|Issue:||Asia-Pacific II 2013|
|Topic:||The end of the IT revolution, or the dawn of singularity?|
|Title:||Chairman & CEO|
Joe Chen is the founder, Chairman and CEO of Renren, Inc., the leading real-name Social networking service in China; Mr Chen is a pioneer of the Chinese Internet industry. Before founding Renren, Joe was the co-founder, Chairman and CEO of ChinaRen.com, a first-generation SNS in China. He served as Senior Vice President of Sohu.com after the two companies merged in 2000.
Joe Chen holds a BS in Physics from University of Delaware, a MS in Engineering from Massachusetts Institute of Technology (MIT), and a MBA from Stanford University.
All technological and intellectual revolutions have their killer apps. The next might be the ‘mega-appstore’ with billions of buyers and millions of sellers. Mega-appstores will have anything you can imagine: a game, fresh flowers, virtual goods, ‘real-world goods’ and services. The leading mega-stores will be worth trillions of dollars, and there will only be two or three. What will the next 100 years bring? No one knows; technology will accelerate so rapidly that no one can foresee where it will lead.
As the IT and Internet world evolves into the mobile age, the pace of change is accelerating. I have come to a view the IT revolution, which started about 70 years ago, as either approaching the beginning of an end, or morphing into a different mode of evolution that is beyond our current framework of understanding
The Z3, the first fully automatic computer in modern sense, was invented in 1941. From this humble beginning IT has proliferated and through Internet now transacts and distributes an increasing share of world’s goods and services.
Our push for faster, cheaper and connected mobile computing devices resulted in the maturation, and integration of almost all layers of the computing eco-system. Apple perfected Steve Job’s vision by combining art with technology and optimizing software together with the hardware.
When art and design take centre stage in the technology industry, it may seem that the drive to advance pure technology is waning. Moore’s law may now be relenting as well, with wiring in the latest CPU designs nearing ten nano-meters, just a few atoms’ wide. Where are we in this decades-old revolution? What will the next five years look like? What will the next 100 years look like?
A framework for technology revolutions
Some of best frameworks to understand human phenomena come from nature. Darwin’s theory of evolution explains many aspects of past technology revolutions. Technology has evolved based on the market’s selection of desirable traits (lower price, higher performance, better look & design, etc.). Smart phones are slicker and faster, today, because consumers want it that way and companies work to give them what they want. Earlier technology revolutions revolved around innovative hardware – from stone tools to steam engines and computers; and all are driven human selection based on needs and wants.
A notable exception to the technology revolution paradigm was the Renaissance – it was not a hardware revolution, but an operating system update for the human brain – albeit an aged OS, written by ancient Greeks. It changed the ways we look at and think about things and ultimately accelerated the technology revolutions that followed which radically improved our ability to change the physical world.
The Industrial Revolution helps us to understand the current technology revolution. It spanned about 100 years from 1750 to 1850, with the first half devoted to steam engines and the second to internal combustion engines. Interestingly, 1846 saw the zenith of the ‘railroad mania’ investment boom in England, the home of the industry revolution. The steel work horses of the railroads were the killer apps of the railroad boom.
Killer apps tend to be bigger than the infrastructure itself, or at least commercially more significant. Railroads required massive land use and resources, but they directly answered an important human need – transportation.
The biggest killer apps typically appear towards the end of a technology revolution, when all conditions exist for a perfect storm and an over-invested public leans to harvesting. Using two powerful frameworks from Darwin and Einstein, let’s focus the lens on the killer apps of our age.
The next five years
What is the biggest killer app for IT today? Many would agree it is mobile Internet. I would venture to say that the biggest killer app in the next five years will be what I call the ‘mega-appstores’. An appstore such as Google Play and Apple’ appstore is a powerful market place with billions of buyers and millions of sellers. The most significant impact of a network on its competitors and the eco-system is called network effect. The bigger the network, the more value it creates for each user.
A business based on networks can be extremely powerful. For example, in China, there are three dominant Internet companies: Tencent, Alibaba, and Baidu. They have ruled the Internet space in China for ten years. Now, Baidu is under attack by a small start-up and seems most vulnerable among the big three. Why? Both Tencent and Alibaba have strong networks; but Baidu, which operates search, does not.
