Excellent book I’ve been reading for a bit: Turing’s Cathedral: George Dyson

Media_httpecximagesam_exjhi

“Perhaps the consciousness of animals is more shadowy than ours and perhaps their perceptions are always dreamlike,” physicist Eugene Wagner recalled in 1964. “On the opposite side, whenever I talked with von Neumann, I always had the impression that only he was fully awake.”

Von Neumann compensated for these superhuman abilities with an earthly sense of humor and a tireless social life, and tried, mixed with success, to blend in on a normal human scale. “You would tell him something garbled, and he’d say, ‘Oh, you mean the following,’ and it would come back beautifully stated,” says former protégé Raoul Bott. “He couldn’t tell really very good people from less good people,” Bott adds. “I guess they all seemed so much slower.”

No point in being perfectly accurate if you’re completely wrong. @nntaleb on building philo-stochasticity into policy in The Economist

This intrinsic limit to predictions is here to stay with us. It will not go away thanks to hard work by zealous researchers or more funding, more data, more computing power and more complicated theories. For unpredictability is part of any system that is prone to “fat tails”, that is, one whose properties are dominated by rare events—what I have called “black swans”. Don’t imagine that complexity, chaos theory, agent-based modelling or some other fad narrative will deliver better, more usable predictions than those failed economic methods we are still teaching our university students.

The truth is that selling a precise prediction to an anxious investor is like offering water to a parched explorer lost in the Sahara desert. Predictions are good therapy, arising from a human thirst for certainty. That might have been reasonable in some ancient world, but is hardly right for today’s.

No point in being perfectly accurate if you’re completely wrong. @nntaleb on building philo-stochasticity into policy in The Economist

Swap finance with ‘economic future’ / Finance: A new ice age? | The Economist

With the Fed also committed to buying $40 billion of mortgage-backed bonds every month until unemployment falls, and with the European Central Bank (ECB) potentially buying “unlimited” amounts of Spanish and Italian government bonds, central-bank policy will be a major influence on market movements in the coming year.

It’s all a matter of confidence. The existing sets of bailouts / fiscal/monetary policies are good, but perhaps simply not big enough. Big enough by what standard? Big enough by the standard of the multiples we were looking at firms earning pre-2008. Firms (and/or shareholders and managers) want the same (or growing) margins, they want the same (or larger) bonuses/dividends. The problem is not that the money is itself not enough, but that the money is juxtaposed against expectations that are even greater.

The easiest way out is perhaps the institution of special economic development zones and loosening of immigration policy in the major countries. It’s probably the best way out of the crisis — new jobs and new industries by those willing to take the risk.

Risk-appetite is paramount. Confidence is liquidity, and liquidity is confidence. Impossible is merely the lack of imagination and incentive.

McLuhan’s 1979 Interview: On Media, The ‘Violence’ of Identity, Nostalgia, and even Hipsters. Brilliant and timeless, as always. He could’ve been talking yesterday.

[youtube http://www.youtube.com/watch?v=ImaH51F4HBw?wmode=transparent]

 

[youtube http://www.youtube.com/watch?v=a11DEFm0WCw?wmode=transparent]

 

[youtube http://www.youtube.com/watch?v=CtpX8A7Q2pE?wmode=transparent]

‘Cloud’ Atlas

 

 

Index

 

_ Introduction to Cloud Computing

 

_ Apple

_ Amazon.com

_ Google

_ Microsoft

 

_ Afterword

_ Concluding Remarks

 

_ Appendices

       _ Five Forces Analysis

       _ Company Introductions

       _ Business Strategy + Business Results

       _ Consolidated Industry Positions

 

 

 

1

 

1

2

3

3

 

4

5

 

 

6

7

8

12


“What wouldn’t I give now for a never-changing map of the ever-constant ineffable? To possess, as it were, an atlas of clouds.”
– David Mitchell, Cloud Atlas

 

Introduction: The cloud has long been the pipe dream of technologists. Ever since the first computers – which were based on the client-server computing model – we have worked toward developing networked computers that allow you to access your data and user-sessions across machines.
With the OS fragmentation of the 80s, and consolidation toward a single player (Microsoft) in the 90s, this progress however, was stunted until the mobile world-wide-web became ubiquitous in the 2000s, forcing at least some attention away from entrenched desktop interfaces. With smartphones came renewed efforts in platform development, the ‘widgetization’ of larger applications into smaller task-specific apps, and a broader multi-screen behavior that made the cloud the quintessential backbone of modern computing.
This paper explores the strategies of the four major players in this space today – Apple, Amazon.com, Google, and Microsoft – their broader strategic positions, and the role the cloud plays for each of their strategies. It explores emerging behavior and potential threats, and concludes by discussing multiple scenarios for the evolution of the cloud industry and the broader computing environment, and its effect on these four players.

