Are You Ready for The Big Switch?

Business will soon change in ways as electrifying as electrification itself.

So argues Nicholas Carr in his new book "The Big Switch."

Carr, who rose to prominence on the strength of his 2003 article "IT Doesn't Matter" (later a book of the same name), is now telling us that technology is headed for the same category as electricity: a silent enabler of huge societal change. That societal change will create even bigger opportunities for business.

The switch reference in the title plays off both the idea of switching on and off the power, and also of a switch in the way companies will use computing. No longer, Carr says, will they spend trillions to build, develop and manage information systems. Instead, they will offload this to what he calls the computing versions of electric utilities. "The ripple effects will be felt throughout the world economy," he tells us.

If he's right, it will be more than a ripple. For example, Carr says it's possible that "much of the traditional hardware business would simply disappear."

Carr spends most of the first part of his book reminding us of the incredible changes wrought by the rise of the electric utility. Not only did businesses stop managing their own power production, but cheap, ubiquitous power created vast new consumer industries â€" the electrification of almost everything in the home, for instance.

Carr, a kind of Homer of the technology age, weaves vignettes about heroes of yore like Thomas Edison and Samuel Insull in with the history of computing, noting their challenges, their vision and their blindspots. As he does so, he builds the case that "The PC age is giving way to a new era (of computing): the utility age."

His evidence includes the advent of gigantic data centers built by Google, Microsoft, Amazon.com and others. And while he gives a little too much credit to Web application providers like Salesforce.com, calling their products equivalent to traditional software, which is often not even the goal of such companies, this is probably a minor quibble with his argument. What's important about the rise of things like the Amazon Elastic Compute Cloud is that "Any company, even a one-person home business, can piggyback on a computing operation that Amazon took years to assemble and fine-tune."

Non-technical readers will appreciate Carr's deft touch in talking about technical jargon. For instance, he defines virtualization as "the use of software to simulate hardware," and uses the example of how telephone answering machines have gone from separate boxes to software. Business leaders will find his premise intriguing.

The big question is whether this idea of utility computing will indeed sweep through business in the way Carr says. He makes the case for that in part II of his book, which I will review soon.[update: as you will see in part II, he goes in a different direction.]

UPDATE: My conclusion and the Big Think Breakdown, here in The Big Switcheroo, Part Two.