What enables improvements in cost and performance to occur?

How do Improvements in Cost and
Performance Occur (i.e., what are the
design changes)?
2nd Session in MT5009
A/Prof Jeffrey Funk
Division of Engineering and Technology Management
National University of Singapore
A summary of these ideas can be found in
1) What Drives Exponential Improvements? California Management Review, Spring 2013
2) Technology Change and the Rise of New Industries, Stanford University Press, 2013
3) Exponential Change: What drives it? What does it tell us about the future? http://www.amazon.com/Exponential-Change-
drives-about-future-ebook/dp/B00HPSAYEM/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1391564750&sr=1-
1&keywords=exponential+change

 From doing R&D and better process and
product designs?
 From developing better materials?
 From increasing volumes?
 From learning in factories?
 From empowering workers?
 From having democracies?
 From working hard?
 From increasing pay of workers?
How do Improvements Occur?

 These design changes can only be achieved if
other things occur
 R&D must be done and done well
◦ Increases in volumes often lead to higher R&D spending
 R&D workers must
◦ be empowered, paid well, and work hard
 Other sessions show that
◦ rapid improvements occur in some technologies more than
others, why?
◦ improvements often occur before commercial production
begins
This Session Focuses on Technical
Design Changes that Enable
Improvements

What Types of Design Changes
Have Led to Improvements?
 Understanding the design changes can help us
understand how and when a new technology
might become economically feasible
◦ Provides justification for rapid rates
◦ Helps us understand technologies for which rates of
improvement aren’t available
 For economic feasibility, we can also use the
term value proposition
◦ When does a new technology provide a superior
value proposition to some set (or an increasing
number) of users

Session Technology
1 Objectives and overview of course
2 How do improvements in cost and performance occur?
3 How/when do new technologies become economically feasible?
4 Semiconductors, ICs, electronic systems
5 Sensors, MEMS and the Internet of Things
6 Bio-electronics, Wearable Computing, Health Care, DNA
Sequencers
7 Lighting, Lasers, and Displays
8 Human-Computer Interfaces, Wearable Computing
9 Information Technology and Land Transportation
10 Nano-technology and Superconductivity
This is Fifth Session of MT5009

Outline
 Value Proposition and economic feasibility
 How do Improvements in Cost and
Performance Occur, i.e., what are the
mechanisms?
◦ Creating materials that better exploit physical
phenomena
◦ Geometrical scaling
◦ Some technologies directly experience
improvements through these two mechanisms
while others indirectly experience them through
improvements in specific “components”

Simple Definition of Value Proposition
Value to
the
target
market
Benefits to
the
target
market
Price to
the
target
market
=
Relative
to
A simple and clear statement of what the new technology provides and
that the existing technology does not: better performance, features, or
price
Such a statement involves performance (including features) and cost

Superior Value Propositions
 Might involve lower price
 Higher performance
◦ Speed, ease of Use
◦ Durability, portability
◦ Maintainability
◦ Reliability, Aesthetics
 Specific Features
 Your projects should consider many aspects of
value
 But for this session, let’s simplify the discussion
and just focus on performance and price

Supply and Demand Curves
 Price and performance determine amount of
demand and supply
◦ Rising performance often leads to growing demand
◦ Falling price often leads to growing demand
 This session focuses on how the
improvements in the supply curve occurred
◦ What were the technical design changes that
enabled the supply curves to move?
 Next session discusses changes in supply
curve in more detail
◦ Minimum level of performance: level of performance
needed before technology diffuses
◦ Maximum level of price: level of price needed before
technology diffuses?

Quantity (Q)
Price (P)
q
p
Supply Curves Often Move Over Time as Technology
Gets Cheaper (and often better performance)
Demand
Curve
Supply Curve
Typical movement of
supply curve over time Typical
movement
of demand
curve over
time

How do Improvements Occur…
 Creating materials (and their associated
processes) that better exploit physical
phenomena
 Geometrical scaling
◦ Increases in scale: e.g., larger production equipment,
engines, oil tankers
◦ Reductions in scale: e.g., integrated circuits (ICs),
magnetic storage, MEMS, bio-electronic ICs
 Some technologies directly experience
improvements while others indirectly experience
them through improvements in “components”
◦ Computers and other electronic systems
◦ Telecommunication systems

LEDs (Light Emitting Diodes)
and OLEDs (Organic LEDs)

More Details on Materials for LEDs
 In 1962, GE’s Holonyak made red emitting GaAsP LED
◦ The output was very low (about 0.1 lm/W)
 Changing materials (to AlGaAs/GaAs) and
incorporating quantum wells, by 1980, increased
output to 2 lm/W, about same as first filament light
bulb invented by Thomas Edison in 1879
◦ Output of 10 lm/W was achieved in 1990, and a red
emitting light AllnGaP/GaP-based LED reached an output of
100 lm/W in 2000
 In 1993, Nakamura demonstrated InGaN blue LEDs
◦ By adding additional indium, he produced green LEDs and,
by adding layer of yellow phosphor on top of blue LED,
produced first white LED
◦ By 1996, Nichia developed the first white LED based on a
blue monochromatic light and a YAG down-converter

Lasers are Like LEDs and Improvements in them (in this case
new colors) come from creating new materials

Organic Transistors
Note the different material classes and the improvements for each of them
Huanli Dong , Chengliang Wang and Wenping Hu, High Performance Organic Semiconductors for Field-Effect
Transistor, Chemical Commununications, 2010,46, 5211-5222

Sources: Koh and Magee, 2008;
Naoi and Simon, 2008)
Capacitors.
Note that energy density is a function of capacitance times voltage squared.
Note also the names of different materials