An appstore is a network-based marketplace, but with so many online appstores it may not be defensible if it stands alone. Mega-appstores come in stacks: they usually have a payment system underneath, a killer app that attracts and retains consumers, an operating system under the same roof and, perhaps – as in Apple’s case, hardware devices.
All signs point to the emergence of a vertically integrated IT eco-system controlled by a few dominant companies where the power laws of networks are the gravitational force equivalent. Each appstore is a separate centre of gravity, pulling companies and consumers into its eco-system. The future’s mega-appstores will have anything you can imagine, be it a virtual item in a game, a song, or fresh flowers for your mum. Future appstores will sell virtual goods, ‘real-world goods’, and services. Willingly or not, Amazon, Netflix, Groupon and even Wal-Mart will have to join them or fight them. Media companies will increasingly depend on Mega-appstores to distribute their content. The Chinese technology, media and. telecommunications (TMT) sector will also have to participate in this global consolidation in the long run. The leading mega-stores will be huge and worth trillions of dollars.
The prevailing mega-stores will be formed by fanatic manoeuvring of a whole range of players in all stacks of the equation. The anchoring companies will most likely be Google and Apple, and to a certain extent, Facebook and Amazon. As the war intensifies, having a money-printing OS is not enough. You need a network business on top of it and you eventually have to make it free. Microsoft charged directly for Windows, Apple bundles its OS with its hardware, and Google now simply gives Android away for free. The tendency is clear.
How many mega-appstores will be at the end? My answer is – most likely two, maybe three but no more, yet there will never be only one.
The next 100 years
We identified the network effect behind mega appstores as the gravitational force behind consolidation in the TMT sector. What then will be the force driving the next 100 years of technology?
Some scholars believe that technology computing and artificial intelligence (AI) are moving towards a ‘singularity’. Mathematician John von Neumann first proposed the term singularity. The hypothesis postulates that the acceleration of technological advances might lead to the emergence of a non-biological super-intelligence. Although it will let us intellectually and creatively transcend the limits of biology – like the pre-Big Bang singularity or a black hole in physics – we cannot see beyond it, we cannot see where it will lead.
Ray Kurzweil’s book The Singularity Is Near was a New York Times bestseller, and Amazon ranks him number one in both science and philosophy. The man the Wall Street Journal called a “restless genius”, Ray Kurzweil, was named Google’s Director of Engineering at the beginning of this year.
Imagine when you leave for work in the morning, your relatively dumb robotic floor-cleaner turns into a smart, articulate, robot by the time you come home. When you awake the next morning, the robot is 10 times smarter than you are. Now, can you imagine that rate of change continuing thousands of times?
Why could there be a singularity at the end of the IT revolution, but not at the end of the industrial revolution? The industrial revolution amplified muscle power, whereas the IT revolution seeks to augment our brain. The next stage of IT’s evolution is about building hardware that rivals human brain capacity, and even, potentially, writing software that can write software.
Nevertheless, if there is no singularity, what will technology look like in 100 years? Are there any clues we can see in the universe?
The universe we know was created over billions of years by the continual, incredibly complex interaction of physical forces; E=MC2. Life is nature’s way of writing progressively more advanced code, recording it, and generation-by-generation constantly repeating, rewriting and revising the DNA of the preceding generation. Through trial and error, over billions of years, all life forms have evolved – our form has become human.
From a software development standpoint, nature’s coding is incredibly inefficient! We only update our DNA every generation – every 20 to 30 years. Now, imagine a computer, with more computing power than our brains have, writing better copies of its OS every day, say at a rate of one per cent per day. In 300 years, this OS will have improved by a factor far too big for my spreadsheet.
Our concept and sense of time are hard wired as a biological clock into our brains and paced by our biological rhythms. Our super-computer’s OS upgrades will be modulated not by DNA determined molecular forces, but by atomic forces acting on silicon crystals. Life, consciousness – even self-awareness – may take on different forms, with rates of change a zillion times faster. We are entering a brave new world.
When Eric Schmidt, Google’s Executive Chairman, visited Beijing a month ago I had the opportunity to ask him about why Google hired Ray Kurzweil, and what does Google think about singularity. “That is an interesting question!” he laughed.