History Is Repeating Itself: 1985 PC Industry - 2010 Machine Tools

Sometimes history repeats itself in different industries.   We are seeing history repeat itself in the 2010 machine tool industry following the same open standards path as we witnessed in the mid 1980s with the PC industry.  What I am referring to was the state of the computer industry prior to TCP/IP, Ethernet and NFS becoming standards for communication and information sharing.   We are seeing it again in 2010 in the Machine Tools industry.

Back in the early 1980s, here is what you had to go through to get your PC networked:

1. Decide on what network software you wanted to purchase:
• Plan to spend $100 to $300 per PC
2. Decide on what networking interface card (NIC) that you needed
• Plan to spend $200 to $500 per PC
3. Decide on what server file sharing and printer sharing software you needed:
• Plan to spend at least $1,000
4. If you also wanted to integrate other systems such as Macs, Wangs, Convergent Technology systems, DEC systems, HP, Data General, then plan on spending a LOT OF MONEY on different types of adapters, gateways, software and hardware.  Even then, it took a small army to make it all work....

A small company with 60 employees would easily spend $50,000 on just networking software and network interface cards.  This, of course, does not include routers, cables and installation. Then,  after you locked in whether or not you were a "Novell shop", or a "Netware shop" or a "Banyan Vines shop", or "IBM Token Ring" or insert 1980s technology here shop".  You would also have to worry about providing a gateway to other protocols.  It was a mess!


So what happened to change this mess?  Sun Microsystems created NFS which was an open and royalty free standard for file sharing.  Anyone could implement NFS!  NFS was (and is) a HUGE SUCCESS by any standard.   Did some companies sell NFS?  Yes.  Was it at the same ridiculous price that the proprietary vendors were selling their proprietary network software for in the market?  Absolutely not.   Did many companies simply roll networking into their software so they could sell higher value applications?  Absolutely!  The smart and innovative companies realized that the by providing a standard interface and open protocol they could move up (as well as down) the value chain by offering new choices for customers.

Customers, of course, loved it.   The market expanded tremendously.  What about the vendors who sold their proprietary software and hardware?  Some of the smart companies realized that the value to customers was moving up the value chain as well as providing the best implementation of NFS.  The smart companies adjusted accordingly and did extremely well.  There were those companies, as there always are, who held onto their proprietary technologies, did not embrace change and went out of business.

Think about the real value of any network.   There is a famous law in the computer industry called Metcalfe's Law.   Metcalfe's law states that the value of any network is proportional to the the number of users of the system  squared(n²).  Simply stated, the overall value of a network grows at a tremendous rate with each addition.   Here is an example that everyone can relate to today - the smart phone.  For those of you too young to remember, it used to be that the phone company was the only place you could buy your phones.   When the government opened that market up, how many individuals at ATT aka "Ma Bell" were glad to see this?  Do you think there very many ATT employees who were thrilled because there would be new innovative phones as well as new applications?  Probably not too many :-)   Who won?  Well, first customers won!   Second, innovative companies won!

The good news today is that the government is not involved in dictating what the machine tool industry needs to do in terms of open and royalty free standards.  This desire for open and royalty free standards is coming first from customers and second from the machine tool industry itself.  The machine tool vendors includes both hardware and software vendors.


Here is another way to think about the economics of this situation today in the machine tool market.  The rising tide of MTConnect will lift all manufacturing companies except those that continue to hold onto the old and proprietary standards.  MTConnect is not evolutionary, it is revolutionary.   I have always said that the first step to make a revolution in manufacturing and to truly realize the "Holy Grail" of manufacturing, which is "Art To Part, First Time Correct", is a common open and royalty free standard for machine tools to speak to the manufacturing floor, the enterprise and to the Internet.   It will be at this point that true innovation will start and machine tool productivity really takes off.  You can not manage what you can not measure as Lord Kelvin once so eloquently stated.

With MTConnect, we are on the verge of witnessing the same transition on manufacturing floors for machine tools as when the old, expensive proprietary adapters gave way to an open and royalty free standards!  We have seen this movie before in the computer industry.   As Scott McNealy, former CEO of Sun Microsystems, liked to say, "you can either be the windshield or the bug - it is better to be the windshield."  Embracing MTConnect allows you to be the window.  

Tomorrow I will blog on the challenge of how to address the MTConnect Tipping Point and How To Prime The Market.