Chapter 1

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Chapter 1: Information Technologies

Americans are so accustomed to the presence of computers in our daily lives that we are amazed to discover that early computer experts did not foresee much demand for these specialized machines. For example, the chairman of IBM, Thomas Watson, stated in the 1940s, “There is a world market for maybe five computers.” Since then, a succession of breakthroughs has created a new economic sector: Information Technologies (IT) — the ever growing variety of ways in which we are able to gather, store, analyze, share, and display information.

Estimates of the total number of computers in the world now exceed 500 million, or more than triple the total in 1991. The proportion of U.S. households with computers has jumped from 15 percent to more than 40 percent. U.S. schools now count one computer for about every six students, up from one machine for every 63 students in the mid-1980s.

The economic implications of this growth are unmistakable. Between 1995 and 1998, producers of computer and communications hardware, software, and services accounted for an average of 35 percent of the U.S. gross domestic product (GDP). During this same period, IT represented 60 percent of U.S. corporations’ capital investments. On average, 20 U.S. technology and telecommunications companies are born every day. Industries that are either major producers or intensive users of IT products and services will employ half the U.S. workforce by 2006. These jobs will pay significantly higher wages than jobs in other sectors. For example, in 1996, the 7.4 million people employed in the IT sector and in IT-related jobs across the economy earned an average of about $46,000 per year, compared to an average of $28,000 for jobs across the entire private sector.

Historical Importance of Federal Funding
Much of the innovation that spawned today’s information technologies resulted directly from Federal investment in science and technology. Starting in 1969, when the Department of Defense opened its experimental nationwide computer network through the Advanced Research Projects Agency (ARPA), computer networking has especially benefited from Federal research and development funding. The National Science Foundation (NSF) extended ARPA’s network to civilian academic users in 1987. These networks marked the convergence of computing and communications, one of the main drivers of information technologies in the 1990s. Networking — linking computers together to share data — has since become one of the fastest growing areas of computing. The Internet emerged from the joint effort by Federal agencies and universities to advance networking technology.

Federal agencies also contributed to the steady decrease in the size of computers and the exponential growth of computing power. The transformation from expensive, room-size computers to laptops vividly illustrates the way science and technology, through a series of chance events, sometimes lead us in unforeseen directions.

The period between 1947 and 1960 saw many separate but ultimately related breakthroughs that combined to produce a revolution in computer hardware. Electrical engineers invented the transistor and later developed the integrated circuit; materials scientists discovered semiconductors and the uses of silicon; and physicists developed the laser. The laser, once seen as an interesting but unpromising technology, has become the signal beacon that we use to transmit information, carrying light waves over optical-fiber networks that connect many parts of the globe. The laser also led to fundamental advances in lithography, the process used to etch transistors onto silicon chips to form modern microprocessors. In 1949, Popular Mechanics predicted: “Where a computer like the ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computers in the future may have only 1,000 vacuum tubes and weigh only 1.5 tons.” In the days before the transistor, this may have seemed a daring prediction, but today we are on the verge of technology that will create microprocessors as small as a molecule.

The Internet Economy

The Internet’s rapid growth in popularity is unparalleled in the history of communications. Radio existed for 38 years before 50 million tuned in; TV took 13 years to reach that benchmark. The Internet crossed that popularity threshold within four years after opening to the general public in 1991, and today an estimated80 million Americans have access at home or at work.

The Internet has quickly become a significant economic force, offering a new avenue for consumer and business-to-business transactions. The U.S. “Internet economy” grew at a compounded annual rate of 174.5 percent between 1995 and 1998, as compared with 2.8 percent for the national economy as a whole. The Internet economy generated revenues totaling an estimated $301 billion in 1998. Employing more than a million people, the Internet economy now rivals the automobile industry and other major established sectors in size. Retail sales on the Internet are also climbing rapidly. In 1997, private analysts forecast that the value of Internet retailing could reach $7 billion by 2000. In fact, the 1998 level was 50 percent greater than that estimate, causing analysts to revise their estimates upward to between $40 billion and $80 billion by 2002. Direct, business-to-business commerce on the Internet is forecast to surpass $1.3 trillion per year by 2002.

