We Can Make It

Literally minutes before I left for the local store to buy it, I checked the vendor's web site to get a list of options and specifications. That is where I discovered that a new and improved model was about to be released.

This has been the secret behind much of the amazing growth in computers and communications for a long time. Modems went from 300 baud to 56 kbaud at the same time that computers went from 4.77 MHz to 1 GHz. In tandem, storage at the same time went from 5 MB to the recently released 100-GB drives.

Broadband networking is now available to most people that are interested, although it still has some pain involved in both the installation and the monthly bill. Even wireless communications is beginning to show some reality, although the carrier deployment schedule in that area is depressingly close to what I expected it to be. Sometimes I would rather not be right...

Still Glum
It's easy to feel sorry for the carriers these days. I went to a meeting of the San Diego Telecom Council (SDTC) recently that featured a star-studded panel discussing the current state of the telecom industry (www.sdtelecom.org). The central topic was a study that had just been completed by Goldman-Sachs of the downturn in the telecom market. I am generally not very interested in reports like this, since by and large they contain information that is painfully obvious about the tech sector. This one is an exception.

The study actually started out to research whether there was going to be a significant downturn. When that became a moot question (Remember what I said about them being "painfully obvious?"), they instead began trying to figure out how long the downturn was going to last. The bottom line on the answer was that things are not going to look good for the carriers for at least the next year or two.

You can get information on this meeting yourself from the SDTC's web site, but the gist of it was that the carriers spent a ton of money upgrading their infrastructure to handle the growth of the Internet and they have yet to figure out how to make money in a business where they are little more than glorified plumbers. In other words, their world has changed radically and they were so busy trying to keep up with it that they left behind any capability to run a profitable business.

That is not to say that there is no opportunity left. The only real bright spot for the carriers is the possibility of adding software to their network to provide differentiated service. This is a real change from the traditional monopoly model, where you fight like hell to be the only supplier and then you raise prices mercilessly, mostly because you can.

Granted, there will be some of that going on as well, but the question remains whether broadband Internet access is still a luxury or if it is now an accepted requirement of modern life. It is only if broadband Internet access has reached the latter status that the service providers can afford to turn the screw and ratchet up the cost.

Things have also changed significantly on the other end of the scale. I have spoken to many venture capitalist (VC) firms lately that are almost bewildered at how rapidly the bottom has fallen out of that business. I say 'almost' because the ones that have gray hair (or at least the ones that had it before this year) realized deep in their guts that the pace was unsustainable. These VCs were the ones that covered their bets and, as a result, are not out today exploring new careers in the exciting world of selling insurance. Instead, they are carefully sifting through proposals with a much more discriminating eye.

In some ways, the older VCs are now in a better position. They can negotiate from a much tougher stance with prospective entrepreneurs, without fear that they will lose the deal. This assumes, of course, that they have any money with which to negotiate.

The result of this scrutiny is that the VCs are forcing companies to have technologies that will succeed before receiving money. This has the short-term effect of putting a huge brake on innovation, but it also means that there will be much less silliness in new product announcements.

Even the new version of the laptop I am looking at only has a few new features and is only a little faster, instead of having half a dozen new port standards and twice as much memory and storage. It's like the entire high-tech industry is pausing to catch its breath.

Not So Bad
While much hype and fear can be placed on things like VC scrutiny and market toughness, it may not be as bad as is seems. The reason is that communication technology is penetrating into the normal lives of end users.

I once participated in one of those management exercises that examines strengths, weaknesses, opportunities, and threats (SWOTs) for a company in a particular market. When we got to the last part, I immediately mentioned a resurgence of the Luddites. I was cautioned against wasting the time of all of the important people involved, so I shut up about it.

I always keep in mind, though, the possibility of a cultural revolution in our modern world. When you think about it, that is at least partly what the war on terrorism is all about. We build complex infrastructure and systems and they use that complexity to destroy them. My fear is that we will decide that life was better in the good old days and will turn our collective backs on technology.

As much as I make fun of marketing labels like new and improved, there is an amazing amount of truth there when it comes to our industry. Sure, we make stupid things like Internet toasters, but we also make medical devices that are radically improving healthcare. We make cellular phones that allow us to keep in touch with loved ones just about anywhere. We also made an Internet and satellite technology that is threatening the monopoly on information that dictators and other oppressive governments have long maintained.

It is easy to fall into the trap of thinking that technology toys like the Xbox are the only products we produce and that we are only in it for the money. The products of technology not only improve lives, they also save them.

So where are the opportunities today? Simply put, they are in doing useful things with the basic tools of technology. For a long time there has been an excess of technology and a dearth of good ideas on how to use it. For the last couple of years companies like Intel have realized this, so they have desperately been trying to support young companies that could keep the cycle going, that could create new demand for even faster microprocessors.

Funding from companies like Intel have kept things going for a while longer, but eventually the signal-to-noise ratio (SNR) of good ideas versus junk just got too low. When that happened, people stopped buying new stuff and spent time instead trying to make what they had work.

This leaves those of us in the industry in a bad spot. Unemployment is actually becoming significant enough that competent people are joining the ranks, along with those who weren't really very good at it anyway. A friend of mine who used to be editor of an embedded design magazine told me about the latest status symbol among the high-flying residents in Silicon Valley: A job.

Life is tough. Get over it.
That hasn't been a popular thing to say lately. The government wrote the airlines a check, and suddenly the line of companies that were mortally wounded by the Sept. 11 strikes was longer than that for the job fair that wrapped multiple times around Madison Square Gardens. Even the airlines have gotten back in line for more. Face it, guys: You weren't in that great of shape even before that happened. This just gives you a patriotic way to become a victim.

This is true for engineers as well. There was a tremendous boom in XYZ for Dummies books over the last decade. Well, if you are a dummy then you shouldn't be trying to do engineering.

Engineering is hard. It has to be done right. Attention has to be paid to the details. You cannot learn this from a book, or even a whole college degree full of textbooks. If you are not capable of doing engineering, you should find something else to do. If you are an unemployed engineer, you will find a way to do what you do again. If you are unemployed and used to work as an engineer, then find out what you are good at and do that instead of trying to chase a job that you think will let you retire early.

As the poet said, these are the times that try people's souls. This is not the first time that things have been bad, and it will not be the last. What you do during times like this will have more to do with how you are ultimately judged by history then anything that happened during the giddy time that went before.

When you tell your grandchildren about the '90s it will be a story about a time where everybody thought they were succeeding. Those that succeeded in spite of the times will tell the story of the first decade of the third millennium with more pride.