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Zero's Newest Electric Motorcycle Is Good Clean Fun

The Zero S looks like a promising, nimble electric commuter motorcycle. We test a pre-production model.

Why Intel's Processors Aren't Big on Cellphones

Intel's Atom processor has failed to find a foothold among smartphones because they cannot compare to the low power consumption of rival ARM chips. But Intel hopes to fight back next year with an improved chip.

Tech Is Too Cheap to Meter: It's Time to Manage for Abundance, Not Scarcity

In 1969, the Neiman Marcus catalog offered the first home PC, a stylish stand-up model called the Honeywell Kitchen Computer, priced at $10,600. The picture shows an aproned housewife caressing the machine, with this tag line: "If she can only cook as well as Honeywell can compute." That image should be on every cubicle in Silicon Valley; it's a testament both to what technologists get right and what they get badly wrong.

Free: The Future of a Radical Price
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To their credit, they understood that Moore's law would bring computing within the reach of regular people. But they had no idea why anyone would want it. Despite countless brainstorming sessions and meetings on the subject, the only application the Honeywell team could think of for a home computer (aside from the perennial checkbook balancing) was recipe card management. So the Kitchen Computer was aimed at housewives and featured integrated counter space. Those housewives would, however, require a programming course (included in the price), since the only way to enter data was with binary toggle switches, and the machine's only display was binary lights. Needless to say, not a single Kitchen Computer is recorded as having sold.

Today, of course, we have computers in every home—and in every pocket and car and practically everywhere else. But one of the few things the average person doesn't use them for is managing recipe cards.

Don't blame Honeywell—blame the computing world of the 1960s. In those days, computers were expensive mainframes. Because processing power was so scarce and valuable, it was reserved for use by IT professionals, mostly working for big companies and the government. Engineers both built the computers and decided how to use them—no wonder they couldn't think of nonengineering applications.

But as the Kitchen Computer hinted, computers would soon get smaller and cheaper. This would take them out of the glass boxes of the mainframe world—and away from the IT establishment—and put them in the hands of consumers. And the real transformation would come when those regular folks found new ways to use computers, revealing their true potential.

Wired Editor in Chief Chris Anderson discusses his latest book, Free: The Future of a Radical Price.

For more, visit wired.com/video.

All this was possible because Alan Kay, an engineer at Xerox's Palo Alto Research Center in the 1970s, understood what Moore's law was doing to the cost of computing. He decided to do what writer George Gilder calls "wasting transistors." Rather than reserve computing power for core information processing, Kay used outrageous amounts of it for frivolous stuff like drawing cartoons on the screen. Those cartoons—icons, windows, pointers, and animations—became the graphical user interface and eventually the Mac. By 1970s IT standards, Kay had "wasted" computing power. But in doing so he made computers simple enough for all of us to use. And then we changed the world by finding applications for them that the technologists had never dreamed of.

Courtesy of Computer History Museum

This is the power of waste. When scarce resources become abundant, smart people treat them differently, exploiting them rather than conserving them. It feels wrong, but done right it can change the world.

The problem is that abundant resources, like computing power, are too often treated as scarce. Consider another example: Wired's IT department used to send out occasional emails telling employees it was time to "delete unneeded files from the shared folders"—their way of saying they had run out of storage room on the servers. Because we're good corporate citizens, we all dutifully scanned through our files, deleting those we could live without. Perhaps you've done the same.

One day, after years of this ritual, I began to wonder just how much storage capacity we actually had. Turns out, not so much: 500 gigabytes. At the time, a terabyte of memory (1,000 gigabytes) cost about $130. I had recently purchased a standard Dell desktop PC for my family, which the kids used for playing videogames; it came with a terabyte internal hard drive. My children had twice as much storage as my entire staff.

Scarcity vs. Abundance Management

 
Scarcity
Abundance

Rules
Everything is forbidden unless it is permitted.
Everything is permitted unless it is forbidden.

Social model
Paternalism ("We know what's best")
Egalitarianism ("You know what's best")

Profit plan
Business model
We'll figure it out

Decision process
Top-down
Bottom-up

Organizational structure
Command and control
Out of control

How did this happen? The answer is simple: We had gotten stuck thinking that storage was expensive, when in fact it had become dirt cheap. We treated the abundant thing—hard drive capacity—as if it were scarce, and the scarce thing—people's time—as if it were abundant. The corporate bureaucracy had gotten the equation backward. (Let me hasten to add that my office quickly added a heap of storage, and those emails don't go out anymore!)

