Will smart watches The march of the Patient-driven ever take off? robo-traders drug development page 3 page 25 page 34 TechnologyQuarterly September 17th 2005

And now, the war forecast Can the outcomes of military conflicts be predicted, just like the weather?

Republication, copying or redistribution by any means is expressly prohibited without the prior written permission of The Economist The Economist Technology Quarterly September 17th 2005 Monitor 1 Contents Watch this space

Consumer electronics: As mobile phones threaten to depose them as the most personal of technological devices, high-tech watches are ghting back T IS a tiny technological wonder that ddly, and because weight and volume Igoes everywhere with you. Your choice are at a premium in watches, battery life of brand and model says a great deal is usually not competitive with larger, On the cover about who you are and how you wish to dedicated devices such as Apple’s iPod. Software can predict the be perceived by others. It may have a clas- As a result, watch-based MP3 players weather, but can it predict sic, bare-bones design, or its sleek casing have also failed to take o. Similar draw- the outcome of a military may conceal a host of extra functions. Ten backs have scuppered attempts to inte- conict? The success of one years ago, this described your wrist- grate personal organisers, digital cameras war-forecasting system watch, which epitomised the combina- and other devices into watches. suggests that it can. But now tion of fashion and technology for over a Yet still they come: gadget freaks can the software must keep up century. But today it also describes your choose from a host of exotic models that with the changing nature of mobile phone, which for many people would do James Bond proud. Want a warfare and the rise of has already dethroned the wristwatch as wristwatch TV for your daily commute? asymmetrical conicts: the most personal of technological de- No problem: NHJ of Japan makes one pages 21-22 vices. Can watchmakers ght with a sharp, 1.5-inch colour screen back? In recent years there have but the battery only lasts an hour. Still Monitor been several attempts to boost looking for those weapons of mass 1 Smart watches, website the appeal of watches by add- destruction in Iraq and need a ra- mash-ups, sailing with kites, ing exotic new functions, diation detector? The Gamma- mobile medicine, summer camp from telephones and Master watch has a handy for coders, a hydrogen-powered televisions to personal built-in Geiger counter. Other plane, preserving digital les, organisers. But so far, watches incorporate ultraviolet driver monitoring via satellite, none of these super- radiation sensors and satellite- an open source record label, watches has been a hit positioning systems. better batteries, avoiding with consumers. Manu- But such watches appeal trac, and the joy of tagging facturers, it seems, have only to the geek fringe. Mobile tended to ignore obvious practical limi- phones, however, suggest that Rational consumer tations, and have failed to exploit the people will adopt new features 10 Video-games consoles unique position of the watchright there on a device that originally just did one Preparing for the next round on your wrist. thing. Millions of people now use their Consider, for example, the chequered mobile phones to send text messages, Reports history of attempts to develop a Dick take pictures and play games. So perhaps 11 And now, the war forecast Tracy watch with a built-in phone, as watchmakers need to nd new features Conict-modelling software that used by the 1930s comic-strip hero. that play to the strengths of watches. For forecasts military outcomes Swatch, the Swiss pioneer of low-cost example, unlike socially disruptive 13 The march of the robo-traders fashion watches, unveiled a prototype mobile phones, watches are far more Could software that buys and sells called Swatch Talk in 1998, but it has not discreet. They are also visible at a glance, shares displace human traders? been seen since. A similar fate befell a without the need to fumble in a pocket or Samsung device that was previewed in briefcase. Watchmakers dream of creat- Case history 2003. In both cases, production plans ing an iconic, breakthrough device that 15 Better by design were shelved when prototypes failed to opens up an entirely new category, just The rise and rise of product impress users: holding your wrist to your as the iPod did. life-cycle management ear during a conversation and keying in Hence the launch last year, after many numbers with a toothpick simply look delays, of smart watches powered by Reports absurd. The Wristomo, a watch-phone Microsoft’s MSN Direct 18 Death to folders! made by NTT DoCoMo of Japan which service. This service, Why le documents on your actually made it to market in 2003, pro- only available in parts computer when you can search? vides a partial solution by making the of North America, uses 20 Just what the patient ordered strap part of the phone. Watch and strap an FM radio signal to A new trend in pharmaceuticals: unfold into a normal sized phone, but send news, sports re- patient-driven drugmaking this makes for a rather chunky watch, sults, stock prices and and the Wristomo has been a op. other nuggets of in- Brain scan Watches, it seems, are simply the formation to the 22 Biology without borders wrong shape for mobile telephony. But watch’s screen. Leroy Hood, one of medicine’s what about digital music? One snag is the Many users have greatest visionaries inconvenience of wires from wrist to their favourite ears. The controls also tend to be rather items, including the 1 2 Monitor The Economist Technology Quarterly September 17th 2005

2 time, cycling continuously, which al- The term mash-up is borrowed from lows surreptitious scanning of the lat- the world of music, where it refers to the est sports results while sitting in a unauthorised combination of the vocal meeting. The watches can also dis- from one song with the musical backing play alerts from Microsoft’s in- of another, usually from a completely dif- stant-messaging service, and ferent genre. Web mash-ups do the same can synchronise calendars sort of thing, combining websites to pro- with a PC. Four watchmakers duce useful hybrid sites and illustrating backed the initiative: Suunto the internet’s underlying philosophy: of Finland, Fossil of Texas, chip inside a watch might also that open standards allow and promote and Tissot and Swatch, be the logical place to store e- unexpected forms of innovation. both members of the Swatch cash, credit cards and personal Mash-ups are emblematic of the di- Group of Switzerland. medical records. Production of the rection of the web, says Paul Levine, the The Swatch Group’s support for new watches starts this month. general manager of Yahoo! Local, a sub- smart watches is signicant, since this Swatch also sees great potential for sidiary of one of the web’s most popular conglomerate of Swiss watchmakers ac- watches as contactless digital wallets. Its sites. This is about participants in the counts for some 25% of global watch sales Swatch Access contactless technology, web community opening up their sys- by value. The decision to launch a smart launched way back in 1996, has since tems. It may also be about good busi- watch under the Tissot brand is particu- found several niche applications, includ- ness. By building their sites using open larly revealing, says Pierre Maillard, a vet- ing use as an electronic ski pass at hun- standards, and so making it easier for cus- eran observer of the Swiss watch dreds of resorts. Christoph Winkelmann tomers and developers to build other industry and editor of Europa Star, a of Swatch says the Access technology is sites that plug into them, companies can trade magazine. He notes that Tissot sits making a big comeback in this year’s pro- both encourage innovation and boost in the highly protable mid-market seg- duct line, as the company targets new their own popularity. When you lower ment which the Swiss have cornered, and applications. In July, 64,000 Swatch Ac- the barriers to entry, interesting things is associated with Swiss quality, not cess watches functioned as tickets to the happen, says Tim O’Reilly, president of cheap gadgetry. The Tissot High T opening events of the new Swiss na- O’Reilly & Associates, a rm based in smart watch, retailing at over $700, is tional football stadium in Bern. So per- Sebastopol, California that publishes aimed at status-conscious businessmen, haps there is a role for the high-tech programming handbooks. The players not hip youngsters. Its novel touch-sensi- watch after all. Time will tell. 7 who gure this out will wield a great deal tive display is reminiscent of the iPod’s of economic power. nifty scroll wheel. As often happens online, this trend is Most smart watches, however, are still being driven from the bottom up, by us- quite chunky, in order to squeeze in the ers. Most mash-ups happen without the necessary electronics. The need to pay a Mashing the web sites that supply the data even knowing $40 annual subscription charge is o- about it. For example, Greg Sadesky, a putting, too. And the technology has had programmer based in Quebec City, teething troubles, so its future is unclear. grabbed textual data from Yahoo! Trac But whatever becomes of smart and map data from Google without con- watches, the wristwatch still has poten- Software: Programmers are sulting either rm, to create a mash-up tial in other areas. For example, because it combining data from dierent (see trac.poly9.com) that produces traf- is normally strapped to its owner, it is websites to create mash-up sites c maps. Similarly, Chris Smoak, who harder to misplace than a ash drive or with entirely new capabilities lives in Seattle, has mashed together sev- memory stick. This has prompted LAKS, eral trac, web-cam, transport-informa- an Austrian rm, to launch a watch with RMED with a stack of house-listing tion and map sites to create Seattle Bus built-in ash memory and a standard Aprintouts from Craigslist.com, a pop- Monster, a public-transit site for the Seat- USB connector in its strap to enable it to ular website, Paul Rademacher was driv- tle area (see www.busmonster.com). The be plugged into a PC. Previously better ing around Silicon Valley late last year rise of online journals, or blogs, has known for its chic Klimt-inspired watches looking for a place to live. It was not until spurred the mash-up trend by bringing than for high-tech gadgets, LAKS has seen he was about to park that he looked up programmers together to discuss new its sales more than double as a result. and realised he had already visited the ideas and tricks. Mr Sadesky credits the Lucas Alexander Karl Scheybal, the same house earlier. Surely, he thought, inspiration for his trac-map mash-up to head of the rm that bears his initials, be- there had to be a better way to evaluate the blog run by John Resig (ejohn.org), lieves this sort of watch has huge poten- and visualise a list of housing options. which explains how to extract trac data tial in e-commerce. Its latest twist on the And so there was. In February, Mr from Yahoo!’s website. memory watch, called SmartTransaction, Rademacherwho by day was a software Mashing is getting easier for these integrates both the USB connector and a engineer at DreamWorks Animationbe- after-hours programmers as big websites secure smart-card chip, like those used in gan building a website that combines the start to cater to their needs. Chicago- credit cards, with a contactless interface mapping capabilities of Google’s search Crime.org, a mash-up that lets visitors developed by Philips, a Dutch electronics engine with housing listings from Craigs- view crime data by street, date, type and giant. By plugging the watch into a PC, list. The result, HousingMaps.com, zip code on a map of Chicago, for exam- funds or travel tickets can be downloaded creates maps showing houses or apart- ple, said at the end of June that Google’s to the chip without the need for a special ments in a particular city within a desig- decision to release an ocial method for smart-card reader. Being wrist-mounted, nated price range. The site went live in linking to its maps had made the site far a watch is always close at hand, which April, and is a leading example of one of more reliable. Yahoo! opened up its map makes it particularly convenient when the latest internet trends: the web mash- data in a similar way in June, and in July operating contactless readers on public- up. HousingMaps instantly attracted a Microsoft unveiled a pre-release version transport systems (such as those used by crowd and has since been visited by of its mapping site, MSN Virtual Earth. It London’s Oyster system). A contactless more than 850,000 people. includes a Community button to help 1 The Economist Technology Quarterly September 17th 2005 Monitor 3

