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“The Next Big Thing”

Investors and consumers today have unrealistic expectations for the next “big thing” meaning new
consumer products or services created by new science and technology. No doubt that is because most
people living today spent most of their life during the last 70 years when the information technology
(IT) industry produced rapid new “big things.”

The IT industry began in the 1950s with the development of television. The computer was developed in the
1960s. It used vacuum tubes and occupied large office spaces with racks of equipment and wiring. The
chip replaced the vacuum tube in the 1970s and that resulted in personal desktop computers with
memory and computing power much greater than the old monsters. Laptop computers and computer
pads followed in the 1980s along with mobile phones. The first mobile phone was the size and weight of
a brick, and you carried it around in a case. Thereafter, Apple and Jobs made the mobile phone ever
smaller until it was the size of a business card, and nobody could use the keys because their fingers were
too large. All excess cycles end and the cell phone now is larger and more useful.

The IT industry was not new in the 1950s. It is a subpart of the much older electronic industry which
began in the early 1900s with the telephone. Then came radio in the 1920s and 1930s. Sonar and radar
developed in the 1940s for the military but not for consumers. Electronics progressed after that on a
parallel track with IT with medical scanners and heart pacemakers.
The vehicle and airplane industries had similar histories, beginning in the early 1900s.
Investors and consumers believe the new “big things” are the driverless car, electric cars and airplanes,
green energy (solar, wind, biomass), and artificial intelligence (AI). In each case, there are major science
and technology obstacles that make that highly unlikely.

Investors and consumers make the following mistakes in choosing the next “big thing”.
1. They assume that because scientists and engineers can produce one working prototype of a new
product in a lab, more than 10 million can be produced per year at a price consumers can afford.
That is not automatically true. The material and equipment cost for making one working
prototype is not critical. To make millions of products, engineers must find the least cost
material and equipment to make each part for the product. There may be hundreds or
thousands of parts in each product. In some cases, the machines may not exist to make the
product and must be designed and built. In most cases, prototypes must be redesigned many
times and rebuilt to get the cost affordable. Example: electric vehicles and green energy.
2. They assume that because the product can be built for one purpose, such as the military or
NASA space program, it can be produced at an affordable price for consumers. The federal
government provides virtually unlimited funding for the military and NASA. Cost does not
matter. Cost is critical for consumer products. For example: solar energy is a good choice for
NASA in space but can’t compete on cost with fossil fuels on earth.
3. They ignore that the new product cost is not competitive with existing competing product costs.
Example: green energy (solar, wind, biomass) and electric cars.

The next Big Thing630
4. They assume that technology break throughs will make the new product competitive with
existing products. Example: electric vehicles, green energy, driverless cars, and AI.
5. They ignore the technical difficulty of producing the new product at a competitive cost.
Example: electric cars.
6. They ignore that the new product requires new infrastructure that does not exist and will be
cost-prohibitive to install. Example: electric car charging stations and power generators and
distribution capacity.

Article by Ralph Coker