This happens all over the place. When your phone company tells you that your voicemail inbox is full, that's artificial scarcity—it costs less than a nickel to store 100 voice messages, and the average iPod could store more than 100,000 of them (voice messages are recorded at lower quality than music, so they take up less space). By forcing subscribers to spend time deleting voicemails, the phone companies were saving a little on storage costs by spending a lot of consumer time. They managed the scarcity they could measure (storage) but neglected to manage a much more critical scarcity (customer goodwill). No wonder phone companies are second only to cable TV companies in "most hated" rankings.

Chris Anderson discusses "Free."

For more, visit wired.com/video.

But the funny thing about waste is that it's all relative to your sense of scarcity. Our grandparents grew up in an age when a long-distance telephone call was an expensive luxury, to be scheduled and kept short. Even today, many find it hard to keep people of that generation on a long-distance call for very long—they still hear a meter ticking in their head and rush to finish. But our kids are growing up in an age when long distance is free on their cell phones. They'll happily chat for hours. From the perspective of 1950s telecom costs, that's incredibly wasteful. But today, when those costs have fallen to near zero, we don't give it a second thought. It doesn't feel like waste at all.

Nature Wastes Life

Our brains seem wired to resist waste, but we are relatively unique in nature for this. Mammals have the fewest offspring in the animal kingdom, and as a result we invest enormous time and care in protecting each one so that it can reach adulthood. The death of a single human is a tragedy, one that survivors sometimes never recover from, and we prize the individual life above all.

Percentage of your CPU's transistors used for ...

Waiting for you to do something

Genie effect and other UI frippery

Running programs you forgot you opened

Spyware keylogging your passwords

Work

As a result, we have a very developed sense of the morality of waste. We feel bad about the unloved toy or the uneaten food. Sometimes this is for good reason, because we understand the greater social cost of profligacy, but often it's just because our mammalian brains are programmed that way.

However, the rest of nature doesn't work like that. A bluefin tuna can release 10 million fertilized eggs in a spawning season. Perhaps 10 of them will hatch and make it to adulthood. A million die for every one that survives.

But there's good reason for it. Nature wastes life in search of better life. It mutates DNA, creating failure after failure, in the hope that some new sequence will eventually outcompete those that came before and the species will evolve. In other words, nature tests its creations by killing most of them quickly—the battle "red in tooth and claw" that determines reproductive advantage.

Nature is so wasteful because scattershot strategies are the best way to do what mathematicians refer to as fully exploring "the potential space." Imagine a desert with two pools of water separated by some distance. If you're a plant growing next to one of those pools, you can follow one of two different reproductive strategies. You can drop seeds near your roots, where there's a pretty good chance they'll find water. This is safe but soon leads to crowding. Or you can toss the seeds to the wind and let them float far away. This means that almost all will die, but it's the only way to find that second pool of water, where life can expand into a new niche, perhaps a richer one. The way to get from what the mathematicians call a local maximum to the global maximum is to explore a lot of fruitless minima along the way. It's wasteful, in a sense, but it can pay off in the end.

The science fiction writer Cory Doctorow calls this "thinking like a dandelion." He writes: "The disposition of each—or even most—of the seeds isn't the important thing, from a dandelion's point of view. The important thing is that every spring, every crack in every pavement is filled with dandelions. The dandelion doesn't want to nurse a single precious copy of itself in the hopes that it will leave the nest and carefully navigate its way to the optimum growing environment, there to perpetuate the line. The dandelion just wants to be sure that every single opportunity for reproduction is exploited!"

This is how to embrace waste. Seeds are too cheap to meter. It feels wrong, even alien, to throw so much away, but it's the right way to take advantage of abundance.

Life Is Cheap (If You're a Fish)
Nature wastes life, but it's not all in vain. The animal kingdom merely takes a scattershot approach to improving its species. Only mammals attempt to preserve every life.

Making the World Safe for Cat Videos

Perhaps the best example of a glorious embrace of waste is YouTube. I often hear people complain that YouTube is no threat to television because it's "full of crap"—which is, I suppose, true. The problem is that no one agrees on what the crap is. You may be looking for funny cat videos and think my favorite soldering tutorials are of no interest. I want to see funny videogame stunts and couldn't care less about your cooking tutorials. And clips of our own charming family members are of course delightful to us and totally boring to everyone else. Crap is in the eye of the beholder.