2 programmers create websites that incor- Loading and unloading is more expen- porate data from Virtual Earth. sive, since the cranes that lift containers Such rms are happy to see their sites must work around the masts. Engineers get mashed. At the Where 2.0 conference Sailing ships designed taller (and more expensive) in San Francisco this summer, Brett Tay- masts, some exceeding 100 metres in lor, the product manager of Google Maps, with a new twist height, to reduce their number and limit noted that everyone is doing it al- the loss of storage space. But the Panama readyso why ght it? A mash-up lets a Canal limits masts to 60 metres, and col- company like Google tap into the creativ- Transport: Giant kites that act like lapsible masts would be prohibitively ex- ity of the world’s programmers, says Na- sails could bring wind propulsion pensive to build, operate and service. than Torkington of O’Reilly Media, who back to ocean-going ships, reducing Knud E. Hansen, the naval engineer- was the conference chairman. emissions and saving on fuel costs ing rm based in Copenhagen that led So will mash-ups march on? Only if Project WindShip, designed high-tensile they lead to revenue, some predict. N THE rst half of the 19th century, steel masts with foldable carbon-bre Something has to evolve, says Craig Iships began to adopt steam engines, sails, known as vertical aerofoils because Donato, the founder of Oodle, a site with rst alongside and then instead of sails. they generate horizontal thrust just as local buying, selling and donation list- Today, wind propulsion is for sportsmen aeroplane wings create lift. The cost of ings. If the information being mashed is and romantics, not shipping rms trying retrotting a cargo ship with a row of useful, he says, it is probably expensive to make money. But the high price of oil masts, and strengthening its hull and for the originated sites to put on the web and stricter pollution regulations are deck to dissipate the additional stress, in the rst place. At the Where 2.0 confer- strong forces working to turn back the was estimated at 10m ($12.5m). So the ence, Mr Taylor of Google said that pro- clock. Wind propulsion is coming back in sails would have taken around 15 years to grammers were free to use Google maps a new form: kites, not sails. Next year, recoup their costs through fuel savings. for mash-ups that were free to consum- SkySails, a German rm based in Ham- But the SkySails approach does away ersbut added that his rm reserved the burg, will begin outtting cargo ships with masts and is much cheaper. The right to deliver maps with advertise- with massive kites designed to tug ves- rm says it can outt a ship with a kite ments on them in future. Dave McClure sels and reduce their diesel consumption. system for between 400,000 and of Simply Hired, a recruitment site based The rm estimates that these kites will re- 2.5m, depending on the vessel’s size. in Silicon Valley, says he expects the duce fuel consumption by about one- Stephan Wrage, the boss of SkySails, says mash-up scene to change, just as the blog- thirda big saving, given that fuel ac- fuel savings will recoup these costs in just ging scene did when Google’s advertise- counts for about 60% of shipping costs. four or ve years, assuming oil prices of ment-placing service, AdSense, rst The idea of reintroducing sails to mod- $50 a barrel. Jesper Kanstrup, a senior na- appeared and turned free content into a ern ships is not new. A Japanese consor- val architect at Knud E. Hansen, says the monetisable data source. tium tried it in the 1970s, but got idea of pulling a ship with an inexpen- There are already signs that mash-ups nowhere. In the 1990s, the Danish gov- sive kiteattached to the structurally have commercial potential. Simply Hired ernment launched Project WindShip, but solid bow like a tugboathad never oc- and the social-networking site LinkedIn, it was scuttled in 1998. Other teams met curred to him. It’s a good idea, he says. for example, have already mashed them- failure, too. The insurmountable problem SkySails’ kites are made of a type of selves together. If you are a member of in each case proved to be the mast. nylon similar to that used in the sails of LinkedIn and go searching for a job on In unfavourable winds, large masts modern windjammers, but they y be- Simply Hired, you can link from a job list- create a lot of drag. In gales, masts cause tween 100 and 300 metres above sea ing to a list of LinkedIn contacts who ships to heel, sometimes dangerously. level, where winds are less turbulent and, could get you an introduction at the com- Masts and their pivoting sails take up on average, more than 50% stronger than pany in question. As well as helping us- valuable container space on the deck. the winds that sails capture. An autopilot 1 ers to land a job, this mash-up should help the two websites to boost their traf- c. And in August, Salesforce.com, a pio- neering provider of business software that runs inside web browsers, an- nounced Smashforce, an initiative to make it easier to incorporate its software into mash-ups. A rm could, for example, combine a list of sales prospects with a map, to help a salesman plan his route. All told, the urge to mix things up should keep companies and program- mers busy for the foreseeable futuretoo busy, sometimes, even to use their own mash-ups. Mr Smoak, who created his mash-up during evenings and weekends, says he never gets up early enough to take the bus to his day job, at Amazon. I’m not an early riser, he says. But if I stay up late I can do projects like this. And what of Mr Rademacher’s housing search? The popularity of his website helped land him a job at Google, but has also kept him so busy that he has not had time for any more house-hunting. 7 Masts? Who needs them? 4 Monitor The Economist Technology Quarterly September 17th 2005

