Zuck said.
Another high-tech PR "think tank" is the Independent Institute and the National Taxpayers Union which, according to PR Watch, has received substantial funding from Microsoft while espousing its position regarding the antitrust issue. Some of these financial ties were disclosed when Oracle, one of Microsoft's leading competitors, hired a private investigator to literally dig through ACT's trash in search of incriminating documents.
"Everyone is talking about technology," Marty Cooper, the former Motorola R&D vice president who is largely responsible for the design of the first cellular phone, told Technology Review. "What's important is what people do with technology."
It's not always clear why some technologies or products succeed and others do not. It is clear, however, that hype plays an important role in the process. We're not only aware of it; we seem to accept it.
Evidence can be found in three recent headlines"Overloaded by Wireless Hype?" from eBusiness Advisor, "Don't Believe All the Hype" from a PC Magazine feature on the wireless Web, and "Hyperencryption: Much Hype About Little That Is New" from IEEE Spectrum magazine.
Quotes from technology industry publications support this idea as well. For example, in the SuperComm2000 Show Daily, Michael Gallipo, vice president and portfolio manager for Monument Funds Group's Telecommunications Fund, said: "We believe data is the next great future for wireless. The great risk is that the hype outruns the reality." A recent "Our Money Matters" column in the Wall Street Journal stated "Overall, we found some of the most hyped features in `smart' phones to be the least usefulor at least several technological leaps away from being useful. That was especially true of Internet access, a completely unsatisfying experience on the phones we tested."
David Dean, vice president and leader of The Boston Consulting Group's Technology and Communications Practice, writing on AllNetDevices.com, said "There is a big gap between what mobile commerce can do today and what the consumer has been led to expect." In the New York Times, Jeffrey Weitzen, president and CEO of Gateway, asked "Do you really need a gigahertz processor? We're finding people don't need that. The drive for speed is no longer what it once was." And Margot Suydam, writing in commVerge magazine, observed that "With all the hype around Bluetooth, it's no surprise that Palm has announced support for the short-range wireless standard."
Jay Salkini, president and CEO of Tecore, told Wireless Week that "Much hype and speculation surround next-generation networks." Wired magazine's "Hype List" reported that "This wireless local area network technology Bluetooth overcomes infrared's line-of-sight limitations, but Bluetooth's true application, much less its market potential, won't emerge until there's a critical mass of RF-chip PCs, handhelds, and phones. And even then, people looking to move data between gadgets might find it hard to sever their emotional connection to the entrenched wireline option."
In Advertising Age, Mohan Vishwanath, vice president of Yahoo! Everywhere, said, "As far as wireless is concerned, it's the flavor of the year. Right now, there's a lot of hype and sex appeal." And "The Explosion of Digital Markets" section of Arthur Andersen's 2000 study of technology trends stated that "Arthur Andersen's research shows that digital marketplace growth will nearly double between 2000 and 2001. This growth presents enormous opportunities for companies to profiton both the sell-side and buy-sidebut only if they can predict accurately their customer needs and develop solutions to address those needs."
What has really changed, if anything, in recent years? Certainly, we have accepted technology to the point that it has become almost transparent in our lives. We sit on the couch with the remote in hand, ready to change TV channels as rapidly as our mood changes. A cellphone or two-way messaging device has replaced the pager that used to be clipped to our belts. There's a personal digital assistant (PDA) in our shirt pocket where the calculator used to be. We're buying up millions of digital still cameras every year to replace those dowdy old-style film models. Many of us have replaced our more fashionable analog watches with multifunction digital models. We're turning entire rooms of our homes into wall-to-wall entertainment centers.
The role that technology now plays in our lives is evident from the expanded coverage it's getting in the general media and business press. Technology is news, and it is now being treated pretty much the same way the press has covered cars for so many yearswith columns, features, and special advertising sections. The Wall Street Journal calls its weekly column "Personal Technology." The New York Times features a weekly section called "Circuits." Gannett newspapers carry a weekly supplement they call "e." BusinessWeek features a weekly Information Technology column and e-biz section. Fortune and Forbes have developed similar sections.
In fact, Forbes logged the biggest gain in technology coverage the third quarter of 2000, according to Sam Witmore's Media Survey, which analyzes the editorial performance of technology publications, Web sites, and broadcast outlets. Forbes, which specializes in financial and investment news and features, boosted its gadget coverage from 1.45 pages an issue to 5.08 pages an issue over the same period a year earlier. Whitmore says, "Increased coverage in the general business pubs is especially important because the readership they attract is different from that of the computing mags. The circulation of Fortune, Forbes, and BusinessWeek averages more than twice that of InfoWorld and eWeek. But you don't have access to the owner's manual until you buy the product."
