The power of the digital, as a symbolic language, has no material but only intellectual limit. The reason is that designers and engineers continually become more skillful and creative at their tasks. Moore found that this higher productivity could not be explained by conventional reasons, such as economies of scale; he also found that Ricardo’s law of diminishing returns, which might have increased labor costs, had little impact. Instead, he realized that the designers were becoming better with practice, and that their cleverness could be quantified and measured. As a result, either chip speeds double or, if the manufacturer wishes to keep speeds the same, the price is halved, every eighteen to twenty-four months. So a chip does twice as much for the same cost, or the same for half the cost. To predict these changes with accuracy, in such a volatile business as computer R&D, was an astonishing achievement. Such rapid changes would be incredible in the material world but are feasible in the virtual world of the digital economy.
This radical reduction in the cost of digital space and networks is causing a new economy which represents a clear-cut break with previous manufacturing and service economies. The new economy deals in intangible goods and services, it is global and it is intensely interlinked[1]. Markets and supply chains may be radically altered by the widespread adoption of electronic commerce…Virtual companies of the future may have little in common with today’s organization.[2]
Any new technology cuts costs for existing companies; then it allows new companies to come and produce a new kind of product which has a more general impact. The remarkable attributes of digital are its speed and its predictability.
[1] KELLY, Kevin, WIRED Magazine, San Francisco, 1997
[2] Department of Trade and Industry, UK , “Our Competitive Future: Building the Knowledge-Driven Economy” Report, 1998
