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A never ending decrease of technology cost

The cost of technology keeps decreasing at an amazing pace. Here the cost of storage over the last 30 years. Credit: Deloitte University Press

In the last century we have seen an amazing increase of affordability of a wide variety of goods, including food (we can have today what used to be premium food at very low price, when I was young salmon was expensive, now it is quite affordable, fruits like mango and papaya where out if range, basically non existent on European tables, now they are to be found in any supermarket). According to Peter Diamandis the average cost of food today is 13 times less than it was a century ago. Travel has also decreased enormously. Going from Padua to Venice (some 30km) used to cost a full month of pay to a blue collar a hundred years ago, now it cost some 30′ of work.

Technology is the main reason behind these cost decrease in all sectors of our daily life.  And if we look at the cost of technology itself the gain over these last hundred years have been even more significant.

Take Storage.  In 1971 storing 1 GB of data would have cost 250 Million $ (the storage I was using at that time were iron rings with a board costing over 2,000$ and storing 8kB worth of data), now storing a GB on a hard drive cost less than 0.03$. In less than 50 years the price went down 8 billion times!

If we look at the price of communications we have similar decrease in price/cost (making a 3′ intercontinental call in the 1930 would have cost more than a month pay of a blue collar worker, today you make it for free with Skype…) and likewise if we look at the price of processing.

Even though Richard Feynman said that “there is plenty of room at the bottom” one might say that having reached almost 0 there is no more way to go (actually it is an asymptotic decrease so it might keep decrease forever) or that any further decrease will be irrelevant.

As a matter of fact we are already seeing example of technology given away at 0 cost, and even some technology we are paid to acquire! The fact is that once you go below a certain thresholds technology can enable different business models where you are actually paid to get the required technology that will enable the access to some services (that are charged).

A reasoning along this lines was offered by Carlo Carnevale Maffé at an event I attended few days ago suggesting that the Government should no longer tolerate the use of analogue and press for the shift to digital. He went on to say that given the affordability of technology today the access to digital was no longer an issue and given its lower transaction cost (hence higher efficiency) it should be the only way to go. Those wanting to stick to analogue (like paper…) should pay for contributing to the overall system inefficiency.

An interesting though indeed!

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.