Text Box:  “If, for some reason, we make some big mistake and IBM wins, my personal feeling is that we are going to enter a computer Dark Ages for about twenty years.”  - Steve Jobs in 1987, 20 years before the launch of the iPhone  “We made the buttons on the screen look so good you’ll want to lick them.” - Steve Jobs on “Mac OSX: Darwin” in 2000 “That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.” - Steve Jobs in 2003
Apple: Apple’s single greatest challenge, with the return of Steve Jobs in 1997, was to not lose the next platform war, even while adhering to their product strategy of highly curated, single-platform hardware-software combination. Apple (and Jobs at NeXT) realized early that the future of personal computing revolved around two variables: (a) computers as access points to content (media hubs,) and (b) the widgetization of services (fragmentation courtesy the internet – apps, web apps, feature-based start-ups – think DropBox, Spotify, Instagram in the modern context, and remember that even in 1997 we had overarching portals and nothing else).
Major Initiatives + Strategic Positioning: They overcame these challenges by a gradual related diversification strategy. It started with a four-box matrix that consolidated their offerings into Personal and Professional, and Desktop and Portable. To this mix was added SoundJam, which was soon rebranded as iTunes. This was followed by the iPod, the iTunesMusicStore, the iPod video, Movies and TV shows via iTMS, the iPhone and the App Store, AppleTV, and the iPad and iBooks, NewsStand, and FaceTime. And in the past 18 months, they have finally refined their cloud service – iCloud – to make it a formidable and ubiquitous service. Apple has at every stage developed a hardware (access point) and data-hub (content, software, cloud services) – developing their strategy as step-functions.
Role of Cloud in Portfolio: Apple’s iCloud service is an extension of its hardware products – both a repository of content for consumers, and a high barrier switching cost. The iCloud service is now merged with iTunesMusicStore, the AppStore and the Mac AppStore, thereby making your content accessible from any device you are logged in to. It also features an email service – .mac, and a set of online productivity tools in the form of iWork.com.
One might argue that the fundamental purpose of iCloud within the Apple portfolio is to make the ownership of multiple
Apple hardware products seamless, in terms of personal data and content.                         

Amazon.com: Amazon’s single greatest challenge has been to ensure that another firm doesn’t do to it, what it did to Borders and Barnes & Noble and other book sellers – being made irrelevant as demand shifts to different channels. Their real-world solution is FBA – Fulfilled By Amazon, which was once called “Marketplace Sellers”. This allows real-world retail stores to host virtual stores on Amazon.com. Amazon controls the flow of cash, and ensures standardization in fulfillment across categories.
Major Initiatives + Strategic Position:
In 2007, Amazon made it’s major thrust into the digital space with its Kindle line of hardware devices, and Kindle service for ebooks. By July 2010, they were already selling more ebooks than physical copies of books. In 2007, Amazon also created AmazonMP3, their answer to Apple’s iTunesMusicStore. In 2011 they added CloudDrive – a drop-box like service, Kindle Desktop Publishing, a Mac AppStore and an Android App Store, and in 2012 announced that they would make a foray into touch-based gaming. They also created Amazon Prime in 2005, which in more recent times also includes two cloud features – access to Amazon Instant Video, the Amazon equivalent of NetFlix, and the Kindle Owners Lending Library.
Role of Cloud in Portfolio:
In 2002, Amazon.com created Amazon Web Services. This was followed by Mechanical Turk in 2005, and a host of service products have since been added to the Amazon.com portfolio. Broadly speaking, AWS offers server and database services to customers, making use of Amazon.com’s extensive server farms by loaning out capacity to start-ups and major corporations alike. Mechanical Turk goes a step further, offering computational services and human-based fractional computation services to firms. This constitutes the B2B side of Amazon’s Cloud portfolio, with Kindle, Prime, Instant Video, CloudDrive and AmazonMP3 constituting their customer-facing side. Kindle Desktop Publishing goes a step further, harnessing the cognitive surplus of human endeavor, allowing budding new writers to bypass the
traditional publishing model, potentially paving the way for overnight success: crowd-based-curation via the cloud.

