Reading Notes on 'The Top of the Wave'

Preface: During the summer vacation, I messed up the open-source software mirror server of LUG. One of the punishments is to submit reading notes for the books borrowed from the LUG Library. It has been more than two years since I first read this book. It can be said that “The Top of the Wave” opened the door to the IT industry for me. Here, I share my humble opinions with you all.

“The Top of the Wave” has two main lines: one is the rise and fall of technology companies; the other is the regularity of the high-tech industry. The interesting part of this book lies in its first main line, which writes the history of technology companies as fascinating as a novel. The value of this book mainly lies in its second main line, that is, to see the rules through the phenomenon. This article will summarize the rise, glory, and decline of various business empires in “The Top of the Wave”, as well as the development rules of companies and the computer industry.

The Rise of Empires

  1. AT&T: Invented the telephone, and has been the industry leader since its inception; developed steadily; antitrust helped it prune and avoid the Great Depression.
  2. IBM: Caught the last wave of the mechanical revolution; young Watson convinced old Watson to transform and develop the emerging electronics industry; followed the principle of performance over price, centralized service; the secret of success is conservatism, not releasing the hawk until seeing the rabbit, always firmly controlling the business of the US government, military, large companies, and banks.
  3. Apple: The world’s first personal computer with an interactive graphical interface and using a mouse that ordinary people can buy (although the graphical interface was invented by Xerox’s Palo Alto Laboratory); Jobs was driven out of the company he founded, Apple’s business expanded but lost its way, fell into a trough; did not muddy the waters of the Internet during the Internet bubble era, but saw the market for music players; Jobs perfectly combined art and technology, and made every product to the extreme.
  4. Intel:

The Glory of Empires

  1. AT&T: Monopolized the telephone business in the United States and Canada; Bell Labs, the place where scientists in the information field most yearn for, invented information theory, radio telescopes, transistors, Unix and C language, etc., and produced 11 Nobel laureates.
  2. IBM: Led the computer industry wave, monopolized the first 30 years of computer development history; promoted computers from the government and military to the public, from scientific computing to commercial use; IBM Labs is worthy of being compared with Bell Labs, invented the von Neumann architecture.
  3. Apple: iPod changed the music market; iPhone revolutionized the mobile phone industry, turning mobile phones from feature phones to the era of smartphones, opening the prelude to the era of mobile Internet; iPad impacted the PC industry chain and the WinTel alliance.

The Decline of Empires

  1. AT&T: Antitrust was just the last straw that crushed it. Historically, antitrust actually helped it prune and forced it to make technological progress instead of sitting back and enjoying its success. The internal cause of the decline is the greed and shortsightedness of investors and executives, and the external cause is missing the trends of mobile communications and the Internet.
  2. IBM: Missed the wave of personal computers. The reasons are the genes of serving large customers (not interested in low-profit PCs), the restrictions of antitrust (unable to prevent others from entering the PC market), and the rise of Microsoft. Gerstner transformed IBM from a computer hardware manufacturing company into a company with services and software at its core, treated bureaucracy, combined scientific research with products (very similar to what Satya Nadella is doing at Microsoft today), and revitalized the century-old shop.
  3. Apple: Currently still at the top of the wave.

The Rules of Company Development

  • No company can last forever. Due to the replacement of old and new technologies, the rise and fall of companies is an inevitable historical cycle.
  • The soul of the company’s founder often stays in the company forever, success or failure.
  • Visionary operators can rejuvenate a company, while greedy, shortsighted speculators can ruin a company.

The Rules of Computer Industry Development

  • Moore’s Law: Technological progress doubles every one to two years, and there is no sign of stopping so far. It is the only industry in human history that can sustain such a development speed. The reason is that the raw materials required for the manufacture of IT products are extremely small, and the cost is almost zero. The three corollaries of Moore’s Law:

    • In order to make Moore’s Law stand, IT companies must invest a lot of money to complete the development of the next-generation product in a short time, which means that each product will not have too many competitors in the market;
    • Because of the strong hardware support, applications that were unthinkable before will continue to appear, such as graphical interfaces, high-definition movies, big data, artificial intelligence;
    • Moore’s Law makes the research of various companies now must target the market several years later.

  • Andy-Bill Law: What Andy gives, Bill takes away. Andy is the founder of Intel, and Bill is the founder of Microsoft. Although Moore’s Law has improved the performance of hardware at an exponential rate, operating systems and application software are getting bigger and slower, so people need to constantly update hardware, turning electronic products that originally belonged to durable goods into consumables, maintaining the high-speed development of the computer industry. The software is getting slower because software engineers pay more attention to work efficiency, standardization, and readability (the time of programmers is more precious than the time of machines), and the functions of the software are becoming more and more complex. In the field of mobile terminals, Android replaced Windows, ARM replaced Intel, and the law still holds.

  • Anti-Moore’s Law: If an IT company sells the same amount of the same goods today as it did 18 months ago, its turnover will be halved. Once a company cannot achieve the development speed stipulated by Moore’s Law, its performance will plummet. In the quantitative change of technological progress, small companies cannot compete with large companies; but in the opportunity of qualitative change, small companies can come from behind, providing the possibility for emerging companies to survive and develop.
     

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