It's all news, but it's not always good news, as a number of headlines published during the second half of 2000 can attest:
"Consumers Still Seem Resistant to Some New High-End Electronics"
New York Times
"Mobile Devices Threaten Personal Time, Survey Finds"
"IP Cores 2001Hype or Key to Future?"
"Do Consumers Want Location Services?"
Wireless Data News
"Wireless Data Users Dissatisfied with Service"
"But Does Anybody Really Use This Stuff?"
New York Times
Technology is hard. Design cycles keep getting shorter to get new products and new technologies to market sooner, forcing manufacturers to support overlapping design teams. Product developers constantly work at differentiating their products, only to have them copied in their competitors' next-generation product line. Fearing their engineers don't know what consumers want, some companies have begun to rely on osmosis, setting up design groups in the markets in which their newest products will be sold.
It can be a tough sell, especially if you're slow to deliver. Vision, the slick quarterly magazine published by the Consumer Electronics Association, wrote in its spring 2001 issue that "Technology companies, software providers and broadcasters have dangled the promise of interactive TV (iTV) for more than a decade with few concrete results to show for all the hype." And in the same issue: "The race to harness and manipulate digital audio files on a handheld player, computer and other devices became an overnight success that actually took eight years to accomplish. But its relatively recent success as a consumer electronics product, while spurred on by the Napster phenomenon and the emergence of high speed Internet access and faster and more manageable PC hardware and software, dates back to the 1980s."
"The real problem we face is not slowness in technical innovation," Lawrence Lessig, a professor at Stanford Law School who has written extensively on law and the Internet, told the New York Times. "The real problem is slowness in legal and civil rights innovation in response to the technological change."
Cellular phone service was launched in the United States in 1983 and it still isn't completely spread out across the country. Even where cellphone service is widely available, mostly in urban areas, it doesn't deliver as promised. Calls continue to be dropped. Voice mail messages may not be delivered for 24 hours. Billions of dollars have been spent on creating a mobile satellite communications service that is erratic at bestwhere it is available. Heavily promoted wireless data service using digital cellphones and other wireless devices has been slow to grow, particularly in the United States.
Then there is Bluetooth, one of the most highly hyped personal technologies in recent history. Developed as a short-range (10-meter) cable replacement for linking consumer electronics products, it becomes an "unconscious" network of an almost endless variety of applicationsfrom ordering soft drinks out of vending machines by using a cellphone or PDA to transferring business and personal information between a cellphone in your pocket or briefcase to a laptop computer resting on a seat next to you in an airport lounge.
The vaunted Wireless Application Protocol (WAP), developed in 1997 to bring Internet content and other advanced services to digital cellular phones and other wireless devices, is a different case, but still a good example of what happens when consumers simply refuse to accept technology that doesn't work as advertised. It didn't help when industry pundits wrote articles with headlines ranging from, "Wrong Approach to Portability" to "Where Are the Products?"
Digital subscriber line, or DSL, the high-speed broadband service targeting online homes, continues to have problems. DSL has been heavily touted by regional carriers and Internet service providers as the best and fastest way to connect to the Internet, downloading 10 times faster than dial-up modems, leaving the phone line free for regular calls. But DSL companies misread the market. By the end of 2000, U.S. DSL subscribers barely topped one million, a small fraction of Internet users who apparently were unwilling to pay an additional $30 to $40 for the higher speed offered by DSL. In fairness, a few other factors account for the low numbers. DSL is only available in some areas of the United States. And customers must be within 15,000 feet of a central officenot directly, but as the wire runs. Worse, some DSL providers have simply failed to deliver promised service.
That's the short list of overhyped, where-are-they-now technologies. It gets much longer with the addition of voice recognition, Third-Generation (3G) cellular service, artificial intelligence (or AI), Internet appliances, electronic books, home networks, and high-definition television (HDTV), all of which are discussed at some length in this book.
A few of these technologies have been around for a long time, and some of these are now reinventing themselves, although slowly. Other examples topping the technology hype list are just beginning to emerge but are no less restrained in their ability to gain wide acceptance. The hype and the promise of making life easier and more productive continue to raise our expectations.
