SYLVIE DOUGLIS, BYLINE: NPR.
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SALLY HERSHIPS, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Sally Herships in for Stacey Vanek Smith. And, Darian Woods, you have been talking a lot about S-curves recently.
DARIAN WOODS, HOST:
That is right. I am unashamedly in love with S-curves. So have a look at this chart I sent you, Sally.
HERSHIPS: I'm looking.
WOODS: This chart is how many people have been vaccinated in the United States.
WOODS: So you've got the total number of people vaccinated. That's on the vertical axis. And then going forward, that's just time passing. So, Sally, if you had to say what letter this looks like, what would that letter be?
HERSHIPS: Is it an S (laughter)?
WOODS: You know what the answer is. But you know, be honest. Does it - I mean, it's not exactly an S.
HERSHIPS: It's, like, not an S at its best - maybe, like, an S having a bad day or, like, a really sleepy, lazy, drunken, stretched-out S.
WOODS: Yeah, kind of like an S leaning forward, kind of with a bit of a headache. So S-curves are really any line on a graph that starts off rising pretty slowly, ramps up really fast and then kind of levels off. And I keep seeing this shape everywhere, and not just in public health. You see it in tech innovation, like in computers, the internet, mobile phones. These things all got better and better and better, and they had more people using them. So over time, curving up the graph, they got more and more users until they kind of reached a peak.
HERSHIPS: Today's show is brought to you by the letter S - the one and only letter that can explain how we got airplanes, cars, computers and phones. We will show you how S-curves explain the world.
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HERSHIPS: Trying to figure out where technology goes next is a trillion-dollar question. Benedict Evans is an analyst who spends his days trying to figure out what software and gadgets are going to sell more in the future so that investment companies can cash in on that trillion-dollar question. And Benedict has a history degree as well, and he still uses history in his work. He finds it really useful.
BENEDICT EVANS: Otherwise, you can see a headline about a company and not really understand, well, this has happened four or five, 10 times before in different ways. And this is what might happen next.
WOODS: And one pattern Benedict sees over and over again in innovation is the S-curve. The technology starts out expensive, clunky, not very widely adopted, like the very first automobiles.
EVANS: It's either a toy or it's an expensive luxury for people who've got more money than sense.
HERSHIPS: Or people just really were attached to their horses.
HERSHIPS: But then at some point (laughter), the cars got better and cheaper, more appealing than a horse and cart. And pretty much everyone is buying one. And then we are onto the steep slope of the S.
WOODS: Then when technology starts to feel less wondrous and incredible, like a car with the combustion engine, it just kind of fades into becoming part of everyday life. You reach the top of the S-curve, where the technology is not improving very much, and there aren't that many new customers to sell to. But then a whole new technology with its own S-curve can come on top.
HERSHIPS: Take computers. In the 1970s, there were all these mainframe computers - big, unwieldy, calculating machines that would take up, like, an entire room. They'd be used by big corporations or government departments for things like payroll. And in the mid-1970s, a whole new S-curve was about to rev up - but slowly at first.
EVANS: This new idea emerges, which is what we would now call a personal computer. And that starts out looking like a toy for hobbyists.
WOODS: Right, we're at the bottom of that S.
EVANS: Exactly. You know, you had to buy the circuit board and write your own software. But that unlocks this new set of economics and these new economies of scale.
HERSHIPS: Economies of scale - that means that companies find it cheaper to make things when they have more customers, and more customers also mean the company can invest to make quality improvements.
EVANS: Because you know, the better the product gets or the more capable the product gets, the more people can use it, the more people have a use case for it, the more money comes in, the more investment comes in. Because it's unlocked this new, much larger market.
HERSHIPS: But even with cheaper and faster PCs, there are limits to that exponential growth. In the '80s and early '90s, the computer definitely upgraded from being a toy. It's become a serious work tool. But there was not a huge reason why every home might want to invest a couple of thousand dollars for what then was kind of a glorified word processor.
EVANS: Then the internet means that suddenly there's a reason for normal people to have a PC. This unlocks this whole new, much larger market. And so that takes you from probably 100 million PCs on Earth in the mid-'90s to something over a billion PCs on Earth today.
