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Technology Forecast Frederic G. Withir~gton A number of recent technology forecasts are relevant to the cost, performance, and nature of the equipment likely to be used for teleworking. Of prime importance is the forecasting of the price of micropro- cessors, which are the central components of workstations (see Figure 1~. The forecast runs to 1997. That sounds far away, but the technology of semiconductors is by now so well known that, with some degree of certainty, it is possible to project quite far into the future. Figure 1 shows the cost of buying microproces- sors of various sizes from their original manufacturers. The four- bit device is used in the pocket calculator; today it costs about $1.50, which is commensurate with the $4.~S cost for the sort of calculator you can buy at a drugstore. More significantly, the cost of the 16-bit microprocessor is now below the $10 level. It is the heart of the IBM PC and the Apple I! and is quite powerful. The 32-bit microprocessor (with the computing power of a fairly large general purpose computer) is now entering the same scale. So far it still exists in limited quantities, but the quantities will rise and the cost will drop. Eventually, even more powerful 64-bit micro- processors will appear. Frederic G. Withington is vice-president, Information Systems, Arthur D. Little, Inc. 105

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106 CE J o 100 A- 10 I CC LL IL C: CL J > J 1 By UJ En o CL o Cal 0 10 THE FUI ARE Nit 1 1 -me ~ Uncertainty , , , , , , , , ~ ~ 1977 1982 1987 YEAR 1992 1 997 FIGURE 1 Median microprocessor price versus time (1,000 Unit purchase). SOURCE: Arthur D. Little, Inc. Figure 2 presents a corresponding forecast of the cost of file storage. An office worker wiB have to take home or have delivered electronically a considerable quantity of information to work with, perhaps hundreds of thousands or millions of characters. The figure shows the cost per character stored for IBM's large disk drives for the last 30 years. The points form a remarkably smooth curve that appears to taper off toward a limit. Just ap- pearing on the scene, however, are brand new recording technolo- gies: optical storage in the form of video disks with perhaps 100

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TECHNOLOGY FORECAST 10 Or: UJ C' CC I C: Or: LL CL He cry 0. 1 Lo o 0.01 C: I L1J 0.001 CD o \ Magnetic _ ~ r \ \ a. Optical or ~ Vertical Magnetic \ - - 0.0001 L I I I I I I 1 955 1960 1965 1970 1975 YEAR 107 1 980 1 985 1 990 1 995 FIGURE 2 File storage evolution. SouRcE: Arthur D. Little, Inc. times the recording density of existing magnetic storage, and ver- tical magnetic recording, which stands the little magnets up on their ends and looks at the cross section instead of laying them down flat and looking at the longitudinal section, offering 10 times today's recording density. So, one technology or the other will keep the cost curve going down. The home workstation of 1990 will employ these technologies along with a telephone handset and communicating capabilities.

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108 THE FUTURE It will not look very different from today's terminals or personal computers. The difference will be in the electronics inside; there will be great quantities of storage and computing power. These wiB support such services as a high-resolution display that can make any shape on a digital bit map, with perhaps 2000 x 2000 picture elements (about 20 times today's resolution) in full color. Turning to communications technology, we find a different world. There are already mature new technologies for improved communications. Coaxial cable is used for cable television and for high-speed digital communications. The optical fiber, which is al- ready widely used for telephone service, is also available. There is also microwave technology, Tow-cost transmitters and receivers that sit atop buildings or homes, and there is satellite technology. It is possible to buy for about $2,000 a home satellite receiver. (You cannot transmit with it, however; that will always be more costly.) The problem is getting past financial and regulatory con- straints to get these technologies into widespread use. The finan- cial quandry lies in the cost of installation. If ~ rewire the tele- phone system to all your homes, ~ must use $26-per-hour workers to do it, and T must go into every manhole in every street, pull out the old equipment, and put in new. To rewire the entire nation's communications system, including every local loop and every connection, would be an astronomical job, costing, let us say, $100 billion, and probably much more. By the year 2050 or 2100 there will have been a universal conversion from copper wire to fiber optics for the nation's entire telephone network, so that every telephone will have television bandwidth. But that is so far away that it is not a concern to us now. In the meantime, we face the problem of affording the available new technology. Since we will be using standard communicating microproces- sors, we can put in software that enables the devices to do many different things, as we can with a personal computer today. Tele- workers will be provided with the appropriate software to do the company's business, but it will also be possible for them to buy game software, to do word processing, to figure the family fi- nances, and to use expert system software to prepare the {RS Form 1040. Consumers as well as workers and employers will have many reasons to acquire this device. A telephone handset will be on the workstation in order to have one less box on the desk and one less keyboard. We will not have