Text Box: “Google's mission is to organize the world's information and make it universally accessible and useful.”  – Larry Page and Sergey Brin Google: There are rapid changes in the technology market, with converging, new and disruptive technologies. Google competes with other service providers to attract and retain users and content providers. It faces limited competition from Yahoo! and Bing in search, Amazon and eBay in eCommerce, Facebook and Twitter in social networking, and traditional advertising media for the advertising business.
Major Initiatives + Strategic Position
: In order to stay in a leading position in the technology game, Google constantly innovates and updates its products and services to offer more powerful experience to its customer base. In June 2011, Google+ was launched as an online social networking and sharing platform. As of January 2012, over 90 million people had joined Google+. In 2012, Google launched Search plus Your World. This allows Google+ content from a user’s network to be included on the results page when a user performs a signed-in search. The intelligent search features on Google’s platform creates unparalleled convenience for the user to navigate through multiple services whilst user preferences are collected and organized in a meaningful manner by the search engine.
Role of Cloud in Portfolio:
Since all of Google’s services and products are web-based, cloud computing is a major part of Google’s business. Its search, advertising, media, and storage capabilities are all hosted by massive data-centers that make use of the cloud technology.

Text Box: “If you give people tools, and they use their natural abilities and their curiosity, they will develop things in ways that will surprise you very much beyond what you might have expected.”  ― Bill Gates
Microsoft: Microsoft operates under a highly competitive environment with strong competitors such as Apple and Google in the mobile devices, content and social spaces; and firms like IBM and Oracle on the enterprise side. And they face competition from Sony and Nintendo in console gaming. Their key strategic challenge, however, is managing the world’s transition from desktops to other devices, and the fate of its two cash cows – Windows and Office – in that brave new world.
Major Initiatives + Strategic Position:
As part of diversifying its products and services from personal computers (“PCs”), servers, phones, and other intelligent devices, Microsoft expanded its portfolio to include entertainment/gaming products by introducing the Xbox 360. The Xbox competes directly with Nintendo and Sony gaming products and utilizes cloud services to entertain and connect users.
In April 2011, Microsoft and Nokia entered into definitive agreements to form a strategic alliance to jointly create new mobile products and services and to extend established products and services to new markets. This partnership allowed Microsoft to support Nokia’s mapping, navigation, and location-based services to the Windows Phone ecosystem, with Microsoft’s Bing and adCenter powering the search and advertising on Nokia’s devices.
Role of Cloud in Portfolio:
The interesting thing about Microsoft and the cloud is how each of their divisions – whether OS (Windows, Windows RT), Office, Online Sales (Bing, adCenter), Enterprise Solutions (Servers), Email and Storage (SkyDrive, Outlook.com, Hotmail) and Gaming (XBox Live) – have cloud computing built in. As of now though, only XBox Live and Enterprise Solutions have any significant contribution to the Microsoft bottom line.


Afterword: It is rare in the world of technology to find a firm regaining lost glory – and it almost never happens like – in the case of Apple – within the very same industry it lost in earlier. What happens more often is that the firm diversifies into new spaces. Think of IBM’s move out of PCs and into consulting services. Or GE’s revival through high finance and other non-related fields. And think of the decline of firms like HP, Dell and one might argue, the entire PC industry – from potential innovators to dumb hardware manufacturers.
With our overview of the cloud, and its role and impact on the bottom-line and strategy of each firm, we clearly see that the cloud is itself not designed to be a major revenue driver. Instead, it is seen as a shield to existing lines of business for each of the firms we have looked at. It is indeed a tacit acceptance of the role of brands/firms as “media objects”.
With Amazon.com, we see the cloud as a defense of existing business and its broader customer-focus. Kindle and Amazon MP3 and Instant Video extend Amazon’s traditional “hard” markets into their digital equivalents. Kindle Desktop Publishing is an answer to the emerging trend of users as content generators. For Amazon, the cloud either defends or extends existing lines of business. Cloud services for amazon (if defined to include content delivery) contribute the largest percentage of revenues for any of the four companies we’ve looked at.
With Apple, we see the cloud used as a service and “carrot” feature to Apple’s hardware line. Indeed, even as Apple has become the largest retailer of music in the world, the percentage that cloud contributes to overall Apple revenue has reduced dramatically over the last three years.
With Google, we see the cloud as an extension to their larger aim of organizing the world’s data and making it accessible and useful. The cloud perhaps most naturally fits into Google’s product line than any other, yet Google is amongst the least efficient at monetizing the cloud – largely because their business model is based on monetization through search, not through paid goods and services. With Google, the cloud performs two roles. Services like Gmail, GDrive, Picasa and Chrome allow for users to extend their data and their “desktop” to any machine, anywhere in the World. And services like Play and YouTube deliver content, which might be either paid or monetized through search.
And finally with Microsoft, we see the cloud used as a means to attempt to defend Windows and Office. So we see OfficeLive and Sharepoint as major drivers of traditional desktop services blending with emerging online behavior, and services like SkyDrive to serve as alternatives to services like DropBox, iCloud, GDrive and CloudDrive.
The potential for disruption or success in the cloud is as likely to occur from one of these four players, as it is from a startup focused on any one given activity. It could be Hulu for video, Flickr or Instagram for photography, Evernote for personal time management, or DropBox for Cloud Services. See the Five Forces Analysis in the exhibits for more details.