2 computer adjusts the height and angle of scales and blood-pressure monitors com- the kite, the surface area of which can municate via Bluetooth (a short-range ra- range from 760 to 5,000 square metres. dio technology) with the mobile phone, When the wind blows too strongly, one which then sends the data to the doctor. end of the rectangular kite is released so Clinical trials are under way in Barcelona that the kite aps like a ag. A powerful and Boston, says Mr Lacal, with potential winch retrieves the kite when necessary. commercialisation as early as next year. Regulators, as well as cost savings, In Britain, a joint-venture between the could boost the technology. For while Institute of Biomedical Engineering at both Europe and America have strict Imperial College London, Toumaz Tech- regulations on vehicle pollution, ships nology and Oracle, the world’s second- have enjoyed something of a free ride. largest software rm, has devised a per- Moving one tonne of goods one kilo- vasive monitoring system that will enter metre by ship, for example, releases trials in 2006. A small sensor, attached about 225 times as much sulphur as using a sticking plaster, monitors the pa- trucking the goods the same distance, ac- tient’s heartbeat and detects irregular- cording to the Secretariat on Acid Rain, a ities. The resulting electrocardiogram Swedish pressure group. Mario Dogliani, data is sent wirelessly to a nearby mobile the head of research at RINA, an organisa- phone, which then transmits it to a moni- tion based in Genoa that inspects and cer- toring centre, or directly to a doctor. ties ships, says European regulators are Mobile telehealth need not be so elab- really pushing for tougher emission orate, however. SIMpill, a South African controls, backed up with sti nes, for rm, makes a small device that clips on to shipping. We need to innovate, he says. a medication bottle and sends a text mes- In May, the International Maritime sage to a central computer whenever the Organisation’s new rules on marine pol- for the whole food-log thing, says Mr cap is removed. If no message arrives, the lution took eect. They require many Katz, who owns a oor-covering busi- central computer sends a text-message re- ships to switch to a low-sulphur fuel that ness. Now I’m doing better at keeping minder to the patient, or to a family mem- costs 50% more than traditional (and track of what I eat. I always have my ber or carer. The system is now used by highly polluting) fuel oil. And an increas- phone with meit’s like having a con- more than 2,000 people and can dramati- ing number of ports now oer discounts science hanging on your waist. cally improve compliance, says SIMpill’s for ships with approval labels, called The notion of procuring health care founder, David Green. It has just been Green Passports, awarded by environ- via phone is not new: when doctors rou- launched in America. mental groups. It all adds up to a favour- tinely made house calls, medical help Many observers expect mobile tele- able wind for SkySails. 7 was just a phone call away. Most health- health to take o in mobile-loving South care services today are delivered inside Korea and Japan, but to lag behind in medical premises, says José Lacal of America, where consumers are more MotoHealth, the health-telemetry project likely to raise privacy concerns. But run by Motorola, the world’s second-big- Donald Jones, head of mobile health care gest mobile-phone manufacturer. But at Qualcomm, a wireless-technology The doctor in with the mobile phone, you can take the rm based in San Diego, notes that services with you. HBS Consulting, a phones’ built-in security features make your pocket consultancy based in London, estimates them far more secure than PCs. that the global telehealth marketthe Besides, the need for tools to improve use of telecommunications and informa- the management of chronic health condi- Medical technology: Nearly everyone tion technology to deliver health care and tions cannot be overstated. According to in the developed world carries a related serviceswill grow to $7.7 billion America’s Centres for Disease Control mobile phoneso why not use it to in 2006, up from $3.2 billion in 2003. and Prevention, more than 90m Ameri- deliver health care? So far, most mobile telehealth ser- cans have a chronic illness, and they ac- vices, such as MyFoodPhone, simply use count for over 75% of the nation’s $1.4 ARY KATZ is a repeat oender. A few ordinary mobile phones to collect and trillion annual spending on health care. Gyears ago, a nutritionist helped him transmit data. The next stage is to add spe- So the mobile phone could be a useful to reduce his blood-cholesterol level from cic medical sensors, which can even be tool to combat both chronic disease and a troubling 286 to a reasonable 177. But incorporated directly into the handset. runaway medical costs. Joseph Kvedar of after his annual check-up in April, Mr For example, LG, a South Korean handset- Partners Telemedicine, who is also a pro- Katz found that his cholesterol was once maker, started selling a phone with a fessor at the Harvard Medical School, again too high. The businessman turned built-in blood-glucose meter, for use by suggests that insurance companies might, to the same nutritionist as before, but diabetics, in its home market last year. It for example, oer free phone minutes to now he and his food adviser have a secret can transmit blood-glucose readings to a customers who go for a walk every day. weapon: the mobile phone. doctor, parent or desktop computer for Their compliance would be monitored Through a new service called My- further analysis. Healthpia America, by a pedometer built into the handset. FoodPhone, Mr Katz uses the camera based in Newark, New Jersey, plans to Mobile phones’ impact on health care built into his phone to take a picture of ev- launch the phone in America in January. could be even greater in the developing ery meal. This is far easier than writing Motorola and Partners Telemedicine world, where mobiles far outnumber everything down in a food log, which the (a division of Partners HealthCare, a PCs. For most of the world, says Mr 44-year-old New Yorker did the last time group of hospitals and health-care pro- Jones, this is the only computer they are he was ghting high cholesterol. At the viders in Boston) have been testing de- ever going to own. It’s on the internet. end of each week, his nutritionist e-mails vices that can transmit a patient’s weight, And they carry it everywhere. Get ready him a dietary critique. I was never one blood pressure and other data. Weighing for the doctor in your pocket. 7 The Economist Technology Quarterly September 17th 2005 Monitor 5

Summer camp for coders ’M A total geek all around, says IAngela Byron, a 27-year-old com- puter programmer who has just gradu- ated from Nova Scotia Community College. And yet, like many other stu- dents, she never had the condence to approach any of the various open- source software communities on the in- ternetdistributed teams of volunteers who collaborate to build software that is then made freely available. But thanks to Google, the world’s most popular search engine and one of the biggest proponents of open-source software, Ms Byron spent the summer contribut- ing code to Drupal, an open-source pro- ject that automates the management of websites. It’s awesome, she says. Held aloft by hydrogen Ms Byron is one of 419 students (out of 8,744 who applied) who were ac- cepted for Google’s summer of code. While it sounds like a hyper-nerdy sum- Aviation: An unmanned aircraft powered by hydrogen has taken to the air for mer camp, the students neither went to the rst time. Such aircraft could have both military and civilian uses Google’s campus in Mountain View, California, nor to wherever their men- LAME it on the Hindenburg. Ever since that would be able to stay aloft for more tors at the 41 participating open-source B the hydrogen-lled German airship than a week. projects happened to be located. In- exploded in 1937, hydrogen and aviation Such an aircraft would have a number stead, Google acted as a matchmaker have not had much to do with each other. of uses as a low-cost alternative to satel- and sponsor. Each of the participating But a new aircraft, which made its rst lites. Equipped with wireless-broadband open-source projects received $500 for ight in May, could change that. Global relays, imaging equipment or monitoring every student it took on; and each stu- Observer, the world’s rst liquid-hydro- devices, it could be used for surveillance, dent received $4,500 ($500 right away, gen powered, unmanned-aerial vehicle weather monitoring and telecommuni- and $4,000 on completion of their (UAV), is not an airship, but an aeroplane cations. In 2002, AeroVironment demon- work). Oh, and a T-shirt. that uses hydrogen as a fuel. It was built strated the use of a solar-powered UAV All of this is the idea of Chris DiBona, by AeroVironment, a rm based in Mon- as a mobile-phone relay and a TV broad- Google’s open-source boss, who was rovia, California, which announced at a casting platform, in conjunction with brainstorming with Larry Page and UAV conference in June that Global Ob- NEC, Toshiba and other Japanese rms. Sergey Brin, Google’s founders, last server had made its rst ight above the Ted Wierzbanowski, AeroVironment’s year. They realised that a lot of program- desert sands of Yuma, Arizona. managing director, admits that many ming talent goes to waste every summer Having pioneered solar-powered people were sceptical about the switch to because students take summer jobs ip- ight in the 1990s with America’s space hydrogen. Building the prototype was ping burgers to make money, and let agency, NASA, AeroVironment has since the only way to put the hydrogen bogey- their coding skills degrade. We want to refocused its eorts towards fuelled man to bed, he says. We think this is a make it better for students in the sum- UAVs. Solar-powered UAVs promise po- big paradigm shift in the aerospace and mer, says Mr DiBona, adding that it tentially unlimited hours in the sky, but space industry. The prototype aircraft also helps the open-source community they have limitations. At latitudes above has a 15-metre wingspan, but he expects and thus, indirectly, Google, which uses 45°, and during the winter, the sun is too two production versions, with 46-metre lots of open-source software behind the weak to keep the aircraft ying. Liquid hy- and 76-metre wingspans. Loitering at alti- scenes. Plus, says Mr DiBona, it does drogen is an attractive fuel for a high-alti- tudes of between 18,000 and 21,000 me- become an opportunity for recruiting. tude, long-endurance vehicle, since it has tres, they would work in threes: as one Elliot Cohen, a student at Berkeley, around three times as much energy per plane started to run out of fuel, another spent his summer writing a Bayesian unit of mass as conventional jet fuel. The would take o, to ensure continuous network toolbox for Python, an open- diculty is keeping it liquid, since hydro- broadband or TV coverage. source programming language. I’m a gen boils at -253°C. Global Observer has a But several challenges remain. One of pretty big fan of Google, he says. He special insulated storage tank that can the biggest is reliability, according to John has an interview scheduled with Micro- hold enough liquid hydrogen to keep the Del Frate, the former manager of NASA’s soft, but Google is the only big com- plane aloft for 24 hours. The hydrogen is Environmental Research Aircraft and pany that I would work at, he says. combined with oxygen from the air in a Sensor Technology project. Most com- And if that doesn’t work out, he now fuel cell, producing electricity that drives mercial aircraft have to be inspected ev- knows people in the open-source com- the aircraft’s propellers and powers its ery 100 or 200 hours, he says. In one munity, and it’s a lot less intimidating. onboard systems. The aircraft is a scaled- ight of these hydrogen and solar- down version of a much larger aircraft powered vehicles, we’ll easily exceed that1 6 Monitor The Economist Technology Quarterly September 17th 2005