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TECHNOLOGY FORECAST 109 voice recognition, although there will be some slow and limited improvement in voice capability in these systems, which, per- haps, will be of some significance in terms of the increasing breadth of work that can be done remotely. The device will probably cost not less than about $500 because manufacturing costs are limited by factors that are either subject to inflation or are not dropping. The manufacturer must provide a case to shield the device that fits the Federal Communication Commission's emission requirements. The keyboard must be con- venient and pleasant to use. There has to be a display assembly, either a cathode ray tube with a high voltage supply or a flat panel, and that will remain fairly costly. Finally, a power supply is needed to drive the whole thing, and it contains heavy metal. Thus there is a certain minimum price for manufacturing the ba- sics of the machine; the rest is electronics, the cost of which is declining toward zero. So the manufacturer may as well provide enough electronics to get to high levels of capability because leav- ing them out doesn't save much money anyway. The workstation printing capability will be rather limited. Un- fortunately, people want fast printers and high quality since we are accustomed to the letter-quality print of the electric type- writer. That is a high standard; there is no cheap, high-speed, high-quaTity printer in the offing. People are likely to solve this problem by pooling their printing needs and equipment. Another device that will be important to teleworking ought to be in widespread use by 1990. It looks like a convenience copier, but it is all-electronic and all-digital. The machine scans the piece of paper on its top and converts it to a digital bit stream. It then drives a laser beam to copy the image on the xerographic drum and to produce copies, though since it is digital it can alter the material by changing the font or suppressing some paragraphs, adding boilerplate, creating a form, or adding a logo. More to the point, this is a communicating device that can receive bit streams from such devices as our home workstations and produce paper images. Printing capability will therefore be available to tele- workers but may be remote. In addition, the divestiture of AT&T has set into motion a racli- cal experiment with this country's communications system. This is more important to the future of home workstations than any technology issue because of its effect on communications costs. Long distance, high-speed service is now very expensive but it

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110 THE FUTURE will become much cheaper. Such service is now unregulated, and the new technology is highly applicable to it; there will be many competitors utilizing optical fibers and satellites to provide wide- band, long distance service at Tow cost. In addition, regulators will no longer be taxing Tong distance service to subsidize local service, as they have done in the past. Thus, under intense compe- tition, rates should drop sharply. At the local level, however, we have services controlled by the regulators who set the rates for consumer dial service. They will necessarily extract the maxi- mum possible revenue from high-cost local business services to subsidize consumer telephone service, to make up for the lost Tong distance subsidy. Thus, even though a local leased line has the same technology and the same potential for price decline as the Tong distance one, it will in fact increase sharply in cost. When T work at home at a terminal, ~ will probably hold a line for a period of perhaps hours. Dial service will be metered and the rates will be higher than now, so ~ will run up a considerable bill. Perhaps it would be more economical to lease a line full time, but that cost will be higher too. In any case, we are talking about several hundred dollars per month for heavy home-communica- tions use. There are alternatives. One of the by-products of this rate change is that it encourages so-called bypass carriers to use new technology. Bypass carriers avoid the regulatecI telephone net- work. They provide a cable link or a microwave transmitter to transmit from the roof of a building to a satellite station or tele- port. A teleport being built on Staten Island in New York City will have cables going to the World Trade Center and then fanning out through Manhattan. These wideband bypass carriers will come into existence, especially through the adaptation of TV cable com- panies that have trouble making the sort of money they would like to from consumer service alone, because of the artificial cost surge in local communications. However, it is not clear that these carriers will be offering Tow-cost service for working in the home. Not every home will be equipped with a roof-top microwave trans- ceiver, even if there were spectrum space, nor will every home have a two-way cable at a cost of hundreds of dollars or more. In sum, the outlook is for superb new devices and communica- tions services to become available for home workstations in the coming years, but at high cost. The price of hardware has a floor set by shielded cases, power supplies, and keyboards. And on the

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TECHNOLOGY FORECAST 111 presumption that most teleworking will involve communications much of the time, homeworkers and their employers may face problems created by sharp increases in the cost of local communi- cations service to the home. Will employers and employees pay the increasing costs of tele- working? Workaholic executives will. Or their employers will do it for them. Computer programmers will, or their companies will do it for them. Journalists aireacly do, and traveling marketing rep- resentatives, aided by facilities offered by the local hose] or motel, undoubtedly will too. But how much further down the line than that is teleworking likely to go? ~ wonder. In any case, we should bear in mind that teleworking has a cost floor that is suddenly higher because of the AT&T divestiture.