Concluding Remarks:
We foresee three potential / ways the near-future (5-10 years) of computing could go:

(a)    A major shift towards pure-play distributed computing. This would give the advantage to services like Chrome OS and Mac OS, with multiple screens still being the norm, and interplay between computer, tablet and mobile client-server relationships.

(b)    A major shift towards touch-based distributed computing. This would give the advantage to Apple with iOS and Google with Android, and potentially Windows RT, if Microsoft manages to deliver usability and a great value proposition

(c)    Or the industry will be as fragmented as it is today.

With the four major interface technologies – click, touch, speak and gesticulate – all in play for the foreseeable future, it would be impossible to, at this point, accurately predict who will come out on top in this race. Our personal belief is that unlike with traditional platform markets, at least in the 5-10 year window we mentioned, there is unlikely to be a single winner. Given the significant multi-homing costs, and differences in price and value-proposition, a more likely outcome is two major 40%+ firms (Perhaps Google and Apple) with a smaller <20% third firm (Microsoft, depending on the success of Windows RT and their Nokia partnership.) Then there’s the question of margins in hardware sales, and ARPU’s (Average Revenue Per User) for each platform, that will over the long-term affect the viability of each platform.

Interestingly enough, regardless of who comes out on top, the firm that seems primed to see good (and comparatively unchallenged) growth in this time period is Amazon.com. Being a platform neutral marketplace (their music plays everywhere, their books load on all devices) they are guaranteed to take advantage of the growing cloud industry, regardless of what else happens in this space in the short term.

Appendices

Five Forces Analysis

Description: Macintosh HD:Users:Vingilote:Desktop:Screen Shot 2012-09-11 at 9.22.28 AM.png

Our Five Forces Analysis brought up some interesting observations. The major one being that while each of the four firms we’re looking at our in a position of strength, new entrants could very easily challenge aspects of their business. In that sense, closed systems and raised multi-homing costs (something firms like Apple and Microsoft do better than Google or Amazon.com,) could be long-term strategic advantages. And even here, because Apple tends to be priced competitively in the content market, and at premium pricing in the hardware market, Apple might eke out a margins-advantage, if not always a volume-advantage.

Once again, our favorite anomaly, Amazon.com, benefits by virtue of its sheer openness. Its content markets are equally competitive as Apple’s, but can be accessed from all hardware systems. And on the B2B side, services like AWS are actually used by startups – for hosting, database management, analytics and so on. So Amazon can “win” regardless of what else happens. They tend to be financially not as spectacular as the other three because they reinvest much of their earnings into capacity or new initiatives, so they certainly are a solid company, and one to watch with their doubling down on hardware with last week’s Kindle Fire HD tablet announcements.


 

Company Introductions

Apple: Apple was established in 1976 and incorporated a year later, like with many computer firms at that time, in a garage. Apple reframed the computer as a personal computer, a “human” object meant for personal consumption. The only computers you could buy back in 1976 were big IBM mainframes, or “hobby-kit” computers, which you had to assemble yourself. Jobs and Wozniak, by selling wholly assembled computers, changed the narrative of how this industry did business. What had been an open mix-and-match hardware and software market offered, for the first time, a “curated”, plug-and-play product. Personal Computing would never be the same again. Apple’s core has always centered on “demystifying technology” – Steve Jobs’ famed insistence on Apple as fundamentally a firm at the intersection of technology and the liberal arts best articulates it. Not just computers and technology products, but design objects, cultural objects, human objects.

 

Amazon.com: Amazon was incorporated in 1994, and sold its first book in 1995. Having spent years perfecting its real-world supply chain and becoming the leading online retailer for books, Amazon.com rapidly diversified into other areas such as technology, durable goods, fashion, and even automobiles, and is among the leading sellers in every category it operates in.

