The Next Phase Its Better Than You Think: Recent IT Trends Rob Atkinson Vice President, Progressive Policy Institute Director, Technology and the New.

The Next Phase

It’s Better Than You Think: Recent IT Trends

Rob Atkinson

Vice President, Progressive Policy Institute

Director, Technology and the New Economy Project

The Next Phase

• Founded in 1989 by the Democratic Leadership Council

• 501 (c) (3)

• Mission is to define and promote a “Third Way” progressive politics for the Information Age

• An alternative to the liberal impulse to defend the bureaucratic status quo and the conservative bid to dismantle government

The Progressive Policy Institute

The Next Phase

The digital economy continues to be the key driver of productivity growth, and holds the key to economic growth over in the next two decades.

Average Annual Productivity Growth 1995-1999

IT-Intensive Industries 3.16% Other Industries 2.30%

Source: Kevin Stiroh, Federal Reserve Bank of NY

The Next Phase

The Revolution

• “We are living in a third industrial revolution.”  

• “The Internet is the greatest thing since Guttenberg’s printing press.” 

• “Commerce in the next decade will change more than it’s changed in the last hundred years.”(Jack Welch, chairman GE, 1995)

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The Counter-Revolution

• “The greatest benefits of computers lie a decade or more in the past, not in the future.” (Economist Robert Gordon) 

• “There is no new economy. Notions of the new economy were mere idealism that is now getting a lesson in reality.” (John Dvorak, Forbes’ magazine)

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The Reality

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Productivity

0

1

2

3

4

5

6

1997 1998 1999 2000 2001 2002

% C

hang

e

Source: Bureau of Labor Statistics

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Investment in IT Equipment and Software

0

100

200

300

400

500

600

700

IT equipment and software Industrial equipment

Source: Bureau of Economic Analysis

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Computer Purchases

0

1

2

3

4

5

1995 1996 1997 1998 1999 2000 2001 2002

Mic

roco

mpu

ters

shi

pped

(mil.

)

Source: Bureau of Economic Analysis

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Telecom Network Investment

0

20

40

60

80

100

1997 1998 1999 2000 2001 2002 2003

$ B

illio

ns

Source: Bureau of Economic Analysis

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Venture Capital

0

20

40

60

80

100

120

1992 1994 1996 1998 2000 2002

Billi

ons

Source: Nat’l Venture Capital Ass’n

The Next Phase

0.0

2.0

4.0

6.0

1998 1999 2000 2001 2002

(jobs

in m

illio

ns)

Manufacturing Service

High Tech Jobs

Source: Bureau of Labor Statistics

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Internet Hosts

0

50000

100000

150000

200000

Thou

sand

s

Source: Internet Software Consortium

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Online Population

0

20

40

60

80

1997 1998 2000 2001 2002

% O

nline

Source: NTIA, NetRatings.com

The Next Phase

0

10

20

30

40

50

1997 2001

% o

f wor

kers

age

d 18

-65

Workers Using the Internet

Source: Richard Freeman, Harvard

The Next Phase

Online Services

0

10

20

30

40

50

60

70

Bank Online Make Travel Reservations Online

Mill

ions

of A

mer

ican

s

2000 2002

Source: Pew Internet Project

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Federal Tax e-Filing

Source: Internal Revenue Service

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

1996 1997 1998 1999 2000 2001 2002 (est.)

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Holiday Online Shopping

Source: Pew Internet and American Life project

0

5

10

15

20

25

30

2000 2001 2002

Am

eric

ans

(m

il.)

b

uy

ing

ho

lid

ay g

ifts

on

lin

e

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0

10

20

30

40

50

60

70

80

2000-Q4 2001-Q4 2002-Q4

% i

ncr

ea

se o

ver

pre

vio

us

yea

r

Total retail e-Retail

Growth in e-Retail

Source: Census E-Stats

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Online Ad Revenue

Source: Interactive Advertising Association

0

25

50

75

100

125

150

175

200

1 2 3 4 5 6 7

Gro

wth

in to

tal a

d sa

les

(199

6=10

0)

0

500

1000

1500

2000

2500

3000

3500

Grow

th in online ad sales (1996=100)

Total Advertising Online Advertising

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Broadband Adoption

0

5

10

15

20

25

30

99 00 01 02 03* 04** Projections

Mill

ions

of S

ubsc

ribe

rs

Source: The Yankee Group

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So Why Did The Bubble Burst? Expectation: The Internet and E-commerce would be driven by

new services consumers would pay for.

Reality: The real growth in E-business will be to drive efficiency and cut cost.

Expectation: Transformation would be fast, painless and sweep away the resistors.

 Reality: Supplanting an old industrial network built around

machines, paper, and people takes considerable time and brings considerable disruption.

The Next Phase

So What Do We Need to Do?

1. Recognize that the real impact of IT will be through digital transformation of entire industries.

2. Recognize that innovations in the IT sector are far from over, and that while customer-led adoption will be the driving force, vendor-led innovation still offers new possibilities.

3. Recognize that we need to move to a new phase of IT policy that focuses on removing barriers and creating conditions for the widespread transformation of whole industries.

The Next Phase

Move beyond the fashionable skepticism, and

Dare to Dream Again

about the potential of IT to transform our economy

and our lives.

The Next Phase

WWW.PPIONLINE.ORG

Rob [email protected]

(202) 608-1239