Let me give you one example (and there are hundreds of them). The music business underwent this transition rather quickly. For nearly a century the music business consisted of a physical medium – originally albums, then tapes and finally CDs. But in a rather short period of time that physical medium got subsumed by the virtual medium of locally-stored MP3s. Apple and a few others made a lot of money from people who downloaded songs rather than buy the physical medium. But now that virtual business is being decimated by streaming music services. So within a very short period of time the music business went from physical to virtual and now to service. And each of these changes was transformational. In both shifts the old industry got largely left behind and new players took over the bulk of the business. Like most such shifts, the changes weren’t all-encompassing and there are still some people buying physical medium and downloading songs. But almost everybody has accepted the new over the old.
You can see or will see this same kind of transformation in every industry where computers and software can perform a function once done in the physical world. Almost every aspect of our personal lives has already been transformed by computers. Remember the days when you had to carry cash or checks to shop? That has been replaced by the virtual transactions of credit cards. And we are within a decade where paying for things will become an automated service and your face or your handprint will suffice to identify you and pay for things.
This shift can happen to things that we think of as purely physical. Remember the day when many people could do basic maintenance on their car? It didn’t take too much knowledge to change spark plugs or check the timing. But as cars have become software driven they are now far beyond any backyard mechanic. That step of computerization is putting cars on a track to go from physical to service. It’s pretty obvious that Google and others will succeed in making self-driving cars, making driving virtual. And it’s not too hard to imagine soon after that when cars might become communal. Your tax dollars or your home-owners association dues will cover a fleet of self-driving cars that will be ready to take you anywhere, eliminating the need for car ownership and turning cars into a service.
The same thing can happen with people and jobs. Back in the 70s I worked for several large corporations including Southwestern Bell. In those days every group of 10 – 50 people had a group secretary who handled various clerical functions for the group. This would include typing memos, filing paperwork, answering the phones, etc. But over time most of those functions have gotten computerized and large companies have far fewer clerical positions than they did in the 1970s. The phone systems can now answer themselves. We all write our own emails and memos. For the most part we have gone paperless and you no longer see every hallway in a large business covered by filing cabinets. And we all have our smart phones to help with just about everything else. So we have taken clerical functions and made them virtual.
But that transition is not over. Everything I read about technology tells me that the move to replace people with computers is going to accelerate over the next few decades. Pretty much any job that does repetitive tasks – like accounts payable clerks, coffee baristas, shipping clerks, and maybe even truck drivers – are going to be replaced to some degree by software. And at that point these functions become a service. If you need an accounting function done you will just choose a program in the cloud to take care of it. You need something heavy delivered and a self-driving truck will appear at your door. Many jobs that require people today will eventually become services.
It’s human nature to think that these kinds of shifts are going to take a long time and that what I am talking about is some Star Trek future. But to the extent that computers and related technologies keep improving at the same pace that they historically have, then in twenty years computers and storage and processing speeds will be thousands of times faster and more powerful than the computers of today. That means everything we use today will be an obsolete relic. The iPhone 6 will be on display in a museum as an example of quaint technology, much the same way that we now think about the first Atari game console. This means that the devices we use daily will be as far advanced in capabilities over our smartphones as the smartphone is over the Atarti. That alone is mindboggling and it’s really hard to imagine what that is going to mean to our daily lives.