I came into the computer industry by way of the 8080 CPU, the first CPU on a chip. After tinkering with the 8080 chip for several years, in 1980 I was lucky to get into Intel, the company that introduced the 8080 in the market. I am happy and proud to have been (and still am) a foot soldier in this worldwide upheaval which has seen the digitization of most everything: appliances, cars, cell phones, communication, even the way we record our thoughts (as in this blog) and absorb new ideas. As a foot soldier in this truly life-changing upheaval, I write this article from a unique vantage point.
The most amazing thing to think about is that it did not take us a hundred years to progress from the vacuum tube and computers that had to be housed in buildings, to integrated circuits and computers that you can hold in the palm of your hand. And that computer you have in your hand is more than a million times more powerful than its roomful ancestor only a few decades ago. What used to be called a “supercomputer” a giant, electricity-draining behemoth, costing hundreds of millions of dollars just about three decades ago now sits on your desktop, and you use it to play first-person shooter games. You even complain that your neighbor’s gaming system has a more powerful graphics card than yours.
Progress has been exponential and continues to be so, like doubling the count of transistors on a chip every two years. We have only scratched the surface of what is possible, however, because we are still so far away from the processing density of computing systems in nature — meaning the brain, any mammalian brain. In terms of the processing power itself, the digital computer is no match for even the brain of a cat. There maybe a limit to what we can do with digital systems: we may never be able to emulate the power of the mammalian nervous system simply because the architecture and the units of computation (bits and hard logic versus analog values and “soft” logic) differ fundamentally. However, even now we can see what the future holds: a computer may never be able to survive in the jungle in a way that a lion can, even though today the fact that a computer can drive the streets of California legally is quite a feat. With miniaturization comes more computing power, not less, and so we will see ourselves undergoing an upheaval in months, not years. It took only a few months for Apple’s iPhone to blanket the whole world and start another revolution. Ideas can come from anywhere. There is no order to it all, and the only thing we can be certain about is faster and faster pace of change. Don’t buy that latest smarphone yet! In a few weeks another one will come out more dazzling, more powerful, more beautiful than that.
To build a pyramid in ancient times, you need slaves, and it took decades to put together one. To build a marketable smartphone can take six months to a year, and you need freethinking engineers, the most creative kind, to put it together and survive in the market. To build a pyramid you need solid rocks, and a discipline for accuracy. A little mistake, and you have to do it all over: add a few more years to your schedule, and a few thousand more slaves to replace those who would die as a result of the mistake. To build a smartphone, one that can survive the first day in the market, you need it to be as near as possible to perfection. Any defect noticeable to the consumer means defeat in the market. And yet perfection is not enough: it has to be attractive too, and full of desirable features like the ability to tell you exactly where you are at any moment.
All of this would not have been possible without freedom, the more freedom, the better. This is exactly the antithetical arrangement from that under which Egyptians had to organize themselves at the time they built those pyramids. You definitely can’t build a microchip by hiring slaves. You still need a large number of people to build a microchip, but under a very different motivational infrastructure. A slave’s motivation is very simply to survive today and live to see tomorrow. An engineer’s motivation is very complex, but one essential feature of such motivational makeup is money. So, instead of recruiting by force, you recruit for your army of engineers with a complex web of positive incentives: money in amounts competitive enough (market pay rates), a chance to leave a significant mark in the world, a little fame or bragging rights, extra benefits like comprehensive health care, and so on. Even all these are not enough. Like Rome’s armies, the army of engineers you need today have to have a vision of where the army is going, what is the prize, and leaders who can rally them on.
Whereas the pyramids were built under government coercion, today’s microchips are built without even the hint of government intervention. The U.S. government did not “create” Intel nor did it have any hand in the emergence of Microsoft. Its role is very limited to providing the environment by which these and subsequent technological giants came into being. What kind of environment is conducive to rapid progress? It’s not some comprehensive “industrialization plan” that caused the emergence of these companies. The kind of environment conducive to rapid technological change can be summed up in one word: freedom. The freedom to create, to set one’s own direction, to form an army of engineers. The freedom to make decisions, but then to enforce those decisions that become contractual agreements. To define precisely what rights are, and to enforce those rights. If I have the right to property, the government must protect that right by catching burglars and making them pay for property lost. The government’s role in this is very basic, almost mundane: protect people’s rights to be free. And by “rights” I don’t mean the “rights” to housing, to education, to health care. There are no such rights, unless we all want to be subservient to government.
