Quote dump for "megamistakes"

post by VipulNaik · 2014-04-12T04:53:56.731Z · LW · GW · Legacy · 0 comments

Contents

  #1: Quote dumps related to bad timing
  #2: Computing: the gaping-hole exception to the rule?
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This post contains a dump of the less important quotes from Megamistakes that I omitted from the main post in order to keep it short.

#1: Quote dumps related to bad timing

On the fax machine, quote from p. 57 of the book:

Originally, the facsimile machine, or sending mail by phone, was targeted toward business customers. Although a bright future was predicted for those devices, it took nearly twenty years for the product to exhibit rapid growth. Twenty years ago, in 1968, Xerox and Magnavox were joined by Litton, Stewart-Warner, and a host of other entrants in an attempt to garner the lion's share of this growth market. They all believed it was "on the verge of a boom akin to that of the office copier." One executive predicted that the sales would climb to 500,000 units in just a few years, even though only 4,000 were currently in use for business corespondence.

The innovation failed to catch fire. It was too expensive and took too long to send a single document — ten 8 1/2-by-11-inch sheets in an entire day! No wonder companies called the courier.

By 1987 the situation had changed. Prices had been reduce dramatically, and performance had increased. Driven by consumer and small business purchases, sales skyrocketed to nearly 300,000 units in 1987. After twenty years, the balance between price and performance finally stirred a growth market for this innovation and warranted the optimism that had originally been applied to it. In the case of facsimile machines, change came much more slowly than expected.

The book later notes (p. 118):

Facsimile machines lingered for decades until technological advances enhanced the benefits and allowed price declines to spawn a larger market. Only now, after many false starts, has the market for facsimile machines exploded. The balance between price and performance has been struck. The machines send documents faster and cheaper, and are now a "hot" product.

Here are some of the technologies that Schnaars notes as failed predictions, but that have since emerged in a form approximately similar to what was predicted:

#2: Computing: the gaping-hole exception to the rule?

Full quote (pp. 123-124) (emphasis mine):

Most growth market forecasts, especially those for technological products, are grossly optimistic. The only industry where such dazzling predictions have consistently come to friution is computers. The technological advances in this industry and the expansion of the market have been nothing short of phenomenal. The computer industry is one of those rare instances, where optimism in forecasting seems to have paid off. Even some of the most boastful predictions have come true. In other industries, such optimistic forecasts would have led to horrendous errors. In computers they came to pass.

Integrated circuits were widely expected to create wondrous products and stunning growth markets. Over the past few decades there have been numerous calls for integrated circuits. As early as 1962 many foresaw the potential of these devices. It was widely, and correctly, predicted that integrated circuits would follow the time-honored pattern of increasing sales volume and declining unit costs as the technology was transferred to larger markets. In 1962 John W. Mauchly, one of the innovators of early computer technology, predicted: "By the 1980s businessmen will be carrying personal computers around in their pockets." Given the widespread use of portable and laptop computers, and the fact that at the time (1962) computers had not been widely diffused even to business, his prediction is amazingly accurate. It was not unusual, however. Throughout the 1960s, there were equally glowing forecasts for computer gear.

Similarly, Fortune reported in 1962: "These exquisite artifacts [microprocessors] may later the electronics industry, economically as well as technologically, as dramatically as did the transistor." They did. Unlike other sectors of the economy, technological changes in computers were dramatic, even if they were largely expected to occur.

In 1968, in response to critics who saw the end of growth in the computer industry, Thomas J. Watson of IBM noted that "there doesn't seem to be any real limit to the growth of the computer industry."

Finally, in 1973, Intel's Robert N. Noyce started that "the potential applications [for microcomputers] are almost unlimited."

The most fascinating aspect of those predictions is that in almost any other industry they would have turned out to be far too optimistic. Only in the computer industry did perpetual boasting turn out to be accurate forecasting, until the slowdown of the mid-1980s.

The tremendous successes in the computer industry illustrate an important point about growth market forecasting. Accurate forecasts are less dependent on the rate of change than on the consistency and direction of change. Change has been rampant in computers; but it has moved the industry consistently upward. Technological advances have reduced costs, improved performance, and, as a result, expanded the market. In few other industries have prices declined so rapidly, opening up larger and larger markets, for decades. Consequently, even the most optimistic predictions of market growth have been largely correct. In many slower growth industries, change has been slower but has served to whipsaw firms in the industry rather than push the market forward. In growth market forecasting, rapid change in one direction is preferable to smaller erratic changes.

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