How producers react to demand by consumers: Moore's Law and the computer industry
"Leaving Moore's Law in the dust," U.S. News & World Report, July 10, 2000
If you ever played a computer game, then you might have wished that the flight simulator be more realistic and receptive to your handling, or that the enemy plane could be seen in realistic three dimensions with a sharp image. Achieving such visually compelling images requires a smaller computer chip, which is able to contain more information. As a consequence, chip manufacturers are constantly endeavoring to reduce the size of the chip. This trend is known as "Moore's Law" in honor of its discoverer, Dr. Gordon Moore, which states that a silicon chip doubles its capacity and complexity every two years, and its size decreases exponentially. However, size has its own limit. In about ten years the chip can be shrunk to an absolute limit of the size of an atom, and after that it will be physically impossible to reduce it any further. At that point, it seems the computer industry will be in serious economic trouble due to its inability to produce new products.
However, do not despair. A strong profit motive in the market economy will always encourage ingenuity and innovation. In anticipation of the limit of a chip's size, the computer industry is investing in three areas of future development: enhancing computer graphics, increasing the storage capacity of the hard disk, and faster networking. In 1998, computer graphics generated 1 million polygons per second. Within a year, it will increase to 100 million polygons per second, meaning that the graphics will be one hundred times sharper, fuller and faster, so that in a flight simulator game you can see the face of an enemy pilot. The 3-D graphics, which cost $300,000 six years ago for the military flight simulation, cost only about $400 now, and it is a dream come true for computer game enthusiasts.
In terms of storage, current hard drives contain on the average about 20 gigabytes of information. By 2003, the same hard drive will contain a terabyte, or 1,000 gigabytes. In the area of networking, currently a single fiber-optic cable sends one message on a wave of light. In the near future, a light wave will be divided into 16 different waves, each wave carrying one message. This will make networking extremely fast and efficient. Therefore, there is no danger of Moore's Law coming to a sudden halt in the computer industry. In fact, current progress in this industry seems to make the law already obsolete.
So, in the market economy, as long as there is a demand by consumers, someone will always try to satisfy the demand and make profits. The consumer is king, and the producers are its servants. This observation is known as the Consumer Sovereignty.