In order for a technology to succeed and to change the world it must be economically viable.
What exactly do you mean?
Good question. The world is full of interesting and seemingly revolutionary technologies. Unfortunately many of these (most) do not make it to market (therefore do not become ubiquitous). You have only to look back at old videos of shows that focused on ‘futuristic technologies’. A perfect example is ‘beyond 2000′.
If you are really keen click on the link to youtube and watch all of the ‘beyond 2000′ promos/footage. One thing of interest to note in the video above is the pocket tv. At the turn of the century the ubiquity of pocket tv’s seemed inevitable. So why don’t we all have pocket tv’s? Well it may be that they ultimately did not provide a benefit that outweighed the cost (accounting profit). Perhaps it didn’t provide a benefit superior to any other option (economic profit).
Instead many people today have smart phones. There has been a change of emphasis from tv to the internet (as online video becomes viable). While it may have looked cool, watching tv while walking down the street isn’t all that smart… but walking and texting at the same time is.
A person can watch a video on youtube (like video on demand) anywhere. Watching tv during your day rarely provides value (unless you are at home and want to relax on the couch and immerse yourself in a tv show). If you were to pull your hand held (or pocket) tv out during the day… you’d probably find something like this on:
Ugh… day time tv is rubbish in general. See what I’m getting at here?
Yes I do Simon!
Awesome. Ultimately, a hand held tv didn’t provide value equal to or greater than the next alternative (in terms of how a person spends their money or spare time). This means that the economic profit of this technological venture is negative (the opportunity cost outweighs the benefit).
Benefit – Opportunity cost < zero
On the flip side, the smart phone became ubiquitous because it provided a useful service and provided a benefit to society greater than the next best option.
Benefit – Opportunity cost > zero
Remembering that the opportunity cost is the next best alternative.
The market has a way of mercilessly scrapping technologies that do not provide an economic profit to society. These technologies are less economically viable as a business cannot generate positive cash flow selling these goods or services (a brilliant way of finding out whether or not something is economically viable).
Think of this as natures way of purging new technologies that would soak up society’s resources.
Will talk about more of this tomorrow, until then…
Regards
-Simon