Sources: Koh and Magee, 2008; Renewable
and Sustainable Energy Reviews 11(2007):
235-258
Flywheels.
Note that energy density is a function of mass times velocity squared and
stronger materials (carbon fiber) enable higher speeds

Structural and Heat-
Resistant Materials

Improvements in corn yield through better seeds, fertilizers
(materials) and other things

Magnetic materials (Coercivity and energy product)

Source: http://www.tdk.co.jp/magnet_e/superiority_02/

Technology
Domain
Sub-
Technology
Dimensions
of measure
Different Classes of Materials
Energy
Trans-
formation
Lighting Light intensity
per unit cost
Candle wax, gas, carbon and tungsten filaments,
semiconductor and organic materials for LEDs
LEDs Luminosity per
Watt
Group III-V, IV-IV, and II-VI semiconductors
Organic LEDs Small molecules, polymers, phosphorescent materials
Solar Cells Power output
per unit cost
Silicon, Gallium Arsenide, Cadmium Telluride,
Cadmium Indium Gallium Selenide, Dye-Sensitized,
Organic, Perovskite
Energy
storage
Batteries Energy stored
per unit
volume, mass
or cost
Lead acid, Nickel Cadmium, Nickel Metal Hydride,
Lithium Polymer, Lithium-ion
Capacitors Carbons, polymers, metal oxides, ruthenium oxide,
ionic liquids
Flywheels Stone, steel, glass, carbon fibers, carbon nanotubes
Information
Trans-
formation
Organic
Transistors
Mobility Polythiophenes, thiophene oligomers, polymers,
hthalocyanines, heteroacenes, tetrathiafulvalenes,
perylene diimides naphthalene diimides, acenes, C60
Living
Organisms
Biological
transformation
U.S. corn
output per area
Open pollinated, double cross, single cross, biotech
GMO
Materials Load Bearing Strength to
weight ratio
Iron, Steel, Composites, Carbon Fibers
Magnetic Strength Steel/Alnico Alloys, Fine particles, Rare earths
Coercivity Steel/Alnico Alloys, SmCo, PtCo, MaBi, Ferrites,
In Summary, Different Classes of Materials were found for Many Technologies

New Processes are Often Key Part
of Creating New Materials
 New materials usually involve new
processes
◦ LEDs, OLEDs, lasers
◦ Batteries, capacitors, flywheels
◦ Solar cells, superconductors
 New processes are often needed to
“create” the new materials
 But all of these improvements are being
done in laboratories

Incremental Improvements to
these processes are also important
 Learning curve emphasizes small changes to
the processes, which do play a role in
achieving improvements
 But small changes to the processes can’t
explain exponential improvements in
performance
 Without new materials and most importantly
new classes of materials, rapid rates of
improvement would not be achieved

For these and other Technologies
 At what rate is a technology being improved along
the relevant dimensions of performance or cost?
 When might these improvements lead to a superior
value proposition for
◦ some set of users?
◦ most users?
 Are improvements needed along other dimensions?
 What are the potential/limits for improvements: can
new materials that better exploit a specific physical
phenomena still be found?
 Are there complementary technologies that are
needed for these improvements?

Must Also be Concerned with Abundance, Since Impacts Cost

Geometric Scaling (1)
 Definition
◦ refers to relationship between geometry of technology, the
scale of it, and the physical laws that govern it
◦ “scale effects are permanently embedded in the geometry
and the physical nature of the world in which we live”
(Lipsey et al, 2005)
 Studied by some engineers (and biologists), but only
within their discipline
◦ chemical engineers: chemical plants (many references)
◦ mechanical engineers: engines, tankers, aircraft (fewer)
◦ electrical engineers: ICs, magnetic, optical storage (many)
 But very few analyses
◦ For engineering in general
◦ By management professors
◦ By economists

Geometric Scaling (2)
 For technologies that benefit from smaller scale, the
benefits can be particularly large, since
◦ costs of material, equipment, factory, transportation typically
fall over long term as size is reduced
◦ performance of only some technologies benefit from small
size
◦ smaller transistors or magnetic regions can increase speed,
functionality; reduce power consumption, size of final
product
 For technologies that benefit from larger scale
◦ output is roughly proportional to one dimension (e.g., length
cubed or volume) more than is the costs (e.g., length squared
or area) thus causing output to rise faster than do costs, as the
scale of technology is increased
◦ Also true with biology examples (think of thin vs. heavy
people)

What do the dimensions
of these creatures
have to do with scaling?

Enough biology (Bonner, J. 2006, Why Size Matters: From
Bacteria to Blue Whales, Princeton University Press.
Schmidt-Nielsen K 1984. Scaling: Why is Animal Size so Important?)
Let’s Move to technologies and ones
that benefit from reductions in scale
these technologies often have very rapid
rates of improvement

Moore’s Law
 Why is more transistors
better?
 How does it impact on
performance and cost?
 What enables increases
in the number of
transistors per chip?