Forecasting Severe Weather

Advance warning of this May 3, 1999 tornado, made possible by NWS technology, enabled officials to order the safe evacuation of millions of residents.

On May 3, 1999, more than 70 tornadoes rampaged across Oklahoma and Kansas. Several days earlier, National Weather Service (NWS) forecasters had seen increasing indications in their computer modeling data that the environment in their region would support severe storms in the coming days. (NWS supercomputers continuously feed such data to field offices around the country to help them make twice-daily forecasts.) As the Oklahoma and Kansas storms developed on May 3, the NWS staff was thoroughly prepared for the intense work that lay ahead to analyze the storms and predict their likely paths, enabling real-time forecasts. As a result, some areas were warned of the impending fury up to 60 minutes before the arrival of severe weather.

More than 1,000 tornadoes occur in the United States every year. Since the early 1990s, technological progress in detecting, monitoring, and modeling such storms has doubled average lead times for tornado warnings, from a nationwide average of less than four minutes to more than 11 minutes. Using the sophisticated Advanced Weather Interactive Processing System, which is now installed at NWS forecast offices throughout the United States, forecasters can process, display, and integrate huge amounts of storm data much more efficiently, adding to the speed and accuracy of warnings to emergency managers, the media, and the public.Ultimately, with continuing upgrades of technology and progress in science, the NWS expects to deliver reliable warnings at least three hours before the onset of severe weather.

Rapid Pace of Improvements
Miniaturization causes prices to spiral downward, making the technology affordable for larger numbers of small businesses, local governments, schools, libraries, families, and individuals. During this decade alone, the cost of microprocessors has dropped sharply, as has the price of silicon-based computer memory. In 1991, the cost of the processing power required to perform a million instructions per second — or MIPS, a standard performance metric — was $230. By 1997, the cost of one MIPS’ worth of computing power was $3.42. As a result, today’s desktop and laptop computers pack the processing power equivalent to what would have been a supercomputer only a few chip-generations ago. Advances also continue at the high end of computing. State-of-the-art supercomputers can perform trillions of operations per second. Federal research in high-performance computing envisions machines within the next ten years that will be thousands of times more powerful, performing a quadrillion operations per second.

Vast increases in computing power have led scientists and engineers to tackle problems once considered beyond the limits of human study — such challenges as long-range weather forecasting, modeling thermonuclear explosions, simulating variations in aeronautical design, and designing new drugs. These efforts depend on improvements in computer software as well as hardware. Mathematics holds the key to the efficient trade-offs in processing speeds, message passing, and use of memory that make up programming code. Recent advances in this area of science have generated a proliferation of software for professional and everyday uses. In terms of economic impact, the software and computer services sector has more than doubled in size since 1990, growing to a $152 billion business by 1998 and roughly equaling the size of the computer hardware sector.

The industrialized world has integrated information technologies throughout almost all economic sectors and social institutions. We use IT when we listen to a weather forecast, enjoy music on a CD, or watch a movie on DVD. The free exchange of information made possible by the Internet has had a democratizing influence in other parts of the world, and small but innovative entrepreneurs now have opportunities to market their ideas on a worldwide scale that would have been impossible to imagine 20 years ago.

Libraries With Instant Access

Digital libraries will provide all Americans with unprecedented access to information.

A $30 million cooperative initiative of several Federal agencies will soon provide a national library of text, images, sound recordings, and other materials to every schoolchild (and all other Americans) with access to the Internet. The library will include countless numbers of books that are in the public domain, such as the complete works of Shakespeare, Mark Twain, the Greek philosophers, and the Federalist Papers. In addition, children will have virtual access to such things as the Apollo 11 command module, the Gettysburg battlefield, and Rose Kennedy’s personal tour of the John F. Kennedy birthplace.

Students and their teachers will also be able to find a digital library for math and science education as part of the new initiative. The collection will include high-quality resources and provide hands-on, interactive content that makes math and science come alive and enables students to “learn by doing.”

Technology can help make America’s treasures available to all citizens. It will still be a thrill to visit Ellis Island in person, but those who can’t make the trip will still have online access to its immigration records. Poetry lovers will still want to own a personal copy of Dante’s Inferno, but every student who needs to read it will be able to download it instantly — and never have to pay an overdue fine!

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