Wednesday, 20 November 2002 8:00 am
“Good-enough computing” is very dangerous to the health of the IT industry.  The term, presumably coined by an IDC analyst in 2001, has been used by IDC and others  to describe a growing problem in the computing business: the power of current hardware and software is now “good enough” for almost all consumer applications and a large number of businesses applications.  The pressure to upgrade that drove the tech boom in the 1980’s and 1990’s has now disappeared, and with it a lot of revenue. (N.B.: Scott McNealy has used the term in recent speeches as well, but in a different context and with different intended meaning.)

The only solutions to the problems caused by “good-enough computing” are new applications that compel the buyer to upgrade in order to obtain their benefits.  In other words, we need new “killer apps”, as we like to call them. That is what has always driven computing and networking demand.  We are currently short on such applications.  Mix that observation with the inexorable forward march of Moore’s Law, and the effects are shrinking revenues and lengthening replacement cycles (worst fear: replacement cycles become refurbish cycles).  That is the crux of the problem currently facing the computer, software, and communications industries.

Where do new killer-apps come from?  Almost entirely from startups, which are almost entirely funded by venture capital.  Unfortunately, the venture capital industry is currently deadlocked, unable to do much more than continue to keep alive some of its investments from yesteryear.  Very little seed funding is going to new ideas.  The reason, of course, is that there is no real demand for either IPOs or startup acquisitions.  Without such “exits”, venture capitalists are forced to redirect their funds to keep their most promising companies alive.  Also, because of the tech-stock crash on the NASDAQ, comparables are way down, which depresses valuations and discourages anyone from wanting to invest in early stages, lest they get killed in a “down round” to follow.  No seed money leads to no funding of new ideas which leads to no new startups which leads to no new killer apps which leads to "good-enough computing" which leads to declining industry revenue.