Smaller Feature Sizes Leads to More
Transistors on Microprocessors
Source: http://www.nature.com/nature/journal/v479/n7373/fig_tab/nature10676_F3.html
Multigate transistors as the future of classical metal–oxide–semiconductor field-effect transistors
Isabelle Ferain, Cynthia A. Colinge and Jean-Pierre Colinge Nature 479, 310–316 (17 November 2011)

Reducing the features (i.e., scale) on transistors leads
to improvements in performance and cost
Metal Oxide
Semiconductor
(MOS) Transistor:
gate length (L)
depends on
feature size
Bipolar Transistor:
Gate length
depends on junction
depth
L: gate length/
junction depth
Junction depth
Gate Oxide Thickness
Emitter, Base, Collector

http://ieeexplore.ieee.org/ieee_pilot/articles/96jproc11/jproc-MSanvido-2004319/article.html
Feature Sizes are Also Becoming Smaller in Memory
And thus Memory gets cheaper

”, ISSCC, 2010, updated from International Solid State Circuits Conference, Technology Trends, 2016.
http://www.future-fab.com/documents.asp?d_ID=4926
And in Camera Chips

Benefits from Reductions in Scale (1)
 Costs of most products fall as size is reduced,
since for most technologies,
◦ costs of material, equipment, factory, transportation
typically fall over long term as size is reduced
 However, performance of only some
technologies increases as size is reduced
◦ placing more transistors or magnetic or optical storage
regions in a certain area can increase speed and
functionality and reduce power consumption and size
of final product
◦ combination of both increased performance and
reduced costs has led to exponential improvements in
many electronic components

Benefits from Reductions in Scale (2)
 Smaller gate lengths and thinner layers also
enable faster speeds and/or smaller voltages
(i.e., power consumption/per transistor)
 Faster speeds from smaller distances
electrons must travel
 Lower power consumption if voltages are
reduced
◦ 10 volts in 1980?
◦ 1.8 to 2.5 volts in 1997
◦ 0.5 to 0.6 volts in 2012 (estimated)
Source: ITRS (International Technology Roadmap for Semiconductors)

But this wasn’t simple….
 Reducing the scale of features on a
transistor required better processes
◦ and new equipment for these processes
 Often this equipment was developed in
laboratories and often the laboratories of
suppliers (and other industries)
◦ Photolithography depends on better lasers
 While some might call this learning…….. It
is a special form of learning that goes
beyond tinkering with existing processes

Disruptive Innovations Often
Involve Reductions in Scale
 Many of Christensen’s
examples also involve
reductions in scale and thus
rapid rates of improvement
 But Christensen doesn’t
emphasize rates of
improvement and why they
are rapid…….
Note: the media defines disruptive innovations as
innovations that displace the dominant technology

Christensen’s
theory of disruptive
innovation ignores
rapid improvements
and the source of
them
It also implies that
performance
improvements
automatically
emerge once a low-
end innovation has
been found

Christensen’s interpretation
1) Low-end innovations emerge and are
used by a new set of customers;
2) Existing firms ignore them because they
don’t meet needs of their customers;
3) Increases in demand lead to
improvements in them;
4) Eventually low-end innovation displaces
dominant technology and thus incumbents
fail in both new and established market
My Questions
1) How do firms increase capacity of fixed
diameter disk drive?
2) What drove and in particular which
markets for disk drives drove these
improvements?
3) Are these rapid (or slow)
improvements in capacity?
4) How many other products
experience such rapid
improvements?

HDD: Hard
Disk Drives
Reductions in Scale Drive Improvements in Capacity
Areal Recording Density
of Hard Disks

Similar Arguments can be made
for Other Technologies
 Rapid improvements occurred in most of
Christensen’s disruptive technologies
◦ Computers (discussed later tonight)
◦ Walkman, VCR and other magnetic tape
storage devices
◦ Other electronic products
 Mini-mills didn’t experience rapid
improvement, but they didn’t diffuse
(contrary to Christensen’s book)

Returning to Disk Drives: The Reductions in Scale Led to
Falling Price per Bit
Source: Yeoungchin Yoon, Nano-Tribology of Discrete
Track Recording Media, Unpublished PhD Dissertation, University of California, San Diego

But the creation of new materials
also help………

https://www1.hgst.com/hdd/technolo/overview/chart11.html

Other Technologies that Benefit
from Reductions in Scale (1)
 MEMS (micro-electronic mechanical
systems) for many applications
◦ Gyroscopes, resonators
◦ micro-mirrors, photonics
◦ ink jet nozzles for printers, micro-gas analyzers
 Bio-electronic ICs (MEMS with micro-
fluidic channels) for many applications
◦ Point-of-care diagnostics
◦ Drug delivery, chips embedded in clothing,
body,
 DNA sequencing
 All of these technologies experience rapid
improvements

Other Technologies that Benefit
from Reductions in Scale (2)
 Nano-technology for many applications
◦ E.g., membranes, nano-particles, nano-fibers,
graphene, carbon nanotubes: e.g., smaller size leads
to higher surface area-to volume ratios
◦ Also other phenomena that benefit from smaller
scale (Richard Feynman first noted these things in
the 1950s: There is a lot of room at the bottom)
 These technologies benefit from reductions in
scale because certain phenomena occur at
small scale
 These applications are covered in
supplementary slides on the IVLE (and on
slideshare account)

Outline
 How do Improvements in Cost and
Performance Occur?
◦ Creating materials that better exploit……
 Reductions in scale
 Increases in scale
◦ larger production equipment: more benefits for continuous
flow, furnaces/smelters, displays/solar panels than with
discrete parts (e.g., automobiles)
◦ Engines and transportation equipment: large benefits
improvements through these two mechanisms…

Scaling in Production Equipment
 We all know about economies of scale
◦ But some products benefit from economies of scale more
than do others
◦ Why? Some products benefit from increases in scale of
production equipment more than do others
 Largest benefits for
◦ chemicals, other continuous flow equipment
◦ furnaces and smelters for materials
 Smaller benefits for discrete parts equipment and
their assembly
 But also large benefits for
◦ Semiconductor wafers, displays, solar cells, graphene,
carbon nanotubes, and their manufacturing equipment,