WOODS: And then presumably there's a slowing down at some point.
EVANS: Well, there's a slowing down at some point really for a bunch of reasons. One of them is, like, every office worker has a PC. Every middle-class family has a PC or two. Another is what's called the replacement cycles. Because, you know, the rate of innovation has slowed, the difference between a new PC and a 5-year-old PC gets smaller and smaller.
WOODS: And that's it - the S-curve cycle for PCs. It was basically a toy in the 1970s and '80s. It was a useful but somewhat limited device for work in the early 1990s. Adoption is then accelerated by the internet. And it seems like PCs and companies that make them are just going to rise and rise and rise. But then in the early 2000s, the technology, its adoption, kind of peaks and just starts plateauing and growing pretty slowly. The S-curve is complete.
HERSHIPS: But in the background, this whole new S-curve is brewing.
EVANS: That's when the smartphone explodes. And the smartphone, of course, is a PC. You know, in a meaningful sense, it's a new personal computer. Smartphones go through exactly that cycle.
WOODS: Yeah. So the cycle - the S-curve cycle continues, just within a new form.
HERSHIPS: But of course, that S-curve would also reach a plateau. Today, there are about 7.5 billion people on Earth, but 6.5 billion of those people already have smartphones. So obviously, the growth has slowed down because we have run out of people.
WOODS: And smartphone technology itself is plateauing. The New York Times recently said that the new iPhone 13, quote, "may be the most incremental upgrade ever," end quote. In some ways, the S-curve is a story of the growth of so many things in the world because success breeds success, whether that's population growth or vaccine uptake or investment in new technologies. But then we butt up against real-world constraints, whether that's running out of land or running out of customers.
HERSHIPS: Now, Benedict is quick to point out that not every technology goes to an S-curve shape. Online shopping, for example - the number of people using online shopping is growing, yes. But it has typically grown more like a straight line. And some really cool pieces of technology that, at the moment, are only for the super-rich or to be used kind of as a stunt might stay that way.
EVANS: So you could also look at rocket packs from the 1960s, if you remember, you know, the Bond movie where James Bond had a rocket pack on. And this thing flies for 30 seconds because it's burning a liter of hydrogen peroxide per second. And there's only so much hydrogen peroxide you can carry on your back. And so in that case, there is no S-curve here because there's no path for it to get better.
HERSHIPS: Benedict says you have to look at every technology and ask, is there some kind of breakthrough principle here? Can you see a pathway where parts of the technology get better and better? And will it stop being a toy and start being truly useful to a lot of people?
WOODS: So we asked Benedict what he thought might be at the early stage of an S-curve right now - what might look kind of like a gimmick for rich people that, not too far in the future, almost everyone will use.
HERSHIPS: And Benedict had a really long list of potential candidates he was thinking through, like artificial intelligence...
WOODS: ...Virtual reality...
HERSHIPS: ...Augmented reality but for more than just Pokemon GO...
WOODS: ...Plant-based meat. In the future, cryptocurrencies might have more of a role.
HERSHIPS: Benedict thought electric cars would clearly be cheaper than combustion engines in about five years. But there's little that jumps out like, say, an early smartphone might have.
EVANS: Do we have the thing where we're like, right, that works, now just make it better? And it's not clear yet whether we have that.
WOODS: So time will tell, unfortunately.
EVANS: Yeah. Well, there's a great line in "The Hitchhiker's Guide To The Galaxy" about a character who spends a year dead for tax purposes. And you know, sometimes as you look at this stuff, you think it would be quite nice to spend 10 years and then come back and see what's changed. Let me just skip all of this and come back.
WOODS: I mean, I guess the real breakthrough in that situation would just be that I'm allowed to be revived after 10 years.
HERSHIPS: I'm counting on the jetpack. I have a bottle of hydrogen peroxide standing by.
WOODS: All right. For me, it's immortality. I think that would be the big breakthrough in technology (laughter). But yeah, you can have your jetpack.
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WOODS: This episode of THE INDICATOR was produced by Julia Ritchey with help from James Willetts. It was fact-checked by Michael He. Kate Concannon edits the show, and THE INDICATOR is a production of NPR.
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