Michael,
Re: <<when I see continue to see PC penetration rates remain stuck at about 40% over the last year in the U.S.>>
There are always innovations which will be developed that will increase the number of users of technology as the technology matures. Voice recognition technlogy is one that is probably just around the corner.
Did you see the Forbes 7/7/97 80th Anniv issue? The article at this url discusses the percentage of ownership issue of computers and other past and present technological "revolutions" in terms of penetration vs number of years since invention.
forbes.com
And see the excellent and revealing chart at:
forbes.com
PCs and cell phones have spread faster than their forerunners,
radios and telephones. That's because technology creates demand
for more technology.
The silent boom
By Peter Brimelow
A FUNNY thing has happened to the human race in the last
hundred years or so. Ways of living and working that had not
changed for millennia have altered abruptly. Reason: We caught a
wave of new technology. The momentum is not going to slow.
Judging from calculations by Dallas Federal Reserve Bank
economist W. Michael Cox, displayed in the chart, technology
seems likely to continue altering our lives ever more abruptly.
It took more than a century for the telephone to reach its present
94% household penetration. (Note the Depression-era stall.) By
contrast, more recent inventions, like television and radio, reached
similar penetration levels in only three or four decades. And the
most recent inventions of all-cell phones, personal computers, the
Internet-are moving even faster.
Not all technologies are equal. Some, like electricity, have
pervasive consequences by virtue of making so many other
inventions practical. The modern equivalent of electricity, says
Cox: the microprocessor, invented in 1971. This made possible
not only the recent explosive takeoff of cell phones and personal
computers but also the sudden sharp increases in penetration
visible (see chart) for older inventions like microwave ovens and
VCRs.
Another factor in some sudden increases in penetration: what Cox
calls "network externalities." Until the number of people using a
new technology reaches a critical mass, there are few real
advantages to users. Your telephone would be useless if you were
the only person who owned one. The Internet, television and radio
would be useless without content, automobiles close to useless
without paved roads and a network of gasoline stations. But good
content and highways don't occur until a lot of customers are ready
to use them. By contrast, some inventions, like microwave ovens,
benefit the individuals using them more or less independently of
anyone else.
Technologies can be complementary rather than competitive.
Radio was rapidly overhauled by television, but it has continued to
grow and its penetration is now equal to that of television.
Similarly, Cox speculates that tree-based print journalism will
complement Internet electronic publishing. Whoopee!
Ultimate message of the chart: The modern economy is changing in
profound ways that cannot be picked up in GDP numbers. The
pocket calculator, more powerful than a $750,000 room-size
mainframe computer of the 1950s, did not show up in the
consumer price statistics until 1978, after its price had fallen well
below $100.
And the problem is not just price. "Statisticians keep track of
cost," says Cox. "The economy produces worth-what people
want." His term for the resulting unmeasured but desirable benefits
like greater convenience, choice, safety, speed: "the silent boom."
It rolls on.
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How do you feel now? By the way, I suggest reading the entire 7/7/97 issue of Forbes.
Barry
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