Production of Liquids or Gases
in a Continuous Flow Factory
 Many products are liquids or gases or are in
liquid or gaseous state during production
 Processes such as mixing, separating, heating,
cooling, filtering, settling, extracting, distilling,
drying are done in pipes and reaction vessels
 Pipes
◦ Cost is function of surface area (or radius)
◦ Output is function of volume (or radius squared)
 Reaction vessels
◦ Cost is function of surface area (or radius squared)
◦ Output is function of volume (radius cubed)

Results of Scaling
 Empirical analyses have found that equipment costs
only rise about 2/3 for each doubling of equipment
capacity
 Large continuous flow manufacturing plants have
been constructed
 For example,
◦ Ethylene was produced in plants with less than 10,000 tons
of capacity in 1942
◦ By 1968, it was being produced in factories with a capacity
of 500,000 tons per year
◦ Capital costs per unit dropped more than 90% during these
years

Barriers to Increases in Scale
 Scaling only works if thickness of pipes and
reaction vessels do not have to be increased
◦ this requires better materials
◦ Without these better materials, benefits from scaling
would not occur
 Weight increases as the cube of a dimension
while strength only increases as the square of
a dimension (remember the elephant)
 Thus, limits to size of continuous flow plants
begin to emerge
 Similar arguments apply to many of the other
examples described this semester

Outline
 Existing theories of technological change
 What Drives Improvements?
◦ Creating materials that better exploit…..
flow, furnaces/smelters, displays/solar panels than with
discrete parts (e.g., automobiles)
improvements through these two mechanisms….

Furnaces and Smelters
 Used to process metals such as steel, copper, and
aluminum
 This processing requires large amounts of fuel and
oxygen
 Benefits to scaling; similar to but perhaps smaller
than continuous flow production
◦ Cost of constructing furnace and heat loss from furnace or
smelter is function of area
◦ Output is function of volume
 For example,
◦ Steel factories had a capacity of a single ton per day in 1700
and 10,000 tons per day by 1990
◦ Cost of crude steel dropped between 80 and 90 percent from
the early 1860s to the mid-1890s (following emergence of
Bessemer process)

From small scale (2000
years ago) to big scale
(20th century)

Example of Even Bigger Furnaces: Modern Steel Mill

Increasing Scale of Blast Furnaces: Output Rose with Volume
while Capital Costs and Heat Loss Rose with Surface Area
Vaclav Smil, Creating the Twentieth Century: Technical Innovations of 1867-1914 and Their Lasting Impact

Complementary Technologies
Often are Needed to Benefit from
“Scaling”
 Size of a furnace or smelter is limited by
need to deliver smooth flow of air to all of
molten metal
 Hand- and animal-driven bellows could
only deliver a limited flow of air
 Water-driven bellows and steam-driven
ones allowed air to be injected with more
force so that larger furnaces could be built
 Large steam engines further increased the
potential scale of furnaces/smelters

Bellows For Fireplace: Much Bigger
Ones are Needed for Blast Furnaces

Increasing Scale of Aluminum “Cells:” Output Rose with Volume
while Capital Costs and Heat Loss Rose with Surface Area
Inflation adjusted prices/costs also fell: prices fell from $721/ton in
1900 to $65.6/ton in 2000 ($1640 in 2000 prices)

Electrolytic cell for
300 kA prebaked
carbon anode
technology for
aluminum
production
Cross section of
a modern
prebake anode
aluminum
reduction cell

For Your Projects
 Some groups will analyze new materials that
probably benefit from increases in scale
 Try to use previous slides to estimate
benefits from increasing scale of production
equipment
 When papers say technology benefits from
increases in temperature or pressure, higher
temperature and pressure probably require
larger scale
 Academic papers might not tell you there are
benefits from increases in scale
◦ They will focus on design tradeoffs
◦ You must read between the lines

Discrete Parts Production
 Much lower benefits from increases in scale of
discrete parts production equipment than
from equipment for
◦ liquids, gases (continuous flow production),
◦ metals (furnaces and smelters)
 Larger machines load, cut, bore, assemble
parts faster than smaller machines
◦ But problems with loading/unloading
 Benefits also depend on type of product. More
benefits for automobiles than for apparel,
shoes, or electronics
 Don’t expect your phone to get cheaper from
increases in scale (more later)

Impact of Scaling in Production
Equipment on Price of Autos
 In 1909: standard 4-seat Model T cost
$850 (equivalent to $20,091 in 2011)
 The price dropped
◦ to $440 in 1915 (equivalent to $9,237 in 2011)
◦ $290 in 1920s (equivalent to $3,191 in 2011 or similar to
cheapest Tata-Nano) mostly because of substituting
equipment for labor
 Since then the scale of automobile factories has
been reduced
 Today few auto factories produce more than
100,000 autos/year
 Diminishing returns to scale emerged many years
ago

Outline
flow, furnaces/smelters, wafers/displays/solar panels than
with discrete parts (e.g., automobiles)

Increases in Scale of IC Wafers, LCD
Substrates, Solar Substrates (1)
 Equipment costs per area of output fall as
size of equipment is increased, similar to
chemical plants
◦ Cost is function of surface area (or radius squared)
◦ Output is function of volume (radius cubed)
◦ Thus, costs increase by 2/3 for each doubling
 For IC Wafers, LCD and Solar Substrates
◦ Processing time per area (inverse of output) fall as
volume of gas, liquid, and reaction chambers
become larger; costs rise as function of equipment’s
surface area
◦ Transfer times per area may also fall with larger
substrates
◦ Larger wafers/substrates have smaller edge effects

Source: http://mrsec.wisc.edu/Edetc/SlideShow/slides/contents/computer.html

http://www.electroiq.com/articles/sst/print/volume-50/issue-2/features/cover-article/scaling-and-
complexity-drive-lcd-yield-strategies.html
Impact of Larger LCD substrates on Costs

