The Great Fragmentation: And Why the Future of All Business is Small

CHAPTER 7 The truth about pricing: technology and omnipresent deflation

For all of its flaws, the industrial mentality has given us the gift of efficiency, of doing everything we do better, faster and cheaper than we did it yesterday. The machine mentality of getting better by increments has led us to a point where the tools that matter are free. They cost so little that they basically cost nothing. Or, in fact, they actually cost nothing in real terms and are given to us in that the thing of real commercial value comes from the person at the end of the technology, rather than the technology itself. The technology still doesn’t make the decisions that matter. We do. From a commercial perspective the decisions that matter are those that involve expenditure, which is still largely a human decision. Two hundred years of churning and competing on price got us to a point where it almost no longer matters. And we should be thankful because that’s how we reached the age of ‘disposable technology’.

Technology deflation

The default example of how technology is getting ever cheaper and ever more powerful is Moore’s law. For the uninitiated, Moore’s law was an observation made by Gordon Moore, co-founder of Intel, who contended that over the history of computing hardware, the number of transistors on a circuit board would double approximately every two years, effectively doubling the power and halving the price of computing power. But it’s not Moore’s law in itself that’s so defining. ...