“The Twilight of Technology?” — Hardly

There was a very interesting article in today’s Wall Street Journal (sorry, I can’t hyperlink to it here as it is password-protected) about Amazon’s decision to pursue a “shopping mall” strategy. In a roundabout way, this article shares a lot in common with some recent remarks made by Kevin Rollins of Dell (for more text on Mr. Rollins, comments, click here). In a nutshell, there seem to be a dialog going on in the computer/IT industry that I find particularly troubling. There are some really good reasons why these discussions about “the twilight of technology” are flawed.

Just to recap, the article in today’s Wall Street Journal talks about the tension between Amazon’s desire to leverage its considerable investment in and knowledge of electronic commerce to provide technological capabilities to other merchants. Amazon has been doing this with Target for some time, but they are now looking to broaden this offering. The Dell article talks about the impact that the “commoditization” of computer hardware has changed the business and how Dell plans to capitalize on its vision of open innovation. Both of these articles are, in my opinion, really about how we transition to the next wave of technology.

Most articles about the so-called “twilight of technology” seem to have a similar structure. As you might have guessed, I am not an adherent to this vision. From my perspective, the argument goes as follows:

1. Once upon a time companies derived competitive advantage from the possession of specialized technology.

2. As technology becomes more of a commodity, all companies in an industry (or the economy as a whole) will adopt technology.

3. Because everyone has adopted technology, whatever competitive advantage was associated with the possession of technology will no longer exist.

Let’s start with the first point. I am of the belief that simply possessing technology does not provide competitive advantage. Simply having a web server or a database or a transaction processing infrastructure is not a competitive advantage. It is the application of said technology that can translate into a competitive advantage. I have a really hard time imaging a technology that actually meets this “golden age” criteria mentioned in point 1.

As for the second point, we also know that all companies do not adopt technology to the same degree, even when it’s available. If the proponents of this “tech is dead” theory have one thing right, they are right on the money about this notion that IT is becoming more like a commodity input in some ways than it has in the past. As such, firms will be able to determine how much IT they want to apply against their business processes. Some firms will become tech leaders and others will become technology laggards. This is not confined to the world of IT — businesses are always making explicit tradeoffs among various inputs when they look at their businesses.

I don’t really know what to say about the last point. I have a hard time reaching that conclusion provided that I can’t accept points 1 and 2.

So, what does this all mean? In the end, we are seeing the latest iteration of a cycle that has played itself out many times in the past. Whenever a new technology (or suite of technologies) comes out, there are those who adopt it and apply it and those who attempt to ignore it. If it is a really important technology, such as the telephone or electricity, those who invest early and learn to master the technology can really create a real advantage.