The document discusses how technology trends like Moore's Law, Gilder's Law, and Metcalfe's Law are enabling new business models by decreasing costs and increasing performance over time. It provides examples of how the music and film industries have transitioned to digital distribution models online. The author argues that utilities should explore new delivery mechanisms and business models made possible by distributed computing technologies and the transition to digital content and services.

1. Grid Utility Technology Drivers Enabling New Business Models July 30, 2006 Paul Kamp GridInstitute Fellow [email_address]

2. Technology Context – The Net Effect 10,000X 1,000X 100X 10X 1X 1,000,000X 100,000X 1980 1990 2000 Moore’s Law Gilder’s Law Metcalfe’s Law Net Effect For a given cost, performance improves over time Performance Time

3. Business Context – The Net Effect 10,000X 1,000X 100X 10X 1X 1,000,000X 100,000X 1980 1990 2000 For a given performance level the cost to deliver a solution decreases over time Performance Time Cost $/Unit of Performance 1/100$ 1/1,000$ 1/10,000$ 1/100,000$ 1/1,000,000$ 1$ 1/10$ Cost to Deliver a 'Solution'

4. Example solution – iTunes Music Store (iTMS) Bricks and Mortar distribution - Vinyl 45 RPM record Artist Record Label Point of Sale Promotion Local Record Store Inventory Distribution Content Creation Manufacturing Performing Artist Songwriter

5. Example solution – iTunes Music Store (iTMS) Bits and bandwidth distribution – iTunes Music Store Artist Record Label Point of Sale Promotion Online Music Store Inventory Distribution Content Creation Manufacturing Performing Artist Songwriter

6. Business Model – Increasing GM's Over Time Cost to deliver service decreases faster than price $10,000 $1,000 $100 $10 $1 $1,000,000 $100,000 1980 1990 2000 Price Time Cost $/Unit of Performance 1/100$ 1/1,000$ 1/10,000$ 1/100,000$ 1/1,000,000$ 1$ 1/10$ G R O S S M A R G I N S Cost to Deliver the Service Price for Service that Technology is Delivering

7. Utility and Application Delivery Chain Enabling the digital economy Utility Computing Grid Distribution Applications Utility Metering Online Record Store Direct Marketing Delivery mechanism Engine – Computer Center Monitoring Provisioning Application Metering

8. The Transition from Atoms to Bits “ The change from atoms to bits is irrevocable and unstoppable. Why now? Because the change is also exponential - small differences of yesterday can have suddenly shocking consequences tomorrow.” Nicholas Negroponte Being Digital