The PC can do traditional business tasks at speed -- just don't expect it to turn a buck, writes Angus Kidman.

Published in The Bulletin, August 14, 2001

'I am not computer literate at all," actor John Travolta admitted recently when asked about his role in the action-hacker film Swordfish. "Email has passed me by." Wealth hasn't similarly passed him by, however. Despite a patchy box-office record in recent years, Travolta still routinely commands up to $US20m ($40m) a movie and was ranked as the 34th richest US celebrity by Forbes last year.

Why is this important? Because it reinforces something that has been increasingly evident, but rarely discussed, ever since the first IBM PC appeared on a desktop those two decades ago: computer technology is not a necessary element of wealth generation.

Over that time, it has been customary for IT industry pundits to wax lyrical about how the PC has revolutionised business, and this has become accepted as a true reflection of its role. Prime Minister John Howard commented recently that PC technology has created "a revolution that is ongoing, that is opening up opportunities which are going to change the way – and have already changed the way – in which so many of us live".

In making that statement, he was echoing a widely-held view – one that many within the technology industry had spent considerable time and effort working to make a cornerstone of government policy-making.

Yet the evidence for this revolutionary fervour is not actually that compelling, particularly when considered in the context of business. Admittedly, no accountant would want to put together a profit-and-loss statement by hand when they could do it with a spreadsheet. However, the actual statement itself remains more or less the same (save perhaps for a line item or two concerning the depreciation of computer equipment).

Electronic mail may be faster to send and easier to format than a written or typed memo, but it doesn't convey any different information to those apparently outdated formats. More generally, the fundamental principle of business – sell something for more than it costs you to make it – remains utterly unaltered by the rampant proliferation of silicon chips into every office. "The new economy is just like the old economy," Wall Street Journal columnist Kara Swisher pointed out recently. "In fact, though it may be faster, it's all the same economy and, thus, all the same economic rules still apply."

The PC evangelism industry has been reminded of this rather sharply since April last year. In that month, the much-discussed "tech wreck" saw dozens of dotcoms collapse when the market finally realised that none of the millions of computers purchased by those businesses was being used effectively to keep track of whether any money was being made by any of them.

While it wouldn't be fair to blame those company collapses entirely on the use or misuse of technology, having loads of PCs doesn't seem to have made much difference to the outcome. Indeed, even the most ardent proponents of the PC's potential have been forced on occasion to admit that computers haven't resulted in a huge change to the way we carry out business tasks. Instead, they've just made us do the same thing more quickly.

The point is made rather well by Microsoft founder Bill Gates in his 1999 book Business @ The Speed of Thought. "Most companies are using digital tools to monitor their basic operations: to run their production systems; to generate customer invoices; to handle their accounting; to do their tax work. But these uses just automate old processes," wrote Gates, who more customarily wears the hat of a rabid PC promoter. "Very few companies are using digital technology for new processes that radically improve how they function."

While Gates intended the book to be a call to arms for companies to start changing the way they use technology, businesses haven't done that in the two years since its publication. Instead, they've started buying fewer PCs. In the second quarter of this year, total worldwide sales of PCs declined by 1.9%, according to research group Gartner Dataquest. It is the first time this has happened since 1986, when the PC was still in its infancy as a business device, and comes despite widespread expectations that growth in markets such as China and India would continue to offset flat spending patterns in the United States and similar economies.

Analysts don't foresee any change in the near future. "The industry needs to create a more compelling value proposition for users that extends beyond the typical price-performance metrics that have dominated industry thinking," says Gartner analyst Todd Kort. In other words, the number of good reasons to buy new PCs is decreasing rapidly.

In recent years, one of the most widely cited reasons for purchasing a PC has been to gain access to the internet. Many appear to believe that the huge growth in the use of the net offers further proof of the PC's centrality in creating revolutionary business models. This ignores two key points. The first is that the internet's fundamental infrastructure was put into place well before PCs were even imagined, and most equipment used to maintain it bears little or no resemblance to a standard office PC. And many commentators have predicted that PCs will ultimately be less important as net access systems than devices derived from mobile phones.

The second is that none of the net-derived business models that has been promoted to date has shown more than mild signs of success. In the past five years, online advertising, net retailing, B2B exchanges and peer-to-peer computing have all been hyped as radical new systems that change the fundamental mechanisms of business. But where are they now? Online advertising market estimates have been slashed repeatedly this year; net retailers are scaling back operations or going broke; B2B exchanges can't attract major clients; peer-to-peer computing has been flattened in the wake of Napster's legal woes.

The evidence for the PC's role as an influencer or catalyst is no more compelling in other areas of business activity. For instance, PCs have been widely cited as a key influence on the trend towards working from home. But just how big a trend is that really? According to an Australian Bureau of Statistics study released in May, of the 9 million Australians in full time work, just 1.7 million had spent time working at home, and only about 700,000 had spent more time working at home than elsewhere.

Even if you consider that figure to be revolutionary, PCs didn't take on a starring role. More than 50% of respondents to the ABS survey were self-employed, and thus weren't really taking advantage of any telecommuting technologies. Just 64% of all work-at-homers used any information technology, and less than 50% made use of the internet. In impact terms, the PC is well and truly dwarfed by the mobile phone, now owned by more than 10 million Australians. Despite having been widely available for only half as long, mobiles have been adopted by more than three times as many people as PCs.

While it's unlikely that anyone would willingly turn back to a pre-PC era of golfball typewriters, adding machines and overflowing filing cabinets, it seems clear that the potential for the PC and its many associated technologies still can't stake a strong claim to being an instrument of complete social or business revolution. At best, they've made life easier and quicker in first-world economies, while reinforcing the status of other countries as nothing more than sources of cheap labour.

As columnist Joe Queenan asked in a 1995 essay: "The real question is: how is the information highway going to make life easier for anyone other than the ones who already have easy lives?" Six years later, there's still no clear answer to that.