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BOOK EXCERPT

9.10.99  
How the World Got Networked, and Bill Gates Became a Good Guy
Excerpts from The Long Boom: A Vision for the Coming Age of Prosperity

The Long Boom People living in the middle of the next century -- say the year 2050 -- will look back on our times and understand that a monumental transformation took place. They will see the forty-year period from 1980 to 2020 as encompassing a critical shift from an Industrial Age economy to an Information Age economy, or what we simply call the New Economy. The Long Boom is not a prediction. It is a first draft idea that is intended to show people a positive future that is desirable and attainable.

LOOKING BACK ON THE MILLENNIUM. Welcome to our documentary series "Twenty-first Century Choices: The Making of a Long Boom." I'm your host, Salma Aboulahoud. I was a girl coming of age in Egypt as the new millennium dawned. Those first years were ones of explosive growth and rapid innovation. And they brought moments of great peril.

Our eight-part series will look back at the major stories that defined those times and led to the creation of ours. We'll look at how the people in the first part of this century made many farsighted choices. We'll look at how they struggled to restructure what was a new global economy, to build a bold new politics, and to create the flexible, learning society. We'll also look at how they might have gotten it wrong, producing decades of horror like the first half of the twentieth century.

We'll start with a look back on the construction of the technological infrastructure of our twenty-first century society. At the end of the twentieth century, the ultimate goal of the technology world was to spread computers and computer chips around the entire globe and connect them. That megaproject can be understood as three major stories: computer hardware, telecommunications, and software. The project was largely completed by 2015, though some of the solutions were unpredictable until the very end.

First, the hardware story: Just after the turn of the century, basic personal computers cost about as much as a good television set. Razor-thin profit margins put computer manufacturers under extreme pressure but allowed people in developing countries to buy computers.

By 2006, virtually every new top-of-the-line personal computer was driven by a chip 100 times more powerful than those of the 1990s. By 2002, all a computer's functions could be housed on a chip the size of the head of a screw. That propelled a proliferation of small computerized devices that unbundled the functions that had previously been the sole province of the PC.

By 2005, computers had become extremely small, powerful, and cheap. With the vast expansion of wireless telecommunications, all computer users became free to roam.

Computers became much easier to use. The keyboard had long checked the growth of computing. Many literate people couldn't type; illiterate or barely literate people were cut off. Most keyboards were designed for European languages, especially English. By 2005, the majority of new computerized devices could recognize a limited spoken vocabulary. By the end of the decade, powerful dictation systems caught nearly every word, even in languages not well suited to keyboards. This advance was a special boon to the Chinese. The 4,000 character keyboard was a thing of the past.

The final hardware threshold was high-resolution flat screens that approached the crispness of paper. Some were flexible like electronic paper; some were the size of entire walls of buildings.

FREE COMMUNICATIONS. In the late twentieth century, telecommunications was all about bandwidth. Data traveled in a relative trickle to many small businesses and almost all homes, causing much consternation because so much of the promise of networking depended on moving large files. Many competing projects tackled this problem. This was a problem for regulators because the different systems needed to be standardized. Companies faced fierce competition. But it was a boon to everyone else because bandwidth became plentiful.

Just after 2005, there were eight competing satellite systems handling voice and video data traffic. By 2009, there was no meaningful distinction among any of them. They all had become strands in the Net. At the same time, many firms were competing to compress digital files. These two developments combined to bring an unexpected big bang in telecommunications in 2007.

Telecommunications and bandwidth became so cheap and capacity so plentiful that virtually anything could be sent over the Net. Demand soared in what became known as the Telecom Takeoff. The most visible development was the proliferation of full-motion video connections between millions of nodes in the Net.

OPEN VERSUS CLOSED SOFTWARE. The final piece in the creation of a global network of computers was software. At the turn of the century, the battle was between free and proprietary software. If the open-source movement could consistently produce free high-quality software, then why would anybody pay good money to the proprietary crowd? Microsoft had the most to lose. A rival Silicon Valley group had the most to gain. If it gave away software and exposed its source code, it might be able to unseat Microsoft. But that meant coming up with new strategies for making money.

The breakthrough came not long after the turn of the century. Its timing couldn't have been better. The entire developing world was ready to leap into the digital age, but how was some poor person in Bangladesh going to come up with $100 to use Bill Gates's operating system? At first, people couldn't believe it was free. When suspicions dissipated, they used it voraciously. So by 2006, the entire world was computerized, and all the machines could talk to each other.

What happened to Bill Gates? By the turn of the century, he started becoming a serious philanthropist, donating billions to eradicating childhood diseases. Yet Gates could not shake his sinister image. There was one daring way forward: Gates could let go of his ambitions for more proprietary control of the basic software. He could even release the source code for Windows.

The complexity of computer code was causing problems, and the best way to solve them was to open the code up to all across the Net. The problem for Microsoft was its shareholders. The company's astronomical stock values were based partly on the strategic advantages of its Windows software. Luckily for Gates and company, the U.S. Justice Department's antitrust suit, begun in the late 1990s, ended with a deal that broke Microsoft up into two companies and forced it to open its operating-systems source codes.

Though they complained bitterly at the time, the Microsoft shareholders profited handsomely. Both successor companies went on to thrive. As for Gates, he could take his rightful place in helping the world make its difficult transition. He was the man in black no more.

Peter Schwartz is the founder and chairman of the Global Business Network, a consulting firm in the San Francisco area, and the author of The Art of the Long View.

Peter Leyden is a journalist who has covered technology, economics, and politics since the mid-1980s. He was formerly managing editor of Wired magazine and a special correspondent in Asia for Newsweek.

Joel Hyatt teaches entrepreneurship at Stanford University's Graduate School of Business. He was co-founder and senior partner of Hyatt Legal Services, and founder and CEO of Hyatt Legal Plans.

Reprinted with permission from The Long Boom: A Vision for the Coming of the Age of Prosperity
By Peter Schwartz, Peter Leyden and Joel Hyatt
Copyright 1999 by Peter Schwartz, Peter Leyden and Joel Hyatt
Published by Perseus Books, a member of the Perseus Book Group
Adapted by permission of the authors and Perseus Books
May not be modified, reproduced, republished, uploaded, posted, transmitted, or distributed in any manner.
Available beginning October, 1999, from bookstores nationwide, online retailers, or by calling 800 386-5656.

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