 

Google: Google was incorporated in California in 1998 as a search company focused on improving the ways people connect with information. Google’s mission is to organize information and make it universally accessible and useful. Over the years, it has become the most recognized internet brand in the world through its innovations in web search. Google’s strategy focuses on hosted web-based applications and search technology. Its assets include Google+, GMail, Google Docs, Google Calendar, Google Sites, Google Maps, Google Earth, YouTube, Google TV and Google Books.

 

Microsoft: Founded in 1975, Microsoft was created with the purpose of putting “a computer in every home.” Today, its products range from its two mainstays – Microsoft Windows and Microsoft Office, to its servers, enterprise solutions, search (bing), social (facebook integration), gaming (XBox) and cloud services (Live, SkyDrive, Office365, Outlook.com).


 

Business Strategy + Business Results

 

Apple (US$, Millions)

Revenues

2011

2010

2009

Desktops

6,439

6,201

4,324

Portables    

15,344

11,278

9,535

iPod  

7,453

8,274

8,091

Other music related products and services (c)      

6,314

4,948

4,036

iPhone and related products and services

47,057

25,179

13,033

Peripherals and other hardware

2,330

1,814

1,475

Software, service and other sales

2,954

2,573

2,411

iPad and related products and services 

20,358

4,958

0

Total

108,249

65,225

42,905

% of Cloud related biz on total Income

9%

12%

15%

Total Growth YoY

66%

52%

 

Cloud related growth YoY

23%

17%

 

 

Description: Macintosh HD:Users:Vingilote:Desktop:Screen Shot 2012-09-11 at 1.40.33 PM.png

Earnings / Forecasting Earnings

The total earnings from the aforementioned cloud services amounted to $9.27bn (total: $108.25bn) in 2011, compared to $7.52bn (total: $65.22bn) in 2010, and $6.45bn (total: $42.9bn) in 2009. Forecasts for this year estimate an even larger Y-o-Y increase of about 30%, versus the 23% from 2010 to 2011. So while Cloud Services are growing, the rest of Apple’s business is growing at an even faster pace. This can be explained by general ecosystem adoption curves. Followers and late adopters tend to have a lower ARPU than early adopters and trend-setters.

 

Amazon (US$, Millions)

Revenues

2011

2010

2009

Media

17,779

14,888

12,774

Electronics and other general merchandise

28,712

18,363

11,082

Other

1,586

953

653

Total

48,077

34,204

24,509

% of Cloud related biz on total Income

40%

46%

55%

Total Growth YoY

41%

40%

 

Cloud related growth YoY

22%

18%

 

 

Description: Macintosh HD:Users:Vingilote:Desktop:Screen Shot 2012-09-11 at 1.40.50 PM.png

Earnings / Forecasting Earnings

Amazon.com earned $19.36bn through digital services in 2011 ($48.08bn total), $15.84bn in 2010 ($34.2bn total) and $13.42bn in 2009 ($24.09bn total). The AWS component increased 50% Y-o-Y in this time. This arc is expected to continue over the next three years. With Amazon we see digital content delivery become a larger and larger part of revenues. So where Apple sells content to entice you into buying hardware, Amazon.com sells you hardware to entice you into buying content.


 

 

Google (US$, Millions)

Revenues

2011

2010

2009

Google websites

26,145

19,444

15,723

Google Network Members’ websites

10,386

8,792

7,166

Other revenues

1,374

1,085

762

Total

37,905

29,321

23,651

Total Growth YoY

29%

24%

 

Cloud account for a total 0.5% of total revenues

 

 

 

 

Description: Macintosh HD:Users:Vingilote:Desktop:Screen Shot 2012-09-11 at 1.40.59 PM.png

Earnings / Forecasting Earnings

80% of Google’s revenue comes from online advertising. The revenue structure is based on “Cost-per-Click” i.e. charge customers for advertising each time visitors click on their ad; and “Cost-per-impression” i.e. charge for advertising each time an ad appears on its platform. Cloud is insignificant, Gartner estimates put its contribution as 0.5% of total revenue. Nonetheless, CloudServices for Google are an important (if loss-leading) initiative.