Other Flat Panel Technologies
 Not just semiconductor wafers, LCDs, and
solar cells
 Continuous casting of steel
 Roll-to roll printing for newspapers,
magazines, OLEDs, and flexible substrates
◦ Organic solar cells
◦ RFID tags
 Some of these technologies will be
discussed in future sessions

Outline
◦ larger production equipment

Example of Benefits of Larger Scale: Engines
Diameter of cylinder (D)
Cost of cylinder
or piston is function
of cylinder’s surface
area (πDH)
Output of engine
is function of
Cylinder/piston’s
volume (πD2
H/4)
Result: output rises
faster than costs as
diameter is increased
Height
of
cylinder
(H)

1
10
100
1000
10000
1 10 100 1000 100
Output (Scale)
PriceperOutput
Price Per Output (Horsepower)
Marine Engine
Largest is 90,000 HP
Source: Honda’s 2010 Price List

From ¾ horsepower in 1885
(Benz) to world’s largest internal
combustion engine (90,000 HP)
Produced by Wartsila-Sulzer
and used in the Emma Maersk
(a ship)

Increasing power density of engines is from
new materials and increasing the scale of engines

From 1807 tons in 1878
To 500,000 tons in 2009
Oil Tankers

Holds18,000 containers (11% bigger than previous one) and has
20% less fuel consumption per ton than previous one (cost of $190 million),
http://edition.cnn.com/2013/06/26/business/maersk-triple-e-biggest-ship/index.html?hpt=ibu_c2
Cargo Vessels Transporting Containers

From 10 HP (horse power)
in 1817
To 1,300,000 HP today
(1000 MW)
Steam engine
Their modern day
equivalent: steam
turbine

From Kilowatts (125 HP engine) to Giga-Watts
Electricity Generating Plants
Edison’s Pearl Street Station More Recent Plant
in NY City (1880)

From DC-1 in 1931
(12 passengers, 180 mph)
To A-380 in 2005
(900* passengers, 560 mph)
*economy only mode

1
10
100
1000
10000
0.1 1 10 100 1000 10000
Relative
PriceperOutput
Relative Price Per Output Falls as Scale Increases
Steam Engine (in
HP) Maximum scale:
1.3 M HP
Marine Engine
Largest is
90,000 HP
Chemical Plant:
1000s of tons of ethylene
per year; much smaller plants
built
Commercial aircraft
Smallest one had
12 passengers
Oil Tanker:
1000s of tons
Smallest was
1807 tons
Output (Scale)
LCD Mfg Equip:
Largest panel size is
16 square meters
Aluminum
(1000s of
amps)
Electric Power
Plants (in MW); much
smaller ones built

For your Projects
 Does your technology benefit from increases or
decreases in scale? If so, what kind? Smaller or larger?
◦ Can we analyze this scaling and the potential cost reductions
from scaling
◦ Can we estimate when might these benefits from geometric
scaling lead to a superior value proposition for
 some set of users?
 most users?
 Also what are the potential limits from geometric
scaling? Or are there complementary technologies that
are needed to benefit from geometric scaling
 If the technology does not benefit from increases or
decreases in scale, maybe a “key” component does

Outline
◦ Creating materials that better exploit physical
phenomena
improvements through these two mechanisms
while others indirectly experience them
through improvements in specific
“components”

In General
 Some components have a large impact on
cost and performance of a system
 Components that benefit from scaling can
◦ have a large impact on performance and cost of
systems, even before system is implemented
◦ lead to changes in relative importance of cost
and performance and between various
dimensions of performance
◦ lead to discontinuities in systems
 Improvements in components may enable
new forms of systems to emerge

In General (2)
 Improvements in engines impacted on
◦ Locomotives, ships
◦ Automobiles, aircraft
 Improvements in ICs impacted on
◦ computers, servers, routers, telecommunication
systems and the Internet
◦ radios, televisions, recording devices, and other
consumer electronics
◦ mobile phones and other handheld devices
◦ controls for many mechanical products
 Improvements in ICs led to many
discontinuities in systems
◦ Partly because they enable the improvements and
because they represent most of the costs

Computers
Note the similar levels of improvements between 1960 and 2000 (about 7 orders of magnitude)
Source: Wikipedia
As one computer designer argued, by the late
1940s computer designers had recognized that “architectural tricks could not lower the cost of a
basic computer; low cost computing had to wait for low cost logic” (Smith, 1988)

Improvements in Computers Primarily
Driven by improvements in ICs
 Quote by one computer scientist
◦ by the 1940s computer designers had recognized that
“architectural tricks could not lower the cost of a basic
computer; low cost computing had to wait for low cost
logic” and
◦ “much of computer architecture is unchanged since the
late 1940s”
 Similar levels of improvements
◦ 9 orders of magnitude for ICs in last 50 years
◦ 9 orders of magnitude for computers in last 50 years
 But changes in the way these ICs are organized
and their algorithms were also needed
Smith, 1988. A Historical Overview of Computer Architecture. IEEE Annals of the History of
Computing 10(4), 277-303

Better ICs Made New Forms of
Computers Economically Feasible
 Mainframe computers – early 1950s
 Mini-computers – mid-1960s
 Personal computers – mid-1970s
 Workstations – early 1980s
 Portable computers
◦ Laptop - late 1980s
◦ Personal digital assistant – mid-1990s
◦ Notebook – early 2000s
◦ Smart phones – mid-2000s
◦ Tablet computer – about 2010
 What is next?