2 amount. Worse, the aircraft must be able results were recorded on laserdiscs that to withstand ultraviolet radiation, freez- could only be read by a special system ing temperatures and high winds, says based around a BBC Micro home com- Mr Del Frate, though AeroVironment puter. But since the disks were unread- The policeman on claims to have addressed these problems. able on any other system, this pioneering Then there is the small matter of con- example of multimedia was nearly lost your dashboard vincing potential buyers, such as Colonel for ever. It took two and a half years of Patrick Rhodes, the commander in charge patient work with one of the few surviv- of America’s Air Force Space Command ing machines to move the data on to a Transport: A new satellite-based Battlelab, which tests new technologies modern PC (it can be seen online at driver-monitoring scheme could for the military. For the moment, he says, www.domesday1986.com). provide a glimpse of the Big hydrogen-powered lighter-than-air and National libraries are just starting to Brotherish future of motoring heavier-than-air vehicles that will pro- grapple with this problem as part of their vide signicant persistence over an area new mandate to preserve digital culture. OR years, trac police and motorists are not there yet. But Major-General It is a major problem, but it is remark- Fhave been engaged in an arms race. As Douglas Fraser, director of air and space able how little known it is, says Hilde the police have adopted speed guns and operations for Air Force Space Com- van Wijngaarden, head of digital pres- roadside cameras, drivers have taken to mand, is optimistic that the new UAVs ervation at the National Library of the radar detectors and maps showing cam- will eventually prove themselves. Netherlands. People just accept that era locations. But a new system being de- The new aircraft also faces compe- things no longer work after ten years. veloped in the United Arab Emirates tition from rival technologies, such as the Keeping working examples of all com- (UAE) could hand ultimate victory to the Stratellite, a helium-lled airship being puter hardware is impractical, so the trac police. The UAE is investing $125m developed as a communications relay by most popular preservation strategy is to in a system that will make it possible to GlobeTel Communications, a rm based copy les from one generation of hard- determine the speed of any of the Gulf in Florida. Mr Wierzbanowski reckons ware to the next. The problem is that to- state’s 2m vehicles, no matter where they his approach has lower running costs, day’s word processors and web are. New devices, now being developed but airships can lift larger payloads. So browsers, for example, do not always dis- by the UAE’s Centre of Excellence for Ap- there may be room in the stratosphere for play les in the same way that older soft- plied Research and Training (CERT) in both technologies. 7 ware did. An accumulation of subtle conjunction with IBM, should be ready errors can eventually make the original for installation in cars within four years. item unreadable. An alternative ap- Once tted, these devices will use proach, called emulation, uses software global positioning system (GPS) satellites to simulate the old hardware on a mod- to determine the car’s location to within a A new way to stop ern computer, to allow old software to few metres, says Farid Metwaly of IBM. run. But today’s emulators will need an- By combining several position and time other emulator to run on the next genera- measurements, it is a simple matter to de- digital decay tion of hardware, which will need termine the car’s speed. This can then be another emulator for the next generation, compared with a database of speed lim- Computing: Could a virtual and so on. This can also introduce errors. its for all roads in the country. If the vehi- computer, built from software, help So the National Library of the Nether- cle is breaking the local speed limit, the to save today’s digital documents for lands is exploring a third option, using a system will issue an audible alert, warn- historians of the future? simulated computer that exists only in ing the driver to slow down. It gives you software. It is called the Universal Virtual ten seconds to slow down, and if no ac- HEN future historians turn their at- Computer (UVC) and is being developed tion is taken it will issue another warn- Wtention to the early 21st century, elec- by IBM, a computer giant. The research- ing, says Mr Metwaly. If you still don’t tronic documents will be vital to their ers are writing programs to run on this slow down, it will record the event. understanding of our times. Old web virtual computer that decode dierent What happens next remains to be pages may not turn yellow and brittle like document formats. Future libraries will seen. The system will be able to inform a paper, but the digital documents of today’s have to write software that emulates the central government server of such culture face a more serious threat: the dis- virtual computer on each new generation events via the mobile-phone network. appearance of computers able to read of computer systems. But once that is But whether that information will be them. Even a relatively simple electronic done, they will be able to view all their used to issue speeding nes, or simply re- item, such as a picture, requires software to stored documents using the decoders tained for statistical purposes, is unclear. present it as a visible image, but 100 years written for the virtual computer, which It is for the country to decide what to do from now, today’s computers will have only have to be written once. The de- with this information, says Mr Metwaly. long since become obsolete. More complex coder can be tested for correctness today, There is no doubt about the motivation items, like CD- while the format is still readable, says behind the new system, however. The ROMs or videos, Raymond van Diessen of IBM. UAE has one of the worst road-safety re- will be unreadable His team has written decoders for two cords in the world: compared with most even sooner. common image formats, JPEG and GIF. European countries or America, there are In 1986, for ex- They plan to move on to Adobe’s PDF for- more than six times as many deaths per ample, 900 years mat. IBM is also talking to drug rms, passenger mile on its roads. after the Domes- which are required to store data from clin- The prospect of having a policeman day book, the BBC ical trials for long periods. Ultimately, the on the dashboard might seem a little Big launched a project aim is to be able to preserve anything Brotherish to some people. But the UAE to compile data from simple web pages to complex data project may merely oer a glimpse of about Britain, in- sets. Ominously, some scientic data what regulators in other countries are cluding maps, from the 1970s has already crumbled into also planning. Switzerland and Germany video and text. The unreadable digital bits. 7 have already introduced automatic road- 1 The Economist Technology Quarterly September 17th 2005 Monitor 7