 


 

 

Microsoft (US$, Millions)

Revenues

2011

2010

2009

Windows and Windows Live

19,024

19,494

15,847

Server and tools

17,096

15,378

14,601

Online service

2,528

2,201

2,121

Microsoft biz division

22,186

19,076

19,257

Entertainment and device division

8,913

6,168

6,416

Total

69,747

62,317

58,242

% of Cloud related biz on total Revenue

28%

28%

29%

Total Growth YoY

12%

7%

 

Cloud related growth YoY

12%

5%

 

 

Description: Macintosh HD:Users:Vingilote:Desktop:Screen Shot 2012-09-11 at 1.41.08 PM.png

Earnings / Forecasting Earnings

Microsoft derives its income from the usage fees for the paid services above. Additionally, revenues come from advertising on their search engine platform. We see significant growth in Microsoft’s enterprise solutions business, whereas its consumer-facing side – SkyDrive, OfficeLive etc are not major drivers yet.


 

Consolidated Industry Positions

Description: Macintosh HD:Users:Vingilote:Desktop:Screen Shot 2012-09-11 at 9.41.57 AM.png

And this is a broad overview of the key offerings of each of the four firms we have looked at in the Cloud Industry. Note the vast amount of unpaid/monetized services. It would conceivably be incredibly difficult for these firms to ever charge money for the presently-free services, limiting their ability to tweak the core business model.

 

Note on Sources

This paper has been written collecting data from myriad sources – articles in publications and journals (milestones, strategic positions, market dynamics), Company 10K’s (revenue figures), and Press Releases (User numbers, etc). In addition, numbers from Gartner and ComScore were used.

Mark Rothko, Adolph Gottlieb and Barnett Newman: A Brief Manifesto

  1. To us art is an adventure into an unknown world, which can be explored only by those willing to take the risks.

  2. This world of imagination is fancy-free and violently opposed to common sense.

  3. It is our function as artists to make the spectator see the world our way not his way.

  4. We favor the simple expression of the complex thought. We are for the large shape because it has the impact of the unequivocal. We wish to reassert the picture plane. We are for flat forms because they destroy illusion and reveal truth.

  5. It is a widely accepted notion among painters that it does not matter what one paints as long as it is well painted. (Rothko said “this is the essence of academicism.)

  6. There is no such thing as a good painting about nothing.

  7. We assert that the subject is crucial and only that subject matter is valid which is tragic and timeless. That is why we profess spiritual kinship with primitive and archaic art.

 

June 13, 1943 edition of the New York Times, brief manifesto: Mark Rothko, with Adolph Gottlieb and Barnett Newman.

 

 

Source: http://en.wikiquote.org/wiki/Mark_Rothko

E Pluribus Unum: Deterritorialization, Reterritorialization, And The Box.

E Pluribus Unum: Deterritorialization, Reterritorialization, And The Box.

Out of many, one. The cornerstone of modernity is perhaps modularization[1]: of people and objects alike into cogs, fulfilling assigned roles within a machine-system. Tribal-human networks have been replaced by industrial-machine-systems – batches[2] – pivotal numbers through which systems[3] run efficiently, generating abstract wealth if not necessarily well-being.

By consolidating units into batches/containers, the Box[4] reduced costs dramatically. It also allowed for ‘bulk’ and specialized transportation, e.g. meat via refrigerated containers. This is as important as cost-reduction itself, as it changed what could be transported, generating new industries, economic centers, and consumption patterns through its existence.

So we see ‘Creative Destruction’ operating at two levels: reconfiguring the existing cargo and shipping industries through increased automation[5], and making new industries possible. As I understand it, where Schumpeter looked at creative destruction through business cycles within a given industry or firm[6]; McLean and the container disrupted the industry from the outside.

The essay itself makes the case for entrepreneurship over innovation, and I surmise that’s accurate. We see throughout the essay an emerging system that would support the modern container business: container trucks, shipping containers, trade policy, and financial instruments such as leveraged buyouts[7]. McLean’s insight, I believe, is fundamentally recombinant[8]. With any emerging industry you see many different solutions to a problem, before they’re consolidated into some most-viable solutions[9]. Without any one, it’s perhaps unlikely that the industry could have achieved scale and success.

This was also the period that words like “diversification” became commonplace[10]. You get a sense of inevitability when you realize that Theodore Levitt’s HBR essay – Marketing Myopia[11] – was published just over a decade after McLean rose to prominence, in 1960.

 

“No power on earth can stop an idea whose time has come.” Victor Hugo 



[1] Modularization as deterritorialization and reterritorialization, being reconfigured to form the optimum “batch”. I borrow the concept loosely from philosophers such as Baudrillard and Deleuze and Guattari. Modularization, I suppose, could also be referred to as standardization, but I’d gravitate towards ‘modularization’ because it gives you a better fundamental sense of what’s happening.