New Types of Computers
 Required cheaper and better
◦ electronic components
 For mainframe computers it was better vacuum tubes
 For subsequent discontinuities, it was better ICs
◦ Magnetic storage such as hard disks
◦ Displays (at least recent computers)
 All of these computers were based on
architectures (and concepts) that have been
know since 1940s
◦ Thus bottleneck has been electronic components,
◦ Better components have also enabled use of more
sophisticated software

Similar Arguments can be Made for
Other Electronic Products/Systems
 Similar arguments be made for
◦ Mobile phones and other portable devices
◦ Servers, routers, and much of the Internet
◦ Video game consoles (and other simulators)
◦ Set-top boxes and much of cable TV systems
◦ Automated algorithmic trading of stocks by hedge
funds, and online universities
◦ To some extent, also better control over
machinery, production systems, mechanical
products such as autos

Laptops MP3 Players
Calculators Video Set-top boxes E-Book Readers
Digital Games Web Browsers Digital TV
Watches Mobile Digital Cameras Smart Phones
PCs Phones PDAs Tablet Computers
Timing is Critical, Different Products Require Different Levels
of Performance and Cost in ICs

Disruptive Innovations
 Many of these new computers can be
considered disruptive innovations
 They entered from low-end, gradually
became better, and displaced higher end
products
 But Christensen’s theory doesn’t address
why these low-end innovations emerged
when they did - Why did they emerge and
why did they become better?
◦ Improvements in ICs were the sources of
improvements
◦ Demand didn’t drive the improvements

HDD: Hard
Disk Drives
Earlier: Higher Platter Densities Enable Smaller Disk Drives
Areal Recording Density
of Hard Disks

This For Computers: Better ICs Make New Forms of Low-
End Computers Economically Feasible

Better ICs also Enabled New forms of Hi-End
Computers: Magnetic Resonance Imaging
(MRI), Computer Tomography (CT)
 Quote by Trajtenberg (1990)
◦ “However, it was not until the advent of
microelectronics and powerful mini-computers in the
early seventies, the early seventies, coupled with
significant advances in electro-optics and nuclear
physics, that the revolution in imaging technologies
started in earnest. Computed Tomography scanners
came to epitomize this revolution and set the stage for
subsequent innovations, such as………..and the wonder
of the eighties, Magnetic Resonance Imaging”
 Quotes from Kalendar, 2006
◦ “Computed tomography became feasible with the development
of modern computer technology in the 1960s”

Better ICs also enabled New Software Languages,
Paradigms, and Tools to Become Feasible
http://xlr.sourceforge.net/concept/moore.html

Better ICs also enabled New Software
Languages, Paradigms, and Tools (2)
 Moore’s Law
◦ reduces importance of software efficiency and thus
programming in assembly language
◦ How many people program in Assembly Language?
◦ fast speeds of microprocessors reduce importance of
using too much code or reusing code
◦ Can reuse large blocks of code
 Challenges for software development have
changed
◦ Programming keeps moving to higher level languages

Another Look at How Better ICs Enabled
New Forms of Software: Intel’s View
 Moore’s Law has enabled new software
tools:
◦ • simple line-mode text editor (e.g., ed)
◦ • multi-line character-mode text editor (e.g., vi)
◦ • extensible character-mode editor (e.g., Gnu
Emacs)
◦ • language-aware GUI code editor (e.g., TextMate
and Sublime Text)
◦ • full IDE (e.g., Visual Studio, Xcode, Eclipse et al)
 What’s Next
http://blogs.intel.com/evangelists/2015/04/18/moores-law-and-its-direct-impact-on-software/
A Lockstep Evolution in Software Tools

For a Given Device (Server and Desktop shown), Moore’s
Law Also Made Larger Operating Systems Possible
Macccaba B 2014. Why Software doesn’t follow Moore’s Law, Forbes, May 19.

Improvements in ICs also Enabled
Internet and Mobile Phones
 Along with improvements in glass fibers,
lasers (Session 6), and photo-sensors
◦ improvements in Internet speed, bandwidth
and cost have occurred
 ICs had a larger impact on mobile phones
and mobile phone systems than on
wireline systems
 As long as Moore’s Law continues,
improvements in wireline transmission
speeds will also continue

Increases in Speed Enable Increases in Web Page Size
And Number of Objects (pictures, videos, flash files)

Higher Speeds Also Propel Cloud
http://www.cisco.com/c/en/us/solutions/collateral/service-provider/global-cloud-index-gci/Cloud_Index_White_Paper.html

Everything is Moving to Cloud
Including Enterprise Software and Personal Storage
http://www.cisco.com/c/en/us/solutions/collateral/service-provider/global-cloud-index-gci/Cloud_Index_White_Paper.html

Increases in Speed, Web Size, and
Number of Object have Enabled
new products and services
 New forms of software, e-commerce, Consumer
Internet, financial services
 Most members of billion dollar startup club
provide these types of services
 Many of these services are also driven by
improvements in mobile phones (see below) and
networks
 These services are discussed in more detail in
Session 3

Improvements in Internet Speed,
Bandwidth, Cost Continue to Occur
 Because improvements in building blocks of
Internet continue to occur
 Lasers and photo-sensors enable further
wave length division multiplexing (WDM)
◦ There is no limit to the number of wavelengths
that can be transmitted down fiber optic cable
 Improvements in integrated circuits and
photonics enable better routers, servers,
and switches
◦ Photonics integrates light and ICs
http://www.slideshare.net/Funk98/telecommunication-systems-how-is-technology-change-creating-new-opportunities-in-them

Wireless Systems have also Experienced Rapid
Improvements

This source and
the
International
Solid State
Circuits
Conference
attribute the
improvements in
speeds to
improvements in
ICs
Again, It’s Mostly About Better ICs
Gonzalez M, 2010. Embedded Multicore Processing for Mobile Communication Systems,

