We know that digital business transformation occurs at the intersection of three laws: Moore’s Law, Metcalfe’s Law, and Bandwidth Law. Put differently, we’re talking about using the combined powers of computing, connectivity, and cloud.
With faster and cheaper computers, we can start to embed sensors and software into devices that would have been unthinkable a few years back. Consider that the power in our smartphones is now greater than the computer power of the first IBM mainframe. As a result, we can process more information from more sources more quickly than ever before. For a fantastic overview of how Moore’s Law has changed our ability to use sensors and embed microprocessors in smaller and smaller devices, listen to Gordon Moore.
With more connectivity, we can access and share that information across a wider range of geographical locations than has ever previously been possible. In 1876, when Alexander Graham Bell invented the telephone, he was able to connect two people across a distance. By 1935, the first phone call was made around the world. By that time, more people had telephones and the value of having one was greater because you could contact more people. By the 1970s, many homes worldwide had a telephone, and the value to each user was increased because they could reach more family members, friends, customers, and services in more countries. Today, think about Facebook’s 1.5 billion plus connections across the globe. You can reach out to more users than ever before. That’s the power of Metcalfe’s Law.
Finally, increased bandwidth ensures the quality of our digital experience remains the same, no matter where we are and what amount of data we’re dealing with. In the days of dial-up Internet, which operated through a telephone line, it could take hours to get a connection. And that connection could be dropped at any time, especially if the phone line couldn’t handle the amount of data it was being asked to transmit. Today, Netflix, Spotify, and Amazon Video all rely on the power of Bandwidth Law—as do all users of these video and music streaming services.
In the digital economy, new business models are taking advantage of these three laws in combination.