Even the most popular YouTube clips may totally fail in the standard Hollywood definition of production quality, in that the video is low-resolution and badly lit, the sound quality awful, and the plots nonexistent. But none of that matters, because the most important thing is relevance. We'll always choose a "low-quality" video of something we actually want over a "high-quality" video of something we don't.

A few months ago it was time for my kids to choose how to spend the two hours of "screen time" they're allowed on weekends. I suggested Star Wars and gave them a choice: They could watch any of the six movies in hi-def on a huge projection screen with surround sound audio and popcorn. Or they could go on YouTube and watch stop-motion Lego animations of Star Wars scenes created by 9-year-olds. It was no contest—they raced for the computer.

Chris Anderson on Free: The Future of a Radical Price at the Wired Disruptive Business Conference.

For more, visit wired.com/video.

It turns out that my kids, and many like them, aren't really that interested in Star Wars as created by George Lucas. They're more interested in Star Wars as created by their peers, never mind the shaky cameras and fingers in the frame. When I was growing up, there were many clever products designed to extend the Star Wars franchise to kids, from toys to lunch boxes, but as far as I know nobody thought of stop-motion Lego animation created by children.

The demand must always have been there, but it was invisible because no marketer thought to offer it. Once we had YouTube, and didn't need a marketer's permission to do things, that demand suddenly emerged. Collectively, we found a category that the marketers had missed.

All those random videos on YouTube are just dandelion seeds in search of fertile ground on which to land. In a sense, we're "wasting video" in search of better video, exploring the potential space of what the moving picture can be. YouTube is a vast collective experiment to invent the future of television, one thoughtless, wasteful upload at a time. Sooner or later, through YouTube and other sharing sites, every video that can be made will be made, and every person who can be a filmmaker will become one. Every possible niche will be explored. If you lower the costs of exploring a space, you can be more indiscriminate in how you do it.

Nobody is deciding whether a video is good enough to justify the scarce channel space it uses, because there is no scarce channel space. The cost of distribution is now low enough to round down to free. Today, it costs a content provider like Netflix about a nickel to stream a two-hour movie to one person. Next year it will be four cents. A year later it will likely be three. Which is why YouTube's founders decided to give it away. The result is messy and runs counter to every instinct of a television professional, but this is what abundance both requires and demands. If YouTube hadn't done it, someone else would have.

What this boils down to is the difference between abundance- and scarcity-based business models. If you're controlling a scarce resource, like the prime-time broadcast schedule, you have to be discriminating. There are real costs associated with those half-hour chunks of network time, and the penalty for failing to reach tens of millions of viewers with them is calculated in red ink and lost careers. No wonder TV executives fall back on sitcom formulas and celebrities—they're safe bets in an expensive game.

But if you're tapping into an abundant resource, you can afford to take chances, since the cost of failure is so low. Nobody gets fired when your YouTube video is viewed only by your mom.

For all YouTube's successes, however, it has so far failed to make any real money for Google. The company has not figured out how to match video ads with video content the way it matches text ads with text content.

The TV networks saw an opportunity in this failing and created a competing video service, Hulu. It offers mostly commercial video, most of it taken from TV, but it is as convenient and accessible as YouTube. Because the content is a known quantity, often the same thing advertisers are already buying on TV, they're happy to insert their commercials as pre-rolls, post-rolls, and even interruptions in the programming. It's free, of course, but unlike on YouTube, you're paying something in time and annoyance—just like on regular TV. However, if it's 30 Rock you want, and you want it now, in your browser, this is the simplest way you're going to get it.

The YouTube model is totally free—free to watch, free to upload your own video, free of interruptions. But it doesn't make money. Hulu is only free to watch, and you have to pay the good old-fashioned way, by watching ads you may or may not care about. Yet it generates healthy revenue. These two video outlets illustrate the tension between different variations on the free business model. Although consumers may prefer 100 percent free, a little artificial scarcity is the best way to make money.

Sound schizophrenic? That's the nature of the hybrid world we're entering, where scarcity and abundance exist side by side. We're good at scarcity thinking — it's the 20th-century organizational model. Now we have to get good at abundance thinking, too.

