July 30, 2001 New Thinking:
From long boom to long gloom

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• Irrational exuberance which led to illogical decision making
• The reaching of the PC ceiling
• The myth of interactive media

Irrational exuberance is well chronicled but what has got less examination is the fact that in many countries there aren’t all that many more people to sell computers to.

In 1999, in a piece called The PC Ceiling, I wrote that: “There is a significant percentage of the public out there who have no interest in spending a large amount of money to buy a machine that intimidates them and the majority of whose functions they have absolutely no need for. The PC Ceiling is already fast approaching in countries such as the United States. It’s not scientific, but I would estimate that some 40 percent of the population will never buy a PC, certainly not the type of PC we have known up until now.”

To get above the PC Ceiling, the computer industry needs to become very inventive, and much more consumer and marketing orientated. Right now, its response to the downturn is to cut prices. This will only achieve so much. There is a significant percentage of the population who simply can’t see the need for a PC. They will need more than faster RAM and cheaper prices to convince them otherwise.

Another key contributor to the downturn is interactive media. Or, to be more precise, the lack of – and lack of interest in – interactive media. The telecommunications companies really bought into interactive media. If they laid big fat pipes, they figured, people would jump out of their couches and wrap their arms around interactive TV.

The theory is reasonable but the practice has been cruel. It is horrendously expensive to lay these fat pipes and provide all the ancillary equipment. It is horrendously expensive to create quality interactive programming. And, wait for it, very few are convinced anymore that the public wants all that much interactive stuff. Or, more to the point, it is debatable whether the public is willing to foot the bill for all this new fangled interactive entertainment.

The telecommunications industry finds itself between interactive dreamland and financial ruin. Huge investments have already been made, yet so much more needs to be invested in a service that has questionable demand. An industry that should be rolling in profits because of the Internet is thus reeling in red ink because of over-expectations.

The PC Ceiling and interactive hype reflect the realities of consumer behavior. A section of the population will always embrace technology because it is part of their lifestyle and work life. However, there is another section that think that the TV’s just fine. You can’t make people buy things that they don’t want.


Gerry McGovern

 

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