2 toll systems for freight vehicles. These are early classical music, which has a strong widely seen as a prelude to extending presence on Magnatune. Around 10,000 similar measures to cars. The British gov- people visit the site every day, and one in ernment has suggested replacing its cur- 42 visitors buys some musica far better rent road-tax scheme with a ratio than the average for e-commerce satellite-based pay as you drive system (where conversion rates are typically be- for all vehicles. The UAE system will also tween 1 in 400 and 1 in 1,000), and not be used for road-taxing and for car-insur- much worse than in bricks-and-mortar ance purposes, says Tayeb Kamali, the music stores, where it takes 20 customers chief executive of CERT. But it has not yet to generate a sale. been decided whether charges and insur- Magnatune has exceeded Mr Buck- ance premiums will be based on dis- man’s expectations in music licensing, tance, time of travel or route taken. another side of the business that has Nor is it clear how the system will be played a big part in helping it reach prot- rolled out. I don’t think you can make it ability. For non-commercial use, such as compulsory, says Dr Kamali. But who a school project, the site allows music to would volunteer to have such a techno- be used under a Creative Commons li- logical tattle-tale installed? It is all a mat- cence, a concept devised by Lawrence ter of incentives, says Mr Metwaly: Lessig, a law professor and crusader for cheaper tax and insurance, perhaps, and internet freedom. For commercial use, the ability to determine the vehicle’s po- Magnatune makes licences available sition in the event of an accident. much is a matter of choiceMagnatune quickly and cheaply online. This busi- Another crucial issue is accuracy. If, as allows you to decide what the music is ness is growing at 30%, as Magnatune has Dr Kamali says, the system is to be able to worth, and to pay as little as $5 for an al- become popular with independent lm- tell when a driver runs a red light, then bum or as much as $18. Once paid for, the makers looking for soundtracks. the accuracy will have to be good enough music is not locked up using digital- Though plenty of commentators have to stand up in court. The UAE project will rights management software, so you are seized upon Magnatune as the online test not just new technology, but new not prevented from making copies. In- music model of the future, Mr Buckman business models and regulations too. 7 stead, Magnatune relies on its customers’ has relatively modest aims. We’re going loyalty to its artists not to pirate their mu- to stick to second-tier genres and we’re sic indiscriminately. not going after the majors, he says. For Mr Buckman likens this community- now, that is probably realistic, since like based, free-wheeling approach to that of other internet-music ventures, Magna- Hear no evil Linux, the open-source operating system, tune’s weakness is that it does not have although the analogy is inexact: Magna- the resources to propel its artists into the tune’s customers do pay for music, you mainstream via radio and television. For cannot remix and redistribute it, and the that reason, says Mr Buckman, it tends company does make a prot. What is not to get musicians in their 20s sending Digital media: Can an open source more Linux-like is Magnatune’s desire to in music. They have an unpleasant atti- approach be applied to the music unseat the industry incumbents and tude and still think they’ll get the limo business? Magnatune, an innovative change the rules of the game by giving and the drugs, he says. record label, thinks it can the artists a fairer, less restrictive deal. So artists considering the 50/50 split Magnatune’s slogan, We are not evil, should remember that Magnatune is, for F, AS many people hope, the internet owes a debt to Google’s slogan (Don’t be now at least, a fairly passive label. In con- Imeans that the major record labels will evil) and is a sideswipe at the major la- trast, says Brad from Brad Sucks, the ma- gradually become obsolete, what exactly bels. Its contract is non-exclusive, so mu- jors front all that money and take a lot of is going to displace them? Apple’s iTunes sicians are allowed to carry on selling risk and they do deserve to get some is clearly a part of the future, but it is argu- their music elsewhere. And the label money back. Any artist on Magnatune ably just a new distribution channel for gives artists half of the revenues from who was oered a deal with a major the major labels’ 50-year-old system of what they sell online. Major labels typi- would jump at the chance, says Costa Pi- big stars and massive marketing budgets. cally give 10% or less. lavachi, president of Decca Music Group, A more radical answer is Magnatune, an Most of the artists on the site are pro- a classical label owned by Universal Mu- independent online record label founded fessional musicians, and many have sic Group, the world’s largest major label. in 2003 by John Buckman. It has all the in- been signed at some point to the evil This month Magnatune is introducing gredients that could help future artists by- kind of record label. Some, like Trevor a new marketing strategy: if you buy pass traditional labels, earn more money Pinnock, a conductor and harpsichordist, some music, you are allowed to give it to and enjoy greater artistic freedom. are famous, but others are unknowns three friendsanother nod in the direc- From a listener’s point of view, the who sent in a demo. Magnatune has a tion of the share and share alike spirit rm’s website, www.magnatune.com, is dedicated artists and repertoire (A&R) of the open-source movement. And even enticing. You can legally listen, free of man, and gets about 400 submissions if Magnatune itself turns out not to be the charge and with high sound quality, to from new artists each month, from which web-powered destroyer of the major la- full albums by any of the 200 or so artists it signs ve or ten. It restricts itself to bels that everyone is waiting for, other, who have signed to the label. (Your corre- seven main genresclassical, electronica, dierent models will come later. Even spondent was immediately hooked by a jazz and blues, metal and punk rock, new Warner Music, one of the majors, is said song called Making Me Nervous by a age, rock and pop and world. Some to be planning to launch an internet-only one-man electro-pop band from Ottawa genres are dying out in the world of phys- e-label later this year. It will only take called Brad Sucks.) Music streamed is free, ical CDs, says Mr Buckman, and Magna- one rock star born on the internet, after but to download it to your computer or tune will soon be one of the few places all, for everyone to pronounce the old burn CDs, you have to pay. Just how you can nd them. He is also a devotee of model completely dead. 7 The Economist Technology Quarterly September 17th 2005 Monitor 9

tent public, and the ability to search ev- pages as they go along. eryone else’s content for a given tag, and Because tags make it easy to share con- a world of possibilities opens up. As tent, users of Flickr have also begun to in- Websites of mass thousands of users tag photographs and teract with their photos in new and web pages, information begins to perco- interesting ways, as communities have description late in new ways. Users themselves build formed around particular tags. These a database of what is useful and impor- communities of convenience are not tant for others to draw upon. For exam- based on real world connections or net- Social software: New tagging ple, a search for the tag love on Flickr working, but rather on bits of content. websites make it easier to share brings up almost 20,000 photos that en- Consider the tag memorymaps, for ex- content, nd items of interest, and capsulate people’s idea of love. ample. Memory maps are digital scrap- form online communities What Flickr does for photographs, books that make use of another feature of del.icio.us (pronounced delicious) does Flickrthe ability to annotate photo- HE images icker across the screen, for bookmarks, by providing manage- graphs with boxes which display pop-up Tone every few seconds: a bed, its ruf- ment of bookmarked web pages. Hun- captions when the mouse pointer rolls ed covers pulled back to reveal a lonely dreds of thousands of registered users over them. Starting with a satellite image emptiness; two pairs of lips gently touch- have so far linked to over 10m web pages. of a city or town, users attach captions to ing, on the verge of a kiss; a lamb play- Traditionally, bookmarks are stored with- places of particular signicance: their old fully nuzzled beneath its mother’s belly; in a web browser on a computer, and can school-friends’ houses, for example. The two little girls whispering secrets to one only be accessed from that particular memory map can then be shared with another. The photographs come from a computer. With del.icio.us, users add friends or added to by others who live in college student in Oklahoma, a middle- bookmarks to their personal del.icio.us that city. Users of another tagging site, aged man from rural England, and a web page simply by entering the address Tagzania.com, sprinkle maps with restau- Dutch woman, none of whom has ever of a web page and typing in a few words rants, bars and other places of interest. spoken with or met any of the others. to tag it. The bookmarks can then be ac- After the London terrorist bombings Each photo takes its place among the rest cessed from any computer. A user can in July, a Flickr group quickly formed to simply because it has been tagged by its surf cooking sites and tag recipes at the share photos of the aftermath. Since us- photographer with the word intimacy. oce, for example, and then easily access ers can upload photos directly to the site The photographs form part of a them from home. from mobile phones and add comments slideshow on Flickr.com, a website that For each bookmark, users can also see to photos, an image of a tube ticket allows its users to store, manipulate and how many other users have bookmarked bought at King’s Cross station on July 7th share their digital photos. While such it and who they are. If another user’s in- became a forum for people to share their sites have been around for years, Flickr terests seem similar, their bookmarks can thoughts and oer their condolences. stands out because it makes it easy for us- be called up to nd new, unexplored Other users simply want to have fun. ers to categorise, search and share photos sites. All of the bookmarks collected by The inniteickr tag invites people to through tagsone-word descriptions all users can also be searched by tag, and contribute photos of themselves looking that capture the essence of a photograph. the most popular links at a given time at Flickr photos of people looking at A tag can be a name or a place, an adjec- give a glimpse of the web in motion. With Flickr photosad innitum. The Flicky tive or a verb, concrete or abstract. Yahoo! or Google, a mindless software Awards group votes for its favourite More importantly, though, tags allow spider is sent out to traverse the web photos in dierent categories (self-por- Flickr and other sites that rely on them to looking for new pages. With del.icio.us, traits, underwater photography, and so harness the social power of the web. an army of people sitting in their homes on). A group calling itself It’s the Crew Give users the option to make their con- and oces does the same, tagging web uses Flickr to make bizarre online comic books. Photos are doctored using Photoshop, have captions added, and tell a story when viewed as a slideshow. MAKE, a magazine geared toward hob- byists who like to play with and modify technology, has embraced both Flickr and del.icio.us as new ways to interact with readers. Writers contribute useful links and photos of projects as they re- search and write their stories; readers view and add to them as they work on projects of their own. Is it all just another internet fad? In March, Flickr was acquired by Yahoo!, and in July Yahoo! launched MyWeb 2.0, a del.icio.us-like bookmarking site. Other tagging sites have sprung up that let users catalogue book recommendations or res- taurant reviews. Technorati.com, which has been tracking blog entries using tags since 2002, now lets users search through Flickr photos and del.icio.us links as well. Having brought together social software, blogging and search, the idea of social searching (and tagging) looks as though it Flickr fans put themselves in the picture is here to stay. 7 10 Rational consumer The Economist Technology Quarterly September 17th 2005

