The boom. The bust. Now what? Burned by exaggerated promises in the '90s and angry at betting their 401(k)s on the hype, many folks are tempted to believe that the information-technology revolution is overrated, overdone, and just plain over. So great is the backlash that the Harvard Business Review recently ran an article entitled "IT Doesn't Matter." Don't believe it for a nanosecond. The new ways we do mundane things -- tour colleges electronically, board airlines with e-tickets, and communicate digitally with family and friends -- are now second nature, integral to our lives. While we may take technology for granted, the reality is that the value of technology is greater than ever.
The right attitude toward tech is neither dark pessimism nor wild optimism, but sober realism. After the '90s binge on glitchy hardware and buggy software, CEOs are justified in demanding that new technology be simple, easy to use, and produce results that add to the bottom line. Purveyors of high-tech products would do well to realize that the market has seriously changed: They must deliver the goods, not just the promise of the goods.
CEOs, for their part, must realize that tech's power to transform their businesses hasn't waned. In fact, the bursting of the high-tech bubble solidified tech's position in Corporate America. The need to cut costs led companies to fully use their existing technology. The Web became the backbone of every big corporation. Companies survived by using productivity-enhancing IT to trim jobs and outsource production. Productivity growth's unusual gains throughout the downturn reflect tech's impact. Yet many CEOs are content to live off past high-tech investments and are reluctant to try new technologies for the future.
Not so consumers. They're changing the patterns of their lives by buying digital cameras, smart cell phones, MP3 and DVD players, and personal video recorders such as TiVo. They're making dates on Match.com, downloading music from the Net, instant messaging, sending photos on their PCs, and building a grassroots model of economic exchange at eBay. In the process, they're promoting new information technologies, such as Wi-Fi and file-sharing, and shaking up the telecom, music, and movie industries. Consumers never lost faith in technology.
It's time Corporate America rekindles its own faith -- and some fun along with it. Look at what Prada is doing with radio-frequency identification chips. As customers pass through its shops with their clothes, RFIDs on the tags trigger video screens showing runway models in Milan wearing the same shoes and dresses. In dressing rooms the RFID tags trigger videos of the clothes combined with different outfits. Behind the scenes, the RFIDs control inventory. Think of what Wal-Mart Stores Inc. could do with RFIDs.
Witness what Apple Computer Inc. is achieving with its iPod player and iTunes Web site, and imagine what entertainment could be like if music and movie companies embraced digital distribution instead of fighting it. Finally, think of broadband without cables, linked by Wi-Fi radio frequencies carrying those movies and songs -- along with data, conversations, and home videos. All of these technologies already exist, waiting for companies willing to invest in them.
There are, of course, problems ahead. Spam, identity theft, and privacy issues may slow the spread of e-commerce on the Internet. Investor memories of being misled by Wall Street haven't disappeared, despite the runup in the prices of high-tech stocks. This could hamper the financing of another round of startups. But the idea that information technology is dead -- that it's no longer a major driver of economic growth and that the future holds few surprises -- is just not true. Says Andrew S. Grove, chairman of Intel Corp. and a forty-year tech veteran: "There are huge, huge things going on, and we are too myopic to notice. We can't even glimpse the many ways IT will change how people work and live." Amen.