Newer Systems and Faster Speeds Require Higher Frequencies
(fT) of High Mobility Electronic Transistor Devices

Newer Systems and Faster Speeds Require Higher Frequencies
(fMAX) of High Mobility Electronic Transistor Devices

We are also Interested in Short Range Wireless
Technologies (Improvements Driven by ICs)
Source: AStar, Kausik Mandal
NFC: Near Field Communication
Range
Data
Rate Previous slides
focused on this range

Another Way to Look at Short-Range Wireless Technologies
(Size of cell Radius)

WiFi
 As of 30 July, 2015
◦ One wi-fi hot-spot for every 7 people in UK, 10
people in South Korea
◦ One for every 70 in the world
 By late 2018
◦ One for every 20 in the world, every 5 in the UK,
every 3 in South Korea, and every 408 in Africa
 What does this mean for new forms of
services
◦ Everything will be connected
◦ Not just new forms of electronic systems, new
forms of solutions and services will emerge
http://www.ipass.com/wifi-growth-map/

https://www.strategyanalytics.com/strategy-analytics/news/strategy-analytics-press-releases/
strategy-analytics-press-release/2016/03/09/strategy-analytics-wi-fi-report-rapid-growth-of-
802.11ad-wigig-expected-in-2016#.V1aEwPl96Uk
2016

http://www.wi-fi360.com/latest-cisco-vni-
quantifies-mobiles-growth-and-wi-fis-role-
as-competitor-and-enabler/

MRI and CT
Scanners Laptops MP3 Players
Calculators Video Set-top boxes E-Book Readers
Digital Games Web Browsers Digital TV
Watches Mobile Digital Cameras Smart Phones
PCs Phones PDAs Tablet Computers
Let’s Look at New Forms of Electronic Products in More Detail:
Moore’s Law Makes New Products Economically Feasible
For more details, see Funk J, Technology Change and the Rise of New Industries, Stanford University Press 2013
slidehttp://www.slideshare.net/Funk98/how-is-technology-change-creating-new-opportunities-in-integrated-circuits-ics-and-electronic-systems
What’s
next?

Type of
Product
Final Assembly Standard Components1
Number of
Data Points
Average
(%)
Number of
Data Points
Lower Estimate
for Average2 (%)
Smart Phones 28 4.2% 26, 28 76%, 79%
Tablet
Computers
33 3.1% 33, 33 81%, 84%
eBook
Readers
6 4.9% 6, 9 88%, 88%
Game
Consoles
2 2.4% 2, 2 64%, 70%
MP3 Players 2 3.4% 2, 9 74%, 75%
Large Screen
Televisions
2 2.4% 2, 2 82%, 84%
Internet TVs 2 5.7% 2, 2 57%, 61%
Google Glass 1 2.7% 1, 1 62%, 64%
Standard Components Determine Cost and Performance
of Many Electronic Products
1 Values as a percent of total and material costs; 2 Excludes mechanical components, printed circuit boards, and passive components

Type of
Product
# of
Data
Point
Mem
ory
Micro-
Proc-
essor
Displ
ay
Came
ra
Connect
ivity,
Sensors
Bat-
tery
Power
Mgmt
Phones 23 15% 22% 22% 8.2% 7.9% 2.3% 3.8%
Tablets 33 17% 6.6% 38% 2.9% 6.3% 7.3% 2.5%
eBook
Readers
9 10% 8.1% 42% .30% 8.3% 8.3% Not
available
Game
Console
2 38% 39% none none Not
available
none 5.8%
MP3
Players
9 53% 9% 6% none Not
available
4% 3.5%
TVs 2 7% 4.0% 76% none Not avail. none 3.0%
Internet
TVs
2 16% 31% none none 10.5% none 3.5%
Google
Glass
1 17% 18% 3.8% 7.2% 14% 1.5% 4.5%
Contribution of Specific “Standard Components” to Costs
of Selected Electronic Products

Summary of Previous Slide
 Processors and Memory (including DRAM, SRAM,
flash, hard disks, CDs) represent high % of costs
◦ Game consoles (77%), MP3 players (53%)
◦ Internet TVs (47%), Smart phones (37%)
 For smart phones, multiple processors
◦ Internal processing of music, video, apps
◦ Processing of cellular network signals (and WiFi)
 Displays represent largest percentage in
◦ Large screen televisions (76%)
◦ Tablet computers (38%)
◦ eBook Readers (42%)
 All these components experience rapid improvements
◦ Processors, memory (Moore’s Law, 40% per year),
camera: 30 to 50% per year, displays: 12% per year

Interpretation
 A small number of standard components
play important role in electronic products
and improvements in them
◦ Enable improvements
◦ Determine new types of functions
 This is why many people emphasize Moore’s
Law
◦ Because it is really changing our world!
◦ Microprocessors, memory, camera, WiFi, and
many sensors (such as MEMS) experience
rapid improvements through reductions in
scale
 Let’s look at the iPhone in more detail