It's a promising, but tedious, process. You can have it, but not yet. Not for several months. Maybe longer. (IBM's old trick, and it worked for a long time, was to introduce, with tremendous fanfare, a line of mainframe computers a year before they were actually shipped to stave off any possibility of its customers even thinking about buying another system. As someone once said, "No one ever got fired for buying IBM.") You can get it and find out you don't really need it. Or, you get it and it doesn't work.
The New York Times used "Weak Reception" as the headline over a story about how slowly the wireless Internet was developing in the United States. The smaller subheadline, "U.S. Lagging Behind in Wireless, And That May Be Just As Well," undoubtedly struck a chord with anyone familiar with the technology and the market, which clearly wasn't ready for prime time.
Remember John Sculley? He was the nonengineer marketing wizard who left Pepsi to take over Apple Computer. In 1993, after months of speculation in the technical and business press, he introduced the Apple Newton MessagePad. Newton was a totally new product, and not only for the company. It represented a whole new product category. It was a very nifty-looking handheld computer designed to do a lot of neat new things, especially for a handheld device. Heavily publicized and promoted, sales ramped up quickly, but then dropped just as rapidly with total unit sales reaching about 100,000 (not a good number for a mass-market consumer electronics product) after more than a year on the market.
Reality quickly set in when Newton's reviews pointed out several shortfalls in the device's two most highly touted featuresneither its handwriting recognition nor its communications systems worked as advertised. Andrew Seybold, a long-time and widely quoted industry consultant, told the Wall Street Journal just as Apple was beginning Newton's initial ad campaign that it was "overhyped to begin with. All I'm hearing from is disgruntled users." Even more damaging was the nationally syndicated cartoon strip "Doonesbury," which picked on the device for an entire week, focusing on its erratic performance.
AT&T didn't do much better with its EO Personal Communicator. Even though it was purchased by more than 60 corporations, it was expensive and hard to use. AT&T finally dropped the unit in early 1994, less than a year after an EO, Inc., press release said: "In an industry inundated with hype, hoopla and pie-in-the-sky promises, we are delivering on our commitment to be the first company to bring to market a personal communicator."
A similar device, called Simon, was designed by IBM and introduced by BellSouth Cellular Corp. toward the end of 1993. But it was heavy for a handheld device (18 ounces) and difficult to use; it didn't last long either. Sony introduced a similar product, the Magic Link PIC 1000, in September 1994 to compete directly with Apple's Newton. Motorola followed early in 1995 with the Envoy, a wireless communicator, and another model called Marco, which was based on Newton technology.
Apple tried to hang in, but finally stopped development of the Newton in February 1998. Eventually, designers went back to the drawing board to create a product that consumers actually wanted. The result is today's "smart phone," or PDA.
Portability is a tricky issue, which is probably why there are several magazines whose editorial focus is on helping engineers design better, small, lightweight electronic products. Wireless Internet users want and expect the same functionality and experience with their cellular phone and personal electronic organizer that they get from their more powerful, larger-screen desktop PC. They don't have it, and it's not clear that they will ever get it. Telecommunications companies are spending hundreds of millions, and in some cases billions, of dollars for new equipment and spectrum licenses in the race to develop next-generation cellular networks offering global, high-speed, Internet and data-centric services. But no one knows for sure how these services will be used, let alone how many consumers are interested in accessing the Internet anywhere, anytime from a handheld device. In fact, only 5% of the respondents to a study conducted by Allied Business Intelligence think the cellular phone will be a useful Internet access tool.
Ease-of-use continues to plague product developers. As Sony's vice president for marketing for cellular phones once told the author, "It's a phone, and everyone knows how to use a phone. They shouldn't have to come with a 150-page manual." But they do.
Nearly half of the consumers surveyed by Duracell in 1999 said they found cellphones, pagers, laptop computers, and personal digital assistants confusing to operate. Another study by Harris Online indicated that about 60% of the consumers surveyed said they have simply stopped buying the newest high-tech devices because they're too complex. Even today, 25 years after videocassette recorders were introduced, few people know how to program them.
The hype cyclethe mean time between the first exposure to the public of a technology or product and its actual acceptance in mass market termsis getting shorter. So is the life cycle of most portable products, which have come to be treated almost as fashion items. TV sets, on the other hand, last for years. Vendors, meanwhile, continue to push high-tech products and services with features of little or limited value to consumers because ofand here's the ironyadvances in the technology itself. Will they continue to buy into these advances?
"Technology's changing, consumers aren't," Nicholas G. Carr, the executive editor of The Harvard Business Review, wrote in one of his columns. And that's not likely to change.