Gaming’s next level

gamers. After a slow start it now has an positioning compared with the original impressive line-up of games, including Xbox, which was aimed at hard-core gam- Consumer electronics: How will the Halo series of sci- shoot-’em-ups, ers, that the new machine really ought to the next-generation games which are not available on any other con- be called the Xbox 180, jokes Ross Rubin sole. The Xbox also has by far the best on- of NPD Group, a market-research rm. consoles dier, and how can line-gaming service, Xbox Live, which is For its part, Sony is emphasising the they attract new gamers? run by Microsoft itself. All of this has raw power of its new console, the Play- helped the Xbox to do well in America, Station 3, which is based around a new RE you a PlayStation person, an Xbox though it is still far behind the PlayStation chip, called Cell, and a high-capacity Blu- Aacionado or a Nintendo nut? You 2, and its sales in Japan were dismal. ray optical drive. This will give it substan- may not play video games at all, of In short, then, the PlayStation 2 has the tially greater processing power and stor- course. But if you do, you will be aware broadest appeal; the GameCube is aimed age capacity than the Xbox 360, but both that each of the three main games con- at younger gamers and families; and the technologies are new and unproven, and soles has strengths and weaknesses that powerful Xbox has been embraced by it is not clear that consumers other than make it appeal to a particular audience. hard-core gamers. (Things are not quite hard-core gamers really care about such Of the current console line-up, Sony’s this simple, of course, since many popu- things. And if technological teething pro- PlayStation 2 is the most popular mach- lar games are available on two or three of blems delay the PlayStation 3 beyond its ine, with the broadest choice of games. Its the consoles, and many dedicated gamers planned introduction next spring, Sony success is the result of several factors, in- own more than one console.) The big could lose a lot of ground to Microsoft. cluding Sony’s decision to launch the question now, as the three rms prepare Nintendo has not been so forthcoming PlayStation 2 earlier than its two rivals, to launch their next-generation consoles, about its new console, the Revolution, which gave it an insurmountable head is how they will position them to maxi- which is also due next year, except to say start; its support for older games written mise their appeal. that it will have an unusual new kind of for the original PlayStation console; its controller andin addition to new titles ability to function as a DVD player; and Changing the game will be able to play Nintendo’s entire Sony’s close partnerships with games This time Microsoft is going rst, with a back-catalogue of games, accessible via publishers, which ensured a stream of November launch for its new console, the the internet. The idea is that these older popular titles. All of this enabled Sony to Xbox 360. Its aim is to establish an early games will draw in casual gamers who garner a 70% global market share. lead, just as Sony did with the PlayStation are put o by the complexity of modern But the two other current consoles 2 last time around. Microsoft has also titles, says Mr Rubin, though using today’s have devoted fans as well. Nintendo’s made an enormous eort to bring Japa- powerful consoles to play classic games GameCube has a far narrower range of nese games-publishers on board, to coun- doesn’t seem to be an ecient use of re- games than Sony’s console, but what it ter the home-eld advantage enjoyed by sources. Even so, the success of Nin- lacks in quantity it makes up for in qual- its two Japanese rivals; the Xbox 360 will tendo’s touch-screen handheld console, ity, at least for the family-oriented audi- have 45 Japanese titles by the end of the the DS, suggests that innovative technol- ence that Nintendo targets. Most of the year. Microsoft has also made some inno- ogy plus relatively simple games is indeed best GameCube games, such as the Mario vative marketing moves. It unveiled the a winning formula. and Zelda franchises, are published by console on MTV, rather than at a big in- The next round, then, will pit Micro- Nintendo itself, since third-party publish- dustry trade show, in an attempt to reach soft’s marketing might against Sony’s ers have not really embraced the Game- out to consumers directly and steal technological prowess and Nintendo’s Cube. But because Nintendo has very mindshare from its rivals. quirkiness and innovation. What will ul- high production standards, the games In addition, Microsoft has used a timately determine the outcome, how- that are available are impressive. And be- trendy technique called alternate reality ever, is the games. It comes down to the cause most of the money in the games in- gaming to leak details of its new mach- software titles, says Mr Rubin. People dustry is made from software, not ine and create buzz on gaming websites. buy consoles to play particular titles, not hardware, Nintendo makes the most pro- And it has struck a deal with Samsung, so because they are impressed by their tech- t among gaming rms, even though it that the consoles will be placed next to nical specications. Most observers ex- has only a 15% market share, notes Paul high-denition televisions in big stores, pect Microsoft to reduce but not eliminate Jackson of Forrester, a consultancy. where they will be seen by non-gamers. Sony’s lead, so that Sony captures 45% of Microsoft, in contrast, has yet to turn a (The next-generation consoles are ex- the market next time around, with Micro- prot from its expensive foray into gam- pected to prompt a urry of interest in soft on 40% and Nintendo on 15%. It’s ing. As the last of the three consoles to high-denition televisions, for which really Sony’s game to lose, says Mr Jack- reach the market, the Xbox is easily the other content is currently lacking.) Over- son. But whatever happens, at least most powerful, so it appeals to hard-core all, so radical is Microsoft’s change of gamers should have fun. 7 The Economist Technology Quarterly September 17th 2005 Reports 11

And now, the war forecast

Software: Can software really predict the outcome of an armed conict, just as it can predict the course of the weather?

N DECEMBER 1990, 35 days before the ber 1995, General Wesley Clark asked the weather forecasting. But understanding Ioutbreak of the Gulf war, an unassum- Dupuy Institute to project casualty sce- the general behaviour of weather sys- ing retired colonel appeared before the narios for NATO’s impending peacekeep- tems is not enough: weather forecasting Armed Services Committee of America’s ing mission, Operation Joint Endeavour. also depends on detailed meteorological House of Representatives and made a The resulting Bosnia Casualty Estimate measurements that describe the initial startling prediction. The Pentagon’s casu- Study, prepared using results from the conditions. The same is true of the TNDM. alty projectionsthat 20,000 to 30,000 TNDM, stated that there was a 50% chance To model a specic conict, analysts enter coalition soldiers would be killed in the that no more than 17 peacekeepers would a vast number of combat factors, includ- rst two weeks of combat against the Iraqi be killed in the rst year. A year later, six ing data on such disparate variables as fo- armywere, he declared, completely had diedand the Dupuy Institute’s repu- liage, muzzle velocities, dimensions of wrong. Casualties would, he said, still be tation had been established. fordable and unfordable rivers, armour less than 6,000 after a month of hostil- The TNDM’s predictive power is due in resistance, length and vulnerabilities of ities. Military ocials had also projected large part to the mountain of data on supply lines, tank positions, reliability of that the war would take at least six which it draws, thought to be the largest weapons and density of targets. These ini- months, including several months of historical combat database in the world. tial conditions are then fed into the math- ghting on the ground. That estimate was The Dupuy Institute’s researchers comb ematical model, and the result is a also wide of the mark, said the former col- military archives worldwide, painstak- three-page report containing predictions onel. The conict would last less than two ingly assembling statistics which reveal of personnel and equipment losses, pris- months, with the ground war taking just cause-and-eect relationships, such as oner-of-war capture rates, and gains and 10 to 14 days. the inuence of rainfall on the rate of rie losses of terrain. Operation Desert Storm began on Jan- breakdowns during the Battle of the Ar- What is perhaps even more surprising uary 17th with an aerial bombardment. dennes, or the percentage of Iraqi soldiers than the TNDM’s predictive accuracy is President George Bush senior declared killed in a unit before the survivors in that the fact that it is for sale. The $93,000 pur- victory 43 days later. Fewer than 1,400 unit surrendered during the Gulf war. chase price includes instruction classes, a coalition troops had been killed or Analysts then take a real battle or cam- year of technical support and a subscrip- wounded, and the ground-war phase had paign and write equations linking causes tion to the TNDM newsletter, although lasted ve days. The forecaster, a military (say, appropriateness of uniform camou- subsequent updates to the software cost historian called Trevor Dupuy, had been age) to eects (sniper kill ratios). These extra. Organisations that have acknowl- strikingly accurate. How had he managed equations are then tested against the his- edged buying the software include the de- to outperform the Pentagon itself in pre- torical gures in the database, making it fence ministries of Sweden, South Africa, dicting the outcome of the conict? possible to identify relationships be- Finland, Switzerland and South Korea, His secret weapon was a piece of soft- tween the circumstances of an engage- along with the aerospace giant Boeing. ware called the Tactical Numerical Deter- ment and its outcome, says Chris Such customers rarely divulge the uses to ministic Model, or TNDM, designed by Lawrence, the Dupuy Institute’s director which they put the software. But Niklas the Dupuy Institute, an unusual military since its founder’s Zetterling, formerly a senior re- think-tank based near Washington, DC. It death in 1995. searcher at the Swedish National was the result of collaboration between All of this is Defence Research Institute in computer programmers, mathema- akin to working Stockholm and now an aca- ticians, weapons experts, military histori- out the physical demic at the Swedish War ans, retired generals and combat veterans. laws that govern College, says his country But was the result a uke, or was the the behaviour of the at- uses the software to im- TNDM always so accurate? mosphere, which can prove its arsenal. Mr Zet- Bosnia was its next big test. In Novem- then be used in terling toyed with the1 12 Reports The Economist Technology Quarterly September 17th 2005