Excerpted from Free: The Future of a Radical Price, copyright ©2009 Chris Anderson, to be published by Hyperion in July. Chris Anderson (canderson@wired.com) is Wired's editor in chief.

July 6, 1947: The AK-47, an All-Purpose Killer

Mikhail Kalashnikov's assault rifle comes along too late to kill the Germans he intended it for, but the AK-47 makes its mark on history anyway.

Crash Could Free Up Wall Street's Grip on Bright Young Minds

Walking around Wall Street these days is like being trapped inside the videogame Resident Evil. There are the dead (Lehman Brothers and Bear Stearns), the undead (AIG, which survives only as long as the government needs it to), and the living scared (every suit who still has a job). Even with the occasional announcement of a good fiscal quarter from one of the banks, it's hard to see anything but neutron-bomb-like decimation. The glory days of Wall Street's dominance are done.

No one likes to see an industry die, but there is an upside: Often, smart cubicle refugees will seize the opportunity to pursue their entrepreneurial dreams, unleashing waves of innovation upon society. The death of Big Steel in the 1980s gave birth to nimbler, more competitive mini-mills. The decline of the Hollywood studio system in the '60s gave us independent films. And the current demise of print media is giving us new sources of information, as journalists band together to reinvent news coverage. Wall Street's turn is next, and we should all be praying for one thing: that many of those liberated innovators seek playing fields outside of finance.

A new flowering of creativity on Wall Street would be a very bad thing. We tend to think of innovation as always and everywhere desirable—it has brought us printing presses, artificial hearts, and shoes that mimic barefoot running. But Wall Street's creations too often devolve from enriching us all to enriching a select few (while sending the rest of us ducking for cover). Bundling mortgages into securities made home ownership possible for many. Then bankers figured out how to go from "many" to "nearly everyone"; foreclosures exploded and the economy imploded. Credit default swaps initially made it easier for companies to finance growth—until they were leveraged, tweaked, and sold to excess, cratering the financial system. Not all Wall Street innovation is bad. But the worst of its labs are Three Mile Island-style dangerous.

Such inventions do produce fabulous paper wealth, however, attracting many of our sharpest math and science minds. At MIT and other top schools, investment banks recruited hard and early, skimming the cream from each graduating class. Until the mid-1990s, college grads with bachelor's degrees could earn more in engineering than finance; that flipped in 2000, and it hasn't come close to parity since. A survey of Harvard alumni found that 5 percent of men graduating in 1970 went to Wall Street; by 1990, the proportion was 15 percent. The same trend was also apparent among women.

But the big paychecks came with what economists call opportunity costs. Instead of spending their days searching for exotic trades, some of these Wall Street wizards could've been creating drugs, imagining software, or solving energy problems. Capital markets need geniuses, too, but it's hard to cheer such a massive money-chase.

"If I invent some superb method for quantitative trading, it puts money in my clients' pockets and my own pockets. Is society any better off?" asks Michael Coen, a former Wall Street quant who now teaches and researches artificial intelligence at the University of Wisconsin-Madison. "You could argue that having healthy capital markets helps society, but it's not particularly satisfying. My work in machine learning gets incorporated into medical applications. Does that make a difference? I can say that, in some humble way, it does." Plus, he adds, his research will no doubt be picked apart by folks looking for ways to apply it to finance. But Coen will never see the results of that analysis. "It doesn't go in the other direction."

He's right: On Wall Street, work in the lab never leaves the building; after all, a trading strategy's value disappears when it goes mainstream. An innovation might strengthen capital markets, but the possibility of that research benefiting another industry—the kind of cross-pollination that turned Velcro from a NASA oddity into a modern staple—is eliminated.

Now's the chance for other sectors to get their hooks into the young and brilliant, while Wall Street is distracted and busy rebuilding. This past spring, MIT held a job fair and saw a surge from companies that had never set foot on campus before—newborn startups, nonprofits, hospitals, and government agencies. A few years ago, these promising players didn't stand a chance against Lehman and Goldman Sachs. Today, their recruiting could mean that out of the financial industry's decay will bloom a thousand innovations far away from Wall Street.

Senior writer Daniel Roth (daniel_roth@wired.com) wrote about why Wall Street needs transparency in issue 17.03.