Atoms to Bits

In 1995 Nicholas Negroponte published Being Digital. The main premise of the book is the shift in our economy from one based upon Atoms to one based upon Bits.

He starts the book with a story about being asked to declare the value of his laptop computer to the security guard at a major corporation. He said "Roughly, between $1M and $2M". The security guard said that could not be true and placed a value on the property pass of $2,000. Of course this represents the value of the computer but not the value of the information that resides on the computer.

Fast forward to today. The shift from Atoms to Bits is transforming business models. The winners will be those companies that see this transformation and implement the infrastructure and business models that moves customers in this direction. A few examples are newspapers like the Boston Globe and the New York Times, developing pictures using Shutterfly and buying music from the iTunes Music Store.

In future entries I will discuss the trends driving this transformation and the business models and products already moving from atoms to bits.

Software as a Service (SaaS) conference

Software as a Service is one form of Utility computing. The delivery of software or more specifically a solution to a customer hosted off-site. IDC's broad image of this space looks like this:


Souce: International Data Corporation

Examples of solutions in this space are salesforce.com, sugarCRM, Shutterfly and many others. This application space is moving quickly and trade shows dedicated to this space are starting to crop up. One such show is the Software Business Transformation Summit in Las Vegas, NV on June 13 and 14. It will be interesting to see how the definition of the applications evolve compared to the "public utility" used to deliver those applications.

A major shift in the industry's fundamental economics

I have been meaning to start a blog on the business aspects of Utility Computing. This is an area where I have focused my efforts in the last few years of my career, a shift in the way people will buy applications and computing. A recent Fortune FastForward article headline has prodded me to begin. It states:

Microsoft's cash versus Google

The software giant's plan to build datacenters the size of 10 Costcos, complete with electrical substations, signals a major shift in the industry's fundamental economics

I believe that the shift in this direction happened many years ago for those so inclined to look for these type of shifts.

First a little background on myself. I have spent the last 11 years working at a wonderful company, Sun Microsystems, led by a truly visionary leader, Scott McNealy. Scott has been evangelizing the future of computing starting with Sun's tagline "The Network is the Computer" and pushing the "big friggin webtone switch".

The trouble for Sun is that it is hard to convert a business model built around selling hardware to one built around selling computing as a utility. Sun's move into Utility Computing, selling CPU cycles at $1/CPU hour, is a step in the right direction placing Sun in the position to become a public utility for CPU cycles.

It seems that more and more people are starting to understand the shift in the industry's economics. There are a lot of efforts moving the industry further in the direction of Utility Computing. Going forward I will write about these efforts and how utility computing will impact us all.