In yesterday’s blog posting, I wrote about the likely impact of significantly faster computers that we can look forward to in the future. Today, I’ll explore another dimension of improvement suggested by Moore’s Law: cheaper computers. In rough, general terms, the computing power that costs me $1,000 today should cost $100 in five years, and $10 a decade from now.

It’s important to note that we might not always see this phenomenon taking place — at least, not necessarily in the short term. If we acquire computer-based technological gadgets from a monopolistic supplier, or an oligopoly capable of price-fixing, then we could find ourselves paying the same price for our gadgets, even though the manufacturer’s costs were steadily dropping in Moore’s-like fashion.

Or we could find, as is so often the case with our home PC’s, that the new products that we’re offered each year cost more-or-less the same as last year’s model … but it’s twice as fast, or has twice as much disk storage. This is particularly likely to be the case if the manufacturer has managed to get the price of its product down to a psychological threshold like, say, $500.

But in the long run, these are exceptions. The fact of the matter is that I have computing power on my desktop that would have cost millions, or even tens of millions, of dollars when I started my career in the computer field. There’s more computing power in my super-cheap digital wristwatch than there was in the minicomputer on which I laboriously coded a FORTRAN math library for DEC in the good old days. And the list goes on …

Okay, so what does this mean — in terms of how we might expect to use computer technology in the future? I think there will be four main consequences:

• ubiquitous computing
• disposable computers
• multiple computer-driven gadgets per person, rather than just one
• shifts in power/control, as scarce items become commodities

I’ll discuss ubiquitous computing in today’s blog, and will move on to the other aspects of cheaper computers in the next couple of days.

Ubiquitous Computing

If the cost of computer technology does continue to drop, then we shouldould expect to see cheaper prices in the marketplace, and thus a much larger potential market for computer-based products. And there’s a related benefit — economies of scale, with mass production of millions of units — that I don’t really know how to quantify. But it ultimately leads to a phenomenon often described as ubiquitous computing — i.e., everyone has a computer.

To some extent, we’re not too far away from that phenomenon, even today. In 2008, the Gartner research firm estimated that the number of installed PCs worldwide had passed 1 billion units, and that it would reach 2 billion by 2014 (see “Gartner Says More than 1 Billion PCs In Use Worldwide and Headed to 2 Billion Units by 2014“). In a slightly more conservative estimate, the Forrester analyst firm estimated in 2009 that the worldwide installed base would hit 1 billion by the end of 2010, and that it will rise to 2 billion by 2015 (see “PC numbers set to hit 1 billion: and 2 billion mark in sight by 2015“). Obviously, that’s not everyone in the world; but it does suggest that one out of three people in the world will have a laptop or desktop within five years.

For those of us in the advanced/developed countries, it’s easy to imagine this trend continuing, for we continue to see computers in our neighborhood electronics/appliance stores for more and more affordable prices — e.g., prices that drop from $2,000 to $1,000 and now down to $500 or even $300. A more ambitious project is known variously as the “hundred dollar laptop” or the “One Laptop Per Child” (OLPC) project, hopes to persuade governments of developing nations around the world to buy hundreds of thousands of these inexpensive general-purpose laptop computers, so that every school-age child can indeed have one for his or her own. As of last year, the purchase price of the OLPC computer was actually closer to $188; but a 2nd-generation machine is scheduled to be released sometime later in 2010, with a price reduction down to $75 (along with a reduction in power consumption from 4 watts to one watt!).

Meanwhile, more and more people are suggesting that laptops/desktops may not be the platform of choice in the future. It might be a netbook/iPad device, or, more likely perhaps, a smartphone. Indeed, even an old-fashioned mobile phone like the Motorola Razr or some of the early Nokia products, could be considered computing devices. And while it’s estimated that there were only 11.2 million cellphones, worldwide, back in 1980, the number grew to one billion in 2002, 2.4 billion in 2006, 3 billion in late 2007, and 4.1 billion in early 2009 (see “Cell Phones and Globalization” and “Nice talking to you … mobile phone use passes milestone” or the sources of these estimates). That’s somewhat more than half of the global population — and while we may never reach the level of 100% market saturation, it’s not unreasonable to imagine that we’ll reach the 90% level within the next 5-10 years.

Of course, the “ultimate” limit in cost reduction is zero — i.e., free computing devices. We already have numerous examples of free information (e.g., Wikipedia), free software (open-source software, and most of the tools and apps from the Web 2.0 community), and many people may believe that their mobile phones are free. But there are at least two well-known business models that make these two examples possible. One such model, which we see primarily with free software is the advertising-based approach, where consumers are subjected to commercial advertisements. The other common model, exemplified by the mobile-phone example, is one in which the “razor” is free, but the “razor blades” cost money.

One last point before I wrap up today’s blog: even if a computing device is free, or even if it has a modest cost of a dollar, it’s likely to be used for entirely different purposes by a poor customer in a developing nation, than it will be used by a middle-class or prosperous customer in an advanced/developed nation. The region where mobile-phone usage is growing the fastest, for example, is Africa. But you’re likely to see much more usage in Africa, India, and other such regions for health-care issues and “basic” economic issues than, say, the U.S. market — where, for example, a predominant percentage of the iPhone apps are games, or some form of entertainment and amusement.