The ants are going to win this round.
I've long been interested in the so-called "cycles of history" — long enough, in fact, not to take it too seriously.
Hardcore history cyclists of the Kondratieff/Spengler school [Russian economist Nikolai Kondratieff suggested half-century cycles, while German historian Oswald Spengler maintained every culture passes through a kind of life cycle] always end up treating history as if it was a living, powerful God, sweeping all of us along in its endless mood swings.
I don't buy it, partly because people are so perversely unpredictable and partly because these Long Wave models always seem to be a lot better at looking backwards than forwards.
On the other hand, there are two cycles of history that life has taught me are real. One, which covers everything from hemlines to membership rolls of the Ku Klux Klan, is driven by the human tendency towards fad, novelty and envy. And it doesn't surprise me at all that the stock market, which certainly exhibits those three traits in abundance, tracks this cycle pretty neatly.
The other cycle is driven by technological change. And I don't just mean Moore's Law, though it obviously plays a part. Rather, in my 40 years of living in Silicon Valley, and a quarter century working in or reporting on high tech, I've noticed a longer, less-obvious cycle that seems to have a wavelength of about 10-12 years.
This cycle is the endless vacillation between centralization and decentralization. This wave affects every part of the modern, tech-driven corporation, from products to organization charts. If you've been around this industry any length of time, you know what I'm talking about.
Cycles of Centralization
When I joined HP in the mid-1970s, the company was in the midst of a massive decentralization of its organization into dozens of divisions clustered about six major product groups. Not coincidentally, about a mile away, the Homebrew Computer Club was figuring out new ways to figure out how to build a "personal" computer that one could have of one's own, rather than timeshare off big corporate mainframes run by arrogant MIS priests.
Nolan Bushnell was nearby in his spare bedroom trying to take a mainframe computer game he'd played in college and shrink it down into a pinball-sized package for a local bar. And, just down the road, Intel, AMD, National Semiconductor and Zilog were perfecting new processors that would bring stand-alone intelligence to calculators, watches, games and even appliances.
Decentralization was in the air. And by the time I became a newspaperman in the early 1980s, the little guys had won. The stultifying, conformist, overpriced world of centralization had been defeated. Big batch mainframes, once the rulers of the digital world, now looked like dinosaurs lumbering off into extinction. Bushnell's Atari was now making games for the home, and there were as many microprocessors in the world as human beings. And that ultimate descendent of Homebrew, the Macintosh, was king.
But the wheel was already turning once again. By the mid-1980s, the fundamental flaws of decentralization — incompatibility, lack of standards, stretched communication lines, isolation, and unpredictability — were becoming insufferable.
The 1984 recession started the turn; the 1991 recession finished it. Companies pulled outlying divisions home. Great, dominating, standardizing firms like Microsoft, Intel and Nintendo arose, asserting predictability on the marketplace even as they crushed their tinier foes. We entered the era of the Big Players, the Tech Titans, where innovation was measured in product upgrades, not technological revolutions.
The Wheel Turns Again
The one countercycle of this era was the Internet, but that was only because the World Wide Web, itself a form of centralization, kicked off an unlikely entrepreneurial land rush. The dot.com boom itself, though disguised by the frenzy of activity and the thousands of new firms, was essentially a centralizing revolution. Why do you need hundreds of Safeways when you can have everything delivered from a single WebVan warehouse? Why go to a hundred garage sales, when you can visit a single eBay?
The defining product of this wave was the "Server", born at place like the newly recentralized HP as the client-server for corporate MIS, then evolving into the network router for the Internet. The server, ever more powerful, lined up in great phalanxes in vast server farms, was the cynosure of the era. The hardware and software companies at the center of this movement, the Ciscos, Oracles, Siebels, et al, became the most successful corporations on the planet.
They aren't so successful these days. Nobody seems to want to spend tens of millions of dollars anymore on big enterprise systems. Moreover, they no longer have to: the wheel has once again begun to turn.
Late last year, while working on a cover story for a magazine, I was given a tour of Google by its CEO, Dr. Eric Schmidt. I've known Schmidt a long time, since his big iron days at Sun. When it came to technology, Schmidt always went first class. So, when he took me into Google's server room, I was stunned to see how primitive the place looked.
By way of explanation, Schmidt pulled out a motherboard, one of thousands in racks around me. You see, he said, we build them ourselves. All off-the-shelf stuff. Nothing fancy. We even chose one of the cheapest disk drives because it turned out to be more reliable in the highly demanding operating environment we work in. We don't buy fancy servers anymore.
By coincidence, the next day I had lunch with Marc Andreesen, co-founder of Netscape. I told him about what I had glimpsed at Google. What you just saw, he told me, was the next revolution.
What Does This Decentralization Mean?
This new decentralization wave is picking up speed and power by the day. If you know where to look it's everywhere: the rise of Salesforce.com, the Apple iPod, home networks, multi-function PDAs and cell phones, the new super Gameboy, consumer broadband… It's one reason why Bill Gates went back into the lab two years ago — just watch what Microsoft is about to do with Tablet PCs and education. Most of all, you can see it in the rise of Linux, perhaps the most decentralized intellectual construction in human history.
Now, today, as I type this, the wire services are carrying an incredible story: scientists at the University of Illinois at Urbana-Champaign have built a supercomputer capable of a half-trillion operations per second from 100 Sony PlayStation 2 game consoles linked together. It runs Linux (big surprise) and the biggest challenge to the engineers was unwrapping all of the machines (a nice metaphor for decentralization's inherent problems).
What does all of this decentralization mean? For one thing, probably that new killer product or application we've all been praying for to revitalize high tech. A lot of interesting new companies. The death of some giant corporations. Cool new consumer products. And probably a transfer to the company's new division in Pocatello.
We can also expect to spend a lot more time screaming at devices that won't talk to each other, products that are orphaned overnight by their dead manufacturers, and most of all, that day five or six years hence, when, without irony, we find ourselves praying for some big corporate white knight to come in and stomp the market back into some sort of order.
In the meantime, welcome back to the Empire of the Ants.
Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor-at-large of Forbes ASAP magazine. His work as the nation’s first daily high-tech reporter at the San Jose Mercury-News sparked the writing of his critically acclaimed The Big Score: The Billion Dollar Story of Silicon Valley, which went on to become a public TV series. He has written several other highly praised business books and a novel about Silicon Valley, where he was raised.