Measure iPhone iPhone 3G iPhone 4 iPhone 5 iPhone 6
Operating
System
1.0 2.0 4.0 6.0 8.0
Flash
Memory
4, 8, 16GB 8 or 16GB 8, 16, 64GB 16, 32, 64GB 16, 64, or 128GB
DRAM 128MB 128MB 512MB 1GB 1GB
Application
Processor
620MHz Samsung 32-bit
RISC
1 GHz dual-
core Apple
A5
1.3 GHz dual-
core Apple A6
1.4 GHz dual-core
Apple A8
Graphics
Processor
PowerVR MBX Lite 38 (103
MHz)
PowerVR
SGX535 (200
MHz)
PowerVR
SGX543MP3 (tri-
core, 266 MHz)
PowerVR GX6450
(quad-core)
Cellular
Processor
GSM/GPRS/
EDGE
Previous plus
UMTS/HSDPA
3.6Mbps
Previous plus
HSUPA
5.76Mbps
Previous plus
LTE, HSPA+, DC-
HSDPA, 4.4Mbps
Previous plus LTE-
Advanced,
14.4Mbps
Display
resolution
163 ppi (pixels per inch) 326 ppi 401 ppi
Camera
resolution
Video speed
2 MP (mega-pixels) 5 MP
30 fps,
480p
8 MP
30 fps at 1080p
8 MP
60 fps at 1080p
WiFi 802.11 b/g 802.11
b/g/n
802.11 a/b/g/n 802.11 a/b/g/n/ac
Other Bluetooth 2.0 GPS,
compass,
Bluetooth
2.1,
GPS, compass,
Blue-tooth 4.0,
gyroscope, voice
recognition
Previous plus finger-
print scanner, near-
field communication
Evolution of iPhone in Terms of Measures of Performance
Fps: frames per second

Summary of Previous Slide
 More memory enables more data to be saved
◦ Songs , pictures
◦ Videos , games , apps
 Faster processors means
◦ More sophisticated apps, games and cellular networks, the
latter enables higher speeds
◦ Higher resolution audio, displays, video, cameras
 Faster and newer WiFi Bluetooth chips
◦ Mean higher data speeds
 Better displays means higher resolution video,
pictures
 New functions come from new components
◦ Compasses , gyroscopes , voice recognition
◦ Finger-print scanners , near-field communication

As an Aside, What About
Development Costs?
 If standard components contribute more to
improvements than do changes in phone design,
◦ development costs should be higher for components than
phones
 For phones, development costs estimated at $150
million for first iPhone (Gizlogy, 2015)
◦ more recent smart phones are 1/10 this amount or $15
million (Yota, 2015), possibly through the use of open source
software
 For components, cost of developing
◦ smart phone processors estimated at $1Billion (Vance, 2010)
◦ simpler chips range from $20 million to $100 million
(McKinsey, 2013)
 Much higher development costs for ICs consistent
with conclusion that improvements in smart phones
primarily come from improvements in ICs

For the first iPhone
 What Levels of Performance and cost
were needed in each Component?
◦ Memory
◦ Microprocessors
◦ displays

The 4GB iPhone could Store
 760 songs, 4000 pictures (4 megapixel
JPEG), four hours of video, or 100
apps/games, or some combination of
them
 Equal usage
◦ 190 songs
◦ 1000 pictures
◦ one hour of video
◦ 25 apps/games
 Was 4GB of flash memory necessary, or
would less have been sufficient?

The Average User Downloaded 58 Apps or a Significant
Fraction of Memory Available in 4GB Phone

Sensitivity Analysis of
Flash Memory Cost
 Cost of iPhone 5 varied from $207 to $238
depending on flash memory capacity
◦ 16GB, 32GB, or 64GB
 For iPhone 4s, costs range from $196 to $254 for
same range in flash memory
 For iPhone 3GS, 16GB of flash memory are $24
thus suggesting costs for same change in capacity
would range from $179 to $251
 In percentage terms, same changes in flash
memory capacity led to increase of 40% in iPhone
3GS and increase of only 15% in iPhone 5

Other Necessary Components
 Needed sufficient processor to have 3G
network capability
◦ It also needed to be inexpensive
 What about camera, WiFi, gyroscope,
other sensors?

The Future isn’t Over!
 Session 4 discusses more examples of new
systems enabled by improvements in ICs
 Session 5 discusses IoT – new types of
mechanical products are being enabled by
improvements in ICs, sensors, transceivers,
and energy harvesters
 Session 6 discusses health care – new types of
health care products are being enabled by
improvements in bio-electronic ICs
 Session 8 discusses human-computer
interfaces and wearable computing
 Other sessions focus on different components
and different systems

Some of these Technologies Will be
Low-End Disruptive Technologies
 New computers are often low-end
disruptive innovations that are enabled by
improvements in microprocessors, memory,
and other electronic components
◦ Mini-, personal, and laptop computers
◦ Personal digital assistants, tablet computers
 Similar things will happen with
◦ Phones
◦ Internet of things
◦ Health care
◦ Wearable computing

Summary (1)
 Technologies that experience rapid improvements
in performance and cost are more likely to create
new opportunities than are other technologies
 These two “mechanisms” provide a better
understanding of how and why improvements
occurred in some technologies more than in others
◦ Creating materials that better exploit physical phenomena
 We can use these mechanisms to think about when
a new technology might offer a superior value
proposition

Summary (2)
 Think about how these mechanisms apply to a
specific technology for group project
◦ Creating materials that better exploit physical phenomena
◦ Geometrical scaling (reductions and/or increases in scale)
◦ Both directly or indirectly (Impact of components on higher
level systems)
 For the technology, think about
◦ current advantages and disadvantages when compared to
old technology
◦ sources and rates of improvement in new technology
◦ might these rates accelerate or de-accelerate?
◦ What kinds of new systems, i.e., entrepreneurial
opportunities will these changes create?

Summary (3)
 Be specific about the components in your
technology and their
◦ rates of improvement
◦ do we expect these rates to increase or
decrease?
◦ Do these components benefit from some kind
of scaling, such as reductions in scale?
 For many of your projects, the rates of
improvements in the components will
determine the rates of improvements for
your system

What enables improvements in cost and performance to occur?

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