[2] There is obviously theory/material with regards to the idea of “batches” but for the purposes of this essay the concept is developed from a discussion in an Operations Management class.

[3] Corporations or industries, for example.

[4] For the purposes of this essay, the notional Box is, of course, from the essay assigned.

[5] What MIT’s Andrew McAfee might refer to as skill-based technological obsolescence in his book ‘Race Against the Machine’, although he is looking more at the accelerated version seen with the rise of digital technology.

[7] One trend is certainly the two inventions of time-shifting in this case – (a) of specialized transportation that allowed goods to be transported further, thus theoretically allowing firms to move away from port cities and relocate to low-cost areas and form new value/competitive clusters; and (b) financial instruments such as leveraged buyouts, that allowed you to reach scale faster. It is only when these elements are brought together that you see adoption increase rapidly.

[8] Innovation is oftentimes recombination.

[9] This somewhat reminds me of Tim Harford’s core thesis in his book ‘Adapt’ – a sense of Darwinian variation and natural selection in ideas and firms.

[10] Google NGramViewer, Diversification

[11] Marketing Myopia, Theodore Levitt, 1960 

 

Probably one of my most favorite vids: The Gift of Apollo / The Sagan Series ♥

[youtube http://www.youtube.com/watch?v=8Xtly-dpBeA?wmode=transparent]

 

It’s a sultry night in July. You’ve fallen asleep in the armchair. Abruptly, you startle awake, disoriented. The television set is on, but not the sound. You strain to understand what you’re seeing. Two ghostly white figures in coveralls and helmets are softly dancing under a pitch-black sky. They make strange little skipping motions, which propel them upward amid barely perceptible clouds of dust. But something is wrong. They take too long to come down. Encumbered as they are, they seem to be flying — a little. You rub your eyes, but the dreamlike tableau persists.

 

Of all the events surrounding Apollo 11’s landing on the Moon on July 20, 1969, my most vivid recollection is its unreal quality. Neil Armstrong and Buzz Aldrin shuffled along the gray, dusty lunar surface, the Earth looming large in their sky, while Michael Collins, now the Moon’s own moon, orbited above them in lonely vigil. Yes, it was an astonishing technical achievement and a triumph for the United States. Yes, as Armstrong said as he first alighted, this was a historic step for the human species. But if you turned off the byplay between Mission Control and the Sea of Tranquility, with its deliberately mundane and routine chatter, you could glimpse that we humans had entered the realm of myth and legend.

 

We knew the Moon from our earliest days. It was there when our ancestors descended from the trees into the savannahs, when we learned to walk upright, when we first devised stone tools, when we domesticated fire, when we invented agriculture and built cities and set out to subdue the Earth. Folklore and popular songs celebrate a mysterious connection between the Moon and love. The word “month” and the second day of the week are both named after the Moon. Its waxing and waning — from crescent to full to crescent to new — was widely understood as a celestial metaphor of death and rebirth. It was connected with the ovulation cycle of women, which has nearly the same period — as the word “menstruation” (Latin mensis = month, from the word “to measure”) reminds us. Those who sleep in moonlight go mad; the connection is preserved in the English word “lunatic”. In the old Persian story, a vizier renowned for his wisdom is asked which is more useful, the Sun or the Moon. “The Moon,” he answers, “because the Sun shines in daytime, when it’s light out anyway.” Especially when we lived out-of-doors, it was a major — if oddly tangible — presence in our lives.

 

The Moon was a metaphor for the unattainable: “You might as well ask for the Moon,” they used to say. Or “You can no more do that than fly to the Moon.” For most of our history, we had no idea what it was. A spirit? A god? A thing? It didn’t look like something big far away, but more like something small nearby — something the size of a plate, maybe, hanging in the sky a little above our heads. Ancient Greek philosophers debated the propositon “that the Moon is exactly as large as it looks” (betraying a hopeless confusion between linear and angular size). Walking on the Moon would somehow have seemed a screwball idea; it made more sense to imagine somehow climbing up into the sky on a ladder or on the back of a giant bird, grabbing the Moon, and bringing it down to Earth. Nobody ever succeeded, although there were myths aplenty about heroes who had tried.

 

Not until a few centuries ago did the idea of the Moon as a place, a quarter-million miles away, gain wide currency. And in that brief flicker of time, we’ve gone from the earliest steps in understanding the Moon’s nature to walking and joy-riding on its surface. We calculated how objects move in space; liquefied oxygen from the air; invented big rockets, telemetry, reliable electronics, inertial guidance, and much else. Then we sailed out into the sky.