The freedom to create means open competition. If I am free to nurture and follow bold ideas, the person next to me has to be free to invent also. In a free country, competition is unfettered and ruthless. The pursuit of perfection can be its own prize, and the only limit to progress is how large a market can emerge from a new invention. This freedom goes both ways: I should be allowed to charge market price for my product, or charge nothing at all. It’s up to the originator of an idea how she wants to use it, as long as it does not harm anybody else’s rights. Message to third world countries like the Philippines: set your people free, and you will see progress. Remove all useless and counter-productive rules and regulations. Let the market decide who wins and who loses.
In a free country such as the U.S., many think that only people who already have money have all the power to make significant contributions to progress. Not true. For example, even granting that Intel is still the largest semiconductor company, and Microsoft is still the largest software company, these two giant corporations have lost their leadership status. Other companies have come and grown even bigger. Google was just a tiny upstart when it offered its shares to the public (I didn’t even think they would make it). Apple got a helping hand from Microsoft when it had difficulties making ends meet, now it’s bigger than Microsoft in terms of stock value. Facebook and its leader could not have come from Intel nor Microsoft. Facebook came from nowhere to become the one dominant force in social networks.
Freedom and innovation are a tricky thing. What makes one company successful can also cause its decline, in time. When I first joined Intel, employee rules were very simple. You basically just did your thing, and risk-taking was even rewarded. My career as a mercenary engineer has taken me back to Intel (this time in Arizona). I am amazed by the changes I experience at Intel now: on my first day in this assignment, I had to undergo safety training. The main point of the training was to impart the idea that “safety and security are a value, not just a priority”. There are rules for everything, from what I can do with the company-supplied laptop (standard weapon for warriors that Intel has now made very difficult to use because of its requirement to ENCRYPT all drive contents), to traffic rules in the parking lot. I can be kicked out for a mere traffic rule violation like going faster than five miles per hour! This is not an exaggeration, and the teacher even cited an example of a warrior who got canned for driving at 20 miles per hour in the company parking lot. Innovation is not the game anymore, being mindful of rigid rules is now the game. I enjoy the independence of being a mercenary, but having this assignment is like being skipper of a small sailboat hitched to a humungous steam ship. I feel safe hitched to this lumbering giant, but I seem to have lost my creativity at the same time.
Understanding the market that Intel has been successful in, can make us appreciate Intel’s transformation from a nimble fighter jet to a slow-moving aircraft carrier. Building chips requires much more discipline than writing software. Intel rarely made mistakes (“bugs” in computer lingo), and every chip design that makes it to one of their billion dollar foundries has to be perfect (essentially free of bugs). Any bug can be very costly to fix, and most probably cost Intel a share of the market. To remain number one in the chip business, discipline is key.
Intel has been part of almost every significant semiconductor development in the past, recently it has missed an “inflection point” or two in the business. It has not participated in the cellphone chip revolution, nor has it made a dent in the mobile business. It bought Chips and Technologies in an attempt to enter the PC graphics business, but it has ceded this field to NVidia and AMD. Antitrust laws may partly be to blame, but today Intel’s core business is no longer new CPU architectures. Our PCs still use the Intel microprocessor, but Intel’s absence in the smartphone and tablet business are a significant loss. Somebody even predicted that, with Otellini’s departure, Intel has marked its transition from avante-garde chip designer to a giant and still very profitable chip foundry. It will be producing chips it did not design.
Success certainly breeds its own “downfall”, in this case not a violent crash, but a slow march to oblivion. Clearly, in a free country, no one individual, no organization can have a monopoly on success. Of course there are ancient companies that have remained competitive in their field: the Ford car company remains dominant. To stay there, however, one cannot rest and be sloppy. Competition drives everyone, including the pioneers, to work hard and yet enjoy, to be disciplined and yet be innovative. It’s not easy to get to number one, much less to remain number one. In the end, who benefits from all this? We all do.