2 software’s technical variables to create ple, in their estimates of how easy it is to testing the model, programmers entered hypothetical weapons that could then shoot down planes. If you run both historical data from the Battle of the be proposed to engineers. models you will see a remarkable dier- Bulge, the German oensive in 1944 Rather than simply buying the TNDM, ence in attrition rates simulating the same against American forces in Belgium. The most clients contract the Dupuy Institute scenario, Mr Braitinger says. Systems CEM predicted heavy German losses in to produce studies that combine the soft- with a wide customer base, like the the initial attack, yet German casualties ware’s predictions with human analysis. TNDM, are regarded as more credible, were in fact light. The probable error? The American clients have included the Joint since they do not have such biases. model overlooked the shock value of Chiefs of Sta, the Army Medical Depart- The TNDM’s reliance on real combat launching a surprise attack. Analysts duly ment, the Department of Defence, the data, rather than results from war games recalibrated the CEMusing an early ver- Vietnam Veterans of America Foundation or exercises, also gives it an edge. Another sion of the TNDM. and the Sandia National Laboratories (a forecasting system, TACWAR, was used The Dupuy Institute is renowned for government-owned weapons-research by America’s Joint Chiefs of Sta to plan its ability to take into account such non- centre run by Lockheed Martin). The insti- the overthrow of Saddam Hussein. Like material factors: the eect of air support tute is currently preparing a secret forecast many models, it was largely developed on morale, fear engendered by attack of the duration and intensity of the Iraqi with data from war games. As a result, with unexpected weaponry, courage insurgency for the Centre for Army Analy- says Richard Anderson, a tank specialist boosted by adequate eld hospitals. The sis, a Pentagon agency. at the Dupuy Institute, TACWAR and mother of all intangibles, within the other programs based on laser tag exer- TNDM model, is initiative, or the ability of Leader of the pack cises tend to run hot, or overestimate lower-ranking soldiers to improvise on The TNDM is not the only war-forecasting casualties. Real-bullet data is more reli- the battleeld. Armies from democratic system. Many other systems have been able, because fear of death makes soldiers countrieswhere people are empowered developed, primarily by armed forces, more conservative in actual combat than to make decisionsbenet by giving their government agencies and defence con- they are in exercises, resulting in fewer soldiers some scope to change tactics in tractors in America, Australia, Britain, losses. The discipline is only just begin- the midst of a reght. Soldiers ghting France and Germany. Some are gloried ning to recognise the tremendous value for authoritarian regimes may not have spreadsheets, but many are far more com- of real-world verication, says Andreas the reexes, or the permission, to seize plex, including the American Navy’s Tolk, an eminent modelling scientist at opportunities when they arise in battle. GCAM software, the OneSAF model used Virginia’s Old Dominion University. Maintaining the accuracy of the by the Army and Marine Corps, the Air Yet another factor that distinguishes TNDM means feeding it with a constant Force’s BRAWLER system and the Austra- the TNDM from other war-forecasting stream of new information. The Dupuy lian Department of Defence’s JICM. With systems is its unusual ability to take intan- Institute’s analysts visit past battleelds all these systems, younger ocers tend to gible factors into account. During NATO’s to augment their statistical data, follow have more faith in the technology than air campaign above Serbia and Kosovo in the arms industry closely and cultivate their older counterparts. (According to a 1999, for example, the Serbs built decoy contacts with government defence pro- joke among technophiles, old-school mil- tanks out of wood and tarpaulins and curers. In countries where access to mili- itary planners refuse to upgrade from painted trompe l’il bomb-holes on to tary archives is limited, the Institute BOGSAT, or Bunch of Guys Sitting bridges. Microwave ovens, modied to surreptitiously pays a handful of clerks to Around a Table.) operate with their doors open and emit provide photocopies. A survey of American war-forecasting radiation, were used as decoys to attract The next challenge will be to expand systems by the Dupuy Institute found that HARM missiles that home in on the radar the TNDM’s ability to forecast the out- very few are for sale or hire, and ocials emissions of anti-aircraft batteries. comes of asymmetric conicts, such as in charge of government models are often Such cunning is one of the many intan- the Iraqi insurgency. To this end, the unwilling to share them with rival agen- gible variables that are taken into account Dupuy Institute is hoping to get its hands cies. The simple availability of the TNDM by the TNDM’s number- on the Vietcong archives, as has favoured its growth, although tech- crunching equations. Mr Vietnam opens up. Insurgen- nology-transfer laws not surprisingly re- Lawrence says incorporating cies rarely leave much of a pa- strict its sale to certain countries. human factors into equa- per trail, but the Vietnamese Another attraction of the TNDM over tions is controversial: most kept detailed records of their rival models is the Dupuy Institute’s inde- models favour harder struggle against the French pendence: it has no weapons to sell, is not numbers such as weapons and Americans. The resulting involved in internecine competition for data. But Robert Alexander, papers provide the world’s budgetary funding, and has no political an expert on war simulations most extensive documenta- stake in military outcomes. Software de- at SAIC, an American de- tion of guerrilla ghting. veloped primarily for, or by, a contractor fence contractor, says these That’s where warfare seems or a branch of the armed forces often fa- are almost secondary to to be heading, says retired vours certain hardware or strategies, says human factors. Major General Nicholas Manfred Braitinger, head of forecasting The Concepts Evaluation Krawciw, who is the presi- software at IABG, a Munich-based rm Model (CEM) developed at dent of the Dupuy Institute. that is Germany’s leading developer of the Pentagon’s Centre for And wherever warfare leads, war-forecasting systems. The Air Force Army Analysis, provides an war-forecasting systems and Army models dier widely, for exam- instructive example. While must follow. 7 The Economist Technology Quarterly September 17th 2005 Reports 13

The march of the robo-traders

and die by how well they perform, says they are trying to get rid of, he says. Richard Balarkas, global head of ad- Some rms, such as FlexTrade of Great Software: Programs that buy vanced execution services at Credit Suisse Neck, New York, now oer complete al- and sell shares are becoming First Boston, an investment bank. The bet- gorithmic-trading platforms. These allow ter the technology, the more money it clients, be they investment banks or ever more sophisticated. Might makes for the client, he says. hedge funds, to straddle dierent markets they replace human traders? At the moment, big strategic decisions, seamlessly and use built-in but customis- such as deciding which shares to buy and able trading rules to do their buying and MAGINE the software equivalent of a sell, are still made by experienced human selling. The advantage is that the clients Igolden goose: a program that contin- traders, says David Cli, who is the direc- get to use algorithmic trading without all ually produces money as its output. It tor of Deutsche Bank’s Complex Risk the hassles that come with it, such as hav- sounds fanciful, but such software exists. Group in London and a veteran of the ing to connect to particular exchanges, Indeed, if you have a pension or endow- eld. Robo-traders are then given the check data feeds are live or deal with the ment policy, or have money invested in power to decide how to buy or sell shares, sending out of orders that have been share-based funds, the chances are that always with the aim of hiding their cli- placed; the platform does all of those such a programvariously known as an ent’s intentions. If you are a pension-fund things automatically. But while these autonomous trading agent, algorith- manager and have decided to sell a mil- kinds of platforms are likely to increase mic trading system or simply as a robo- lion shares in some company, merely re- the prevalence of algorithmic trading, traderhas already been used to help vealing your intention to sell will result in those in the business regard them as your investments grow. the market moving against you, even with rather primitive when compared with Simple software-based traders have very actively traded shares, notes Dr Cli. more sophisticated, proprietary systems. been around for many years, but they are So the aim of the game is to try to unload Robo-traders’ main advantage is now becoming far more sophisticated, the shares in such a way that no one no- speed, says Marcus Hooper, a specialist in and make trades worth tens of billions of tices what you are doing. global electronic-trading solutions for dollars, euros and pounds every day. Bear Stearns International in London. In They are proving so successful that in the Buy! Sell! Exterminate! many electronic markets the time delay, equity markets, where they are used to The simplest algorithmic-trading systems or latency, associated with making a buy and sell shares, they already appear might try to drip-feed the market by slic- trade can be quite signicantin some to be outperforming their human coun- ing up a big trade into a hundred smaller cases several seconds. This is a major terparts, and it now seems likely that their orders. By introducing these trades slowly headache for traders. By the time their success will be repeated in foreign-ex- into the market over some predetermined ngers hit the keyboard, someone else change markets too. Proponents of robo- period of timea few minutes, or hours, could have beaten them to it, says Mr traders claim that, as well as making more or daysthe idea is that the smaller orders Hooper. So any algorithm that can re- money, they can also help to make mar- are less noticeable, and so have a less dra- spond faster than human traders has a de- kets more stable. And, of course, being matic eect on the market price. But such nite edge, he says. made of software, they do not demand salami slicers would not win any prizes Another advantage stems from the ba- lunch breaks, holidays or bonuses. these days, says Dr Cli. Today’s more ad- sic limits that exist on how much informa- This has prompted an arms race as vanced robo-trading programs can cover tion human traders can realistically companies compete to develop the best their tracks more adeptly, for example, by absorb. Studies have shown that profes- sets of rules, or algorithms, to govern the varying the amount they sell, and some- sionals make their trading decisions only behaviour of their robo-traders. We live times even buying back the very stock after considering three or four variables,1 14 Reports The Economist Technology Quarterly September 17th 2005

