Bill Gates

Bill Gates, Microsoft ’ s chairman and chief software architect, predicts

that companies will look even more closely at the benefits of digital technology

during a recession.

In the wake of the dotcom meltdown and terrorist attacks, and

among 2002’s economic miseries, all the excitement about the perso

nal computer and Internet revolution of the 1990s can seem like

a distant memory. While the enthusiasm over the digital revolution

has been overshadowed by recent events, its significance has not.

The phenomenon that made digital technology an essential part of

the workplace, home and classroom is not subject to fashion.

The digital future is more important than ever.

Like every technology revolution, this one will come in waves.

The first, which spanned the 1990s, transformed how we communicate

and get information. Almost overnight, the pc and the Internet

enabled businesses and people to exchange e mail, ideas and data

instantaneously. The next wave will have a far broader impact. As

the pc is joined by a growing range of intelligent devices, all connected

by faster, cheaper and more reliable network connections, we’ll see

a vast transformation of products and services into digital form, from

books to movies to business billing systems. The first ten years of

the 21st century will be the digital decade.

We’ve already seen how atoms have been transformed into bits

in many different media: that is to say huge chunks of the world’s

output have dematerialised from the physical to the virtual. But this

decade is when we’ll start to think of this digital metamorphosis—

and the productivity gains that will accompany it — in a whole new

way. Take music. It has been in digital form since analog long playing

records gave way to compact discs in the early 1980s, but until

recently you still needed some kind of disc to carry the musical data.

Now, though, music is freeing itself completely from its physical form.

As bits, it can be accessed wherever you want it, from any intelligent

device that can decode the bitstream.

We will see this phenomenon replicated in products as diverse

as software, photographs, video and books. Software has been sold

online since the earliest days of the public Internet, but only recently

has bandwidth been capable of carrying the enormous number of bits

required for sophisticated business, personal, educational or

entertainment programs. In the years ahead, as more people have

access to cost effective high speed lines, the Internet will become

the primary way in which software is distributed, updated,

maintained and even managed. Software that once came in shrink

wrapped boxes and was updated infrequently — if at all — will be

transformed into dynamic, living code that can update and repair

itself over the network.

Take another, domestic, example. Millions of people are now

using digital cameras to capture their families’ lives, and using digital

photo frames to share memories with family and friends around the

block or around the world. The ability to store and share high quality

digital video as easily is just around the corner. And while e books

have yet to take off, I’m confident that they will within the decade.

New text display software and new kinds of devices, such as tablet

sized pcs, will make onscreen reading, annotating and searching easier

and more enjoyable than ever.

The long term consequences of this digital revolution will be

far reaching and overwhelmingly positive for many industries,

fundamentally transforming the economics of the marketplace. In

part, this will occur simply through a decline in costs. Digital goods

are cheaper than their material counterparts. And you only have to

make them once. Inventory costs will also fall, a result of improved

efficiency, and of being able to create a “virtual” distribution network.

E publishing, for example, offers an incredibly efficient business

model, with almost no manufacturing, packaging or distribution costs.

Along with virtual distribution will come an increasing trend

towards online billing and payments. According to Jupiter Research,

a consultancy, American companies alone spend a combined $18

billion a year preparing and delivering paper bills. Jupiter estimates

that online bill payment could eliminate 80% of this expense.