 

 

The Moon is no longer unattainable. A dozen humans, all Americans, have made those odd bouncing motions they called “moonwalks” on the crunchy, cratered, ancient gray lava — beginning on that July day in 1969. But since 1972, no one from any nation has ventured back. Indeed, none of us has gone anywhere since the glory days of Apollo except into low Earth orbit — like a toddler who takes a few tentative steps outward and then, breathless, retreats to the safety of his mother’s skirts.

 

Once upon a time, we soared into the Solar System. For a few years. Then we hurried back. Why? What happened? What was Apollo really about?

 

 

For me, the most ironic token of that moment in history is the plaque signed by President Richard M. Nixon that Apollo 11 took to the Moon. It reads: “We came in peace for all mankind.” As the United States was dropping 7.5 megatons of conventional explosives on small nations in Southeast Asia, we congratulated ourselves on our humanity: We would harm no one on a lifeless rock. That plaque is there still, attached to the base of the Apollo 11 Lunar Module, on the airless desolation of the Sea of Tranquility. If no one disturbs it, it will still be readable millions of years from now.

 

Six more missions followed Apollo 11, all but one of which successfully landed on the lunar surface. Apollo 17 was the first to carry a scientist. As soon as he got there, the program was canceled. The first scientist and the last human to land on the Moon were the same person. The program had already served its purpose that July night in 1969. The half-dozen subsequent missions were just momentum.

 

Apollo was not mainly about science. It was not even mainly about space. Apollo was about ideological confrontation and nuclear war — often described by such euphemisms as world “leadership” and national “prestige”. Nevertheless, good space science was done. We now know much more about the composition, age, and history of the Moon and the origin of the lunar landforms. We have made progress in understanding where the Moon came from. Some of us have used lunar cratering statistics to better understand the Earth at the time of the origin of life. But more important than any of this, Apollo provided an aegis, an umbrella under which brilliantly engineered robot spacecraft were dispatched throughout the Solar System, making that preliminary reconnaissance of dozens of worlds. The offspring of Apollo have now reached the planetary frontiers.

 

If not for Apollo — and, therefore, if not for the political purpose it served — I doubt whether the historic American expeditions of exploration and discovery throughout the Solar System would have occurred. The Mariners, Vikings, Pioneers, Voyagers, and Galileo are among the gifts of Apollo. Magellan and Cassini are more distant descendants. Something similar is true for the pioneering Soviet efforts in Solar System exploration, including the first soft landings of robot spacecraft — Luna 9, Mars 3, Venera 8 — on other worlds.

 

Apollo conveyed a confidence, energy, and breadth of vision that did capture the imagination of the world. That too was part of its purpose. It inspired an optimism about technology, an enthusiasm for the future. If we could fly to the Moon, as so many have asked, what else were we capable of? Even those who opposed the policies and actions of the United States — even those who thought the worst of us — acknowledged the genius and heroism of the Apollo program. With Apollo, the United States touched greatness.

 

When you pack your bags for a big trip, you never know what’s in store for you. The Apollo astronauts on their way to and from the Moon photographed their home planet. It was a natural thing to do, but it had consequences that few foresaw. For the first time, the inhabitants of Earth could see their world from above — the whole Earth, the Earth in color, the Earth as exquisite spinning white and blue ball set against the vast darkness of space. Those images helped awaken our slumbering planetary consciousness. They provide incontestable evidence that we all share the same vulnerable planet. They remind us of what is important and what is not. They were the harbingers of Voyager’s pale blue dot.

 

We may have found that perspective just in time, just as our technology threatens the habitability of our world. Whatever the reason we first mustered the Apollo program, however mired it was in Cold War nationalism and the instruments of death, the inescapable recognition of the unity and fragility of the Earth is its clear and luminous dividend, the unexpected final gift of Apollo. What began in deadly competition has helped us to see that global cooperation is the essential precondition for our survival.

 

Travel is broadening.

 

It’s time to hit the road again.

Carl Sagan on Earth, ‘a mote of dust suspended in a sunbeam’.

Look again at that dot. That’s here. That’s home. That’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilization, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar,” every “supreme leader,” every saint and sinner in the history of our species lived there-on a mote of dust suspended in a sunbeam.

Carl Sagan, Pale Blue Dot

Steve Jobs’ Lost 1990 Interview: “Humans are fundamentally tool-builders; and computers are bicycles for the mind.”

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