Eventually, robo-traders may be capable of analysing news feeds, deciding which shares to buy and sell, and devising their own strategies.

2 says Mr Balarkas. Computers, on the comparing share prices to identify pat- be suspended after the London bomb- other hand, can take in hundreds of vari- terns that can be exploited to make a pro- ings. Even though it is impossible for an ables simultaneously, and refer back to a t. In the past, software has been used to exchange to tell whether a person or an al- wealth of historical data, in the blink of an carry out this sort of analysis and iden- gorithm is issuing trades, it is possible to eye. In 2001 Jerey Kephart, a researcher tify, for example, that the best time to buy monitor the rate of trading to tell whether at IBM, compared the performance of hu- aparticular company’s shares is when the algorithmic trading is going on, says Mr man commodity traders with autono- spread between its share price and that of Birch; human traders cannot issue several mous trading agents. He found that the a rival rm has reached a certain value. trades per second. But a greater depen- software agents, which included one de- Historically, this information would then dence on algorithmic trading could even- veloped by Dr Cli (who at the time was a be passed on to a human trader to act on. tually make it impractical to order such researcher for Hewlett-Packard in Bristol), But these days, statistical arbitrage sys- trading to be suspended, he says. produced 7% higher returns than humans. tems are often plugged straight into the Mr Balarkas believes the risks are mini- So is this the end of human traders? Far market, and can place their own trades. mal, and that it may not be necessary to from it, says Mr Balarkas. Instead, man Might that not be rather risky? Some switch o algorithmic trading. By deni- and machine work best together. Algo- blamed the 1987 stockmarket crash on tion, execution algorithms are stealthy rithms are not the nancial-market equiv- computers instructed with simple deci- and designed to create as little volatility as alent of an unmanned droidthey need a sion-making rules. These essentially possible, he says. And the very fact that trader to operate them, just like a Formula they are designed to reduce the market 1 car needs a driver, he says. This requires impact of trades should, in fact, have a sta- judgment, something computers have yet bilising eect. No one wants a repeat of to master. Algorithmic trading is emerg- 1987, says Dr Cli, and nobody would ing as an important new tool, but human knowingly implement an algorithm that traders will only use it when appropriate. they thought might cause a crash. The For instance, although the latest trad- trouble is, he says, that the secrecy that ing algorithms can be pretty sophisti- surrounds these algorithms means that cated, a lot of them are based on what are there is no way to evaluate how various called volume-weighted average-price trading systems might interact with each models. These models set buying or sell- other. It is an intractable problem. But ing prices based on what is calculated to without hideous levels of regulation be the average price for a given dayin there is no way round it, says Dr Cli. other words, they use a low-risk, follow- Beyond worries over market stability, the-herd approach. This has its uses: it might an even greater danger be lying in can, for example, be useful to unload a wait? Mr Hooper proposes a doomsday large number of shares far more quickly scenario. Some day, advances in natural- than might be practical manually. language processing and statistical analy- sis might lead to robo-traders capable of The human touch analysing news feeds, deciding which But to make the real money, human trad- shares to buy and sell, and devising their ers rely upon riskier strategies that enable own strategies. Given that companies are them to outdo their competitors. This re- very keen to patent their algorithms, it is quires more than just experience, market quite possible that just one company knowledge and the ability to keep up could then emerge as the victor in this al- with the news. And such alpha-seeking amounted to little more than if-then gorithmic arms race, says Mr Hooper. This strategy is extremely underdeveloped in rules of thumb: if a share price drops be- outcome would create a particularly chal- algorithmic trading, says Mr Hoopernot low a certain threshold, then sell. When a lenging problem for regulators. It is a pos- because of any lack of demand for it, but market is falling, this can make a bad situ- sibility that you could have an unfair because it is very hard to do. In this regard, ation worse, as low prices prompt more advantageand there would be nothing human traders still have an edge over traders to sell, which further depresses governments could do about it, he says. heartless robo-trading algorithms. But it is prices. Yet despite such worries, the indus- It is an interesting idea. But it seems un- still early days. Algorithmic trading is still try has continued to embrace the technol- likely, since there are so many possible in its infancy: it has taken o only in the ogy. Indeed, part of the reason for trading strategies, and unlike simpler pro- past four or ve years, mainly due to the computerising exchanges such as the Lon- blems in computing (such as sorting a list) introduction of the Financial Information don Stock Exchange and NASDAQ was to it is doubtful that there will turn out to be Exchange Protocol, which has done for facilitate algorithmic trading, says David a single trading algorithm that outper- trading what the internet’s TCP/IP proto- Birch, head of research and development forms all others. Yet perhaps such a sug- col did for data networking, by allowing at the London Stock Exchange. gestion should not come as a surprise. For dierent proprietary systems to plug into Some exchanges now regulate the use whenever robots are being discussed a common standard. of algorithmic trading, both to prevent even if they are merely the software- Some programs do exist that make de- their systems from being overloaded and based, share-trading varietythe idea cisions about which shares to buy and to avoid a repeat of the 1987 scenario. On that humans will lose their jobs and the sell. These are used for statistical arbi- July 7th, for example, the London Stock robots will take over the world always tragethe practice of monitoring and Exchange asked for algorithmic trading to seems to be lurking in the background. 7 8 Monitor The Economist Technology Quarterly September 17th 2005

ments to a completely dierent kind of battery design, known as beta voltaic technology. Such batteries use beta parti- Building a better cles from a radioactive source to generate a current in semiconductor material, in battery much the same way that photons liberate electrons to generate a current in photo- voltaic solar cells. Batteries of this type Energy: As portable devices become can run for years, and are used in devices ever more elaborate and demand such as space probes and pacemakers, ever more power, will battery where changing the battery is impracti- technology be able to keep up? cal. Beta voltaics are safe and reliable but are limited by very low energy yields, UST as you can never be too rich or too says Philippe Fauchet of the University of Jthin, you can never have a battery that Rochester in New York. lasts too long. But as mobile devices ac- Now his team has developed a way to cumulate new power-sapping features, increase the power output tenfold, by in- battery technology has been struggling to creasing the surface area of the exposed keep up. This led Yrjö Neuvo, the chief semiconductor. Instead of a at surface, technologist at Nokia, the world’s largest his design uses a type of porous silicon, handset-maker, to warn of an impending the surface of which is riddled with tiny An all-too-familiar sight mobile-energy crisis last year. But now pits. The radioactive gas within the pits is several new developments could be then almost entirely surrounded by the is and try to avoid it. Honda, a Japanese about to come to the rescue. semiconductor, increasing the chances of carmaker, even combines VICS data with In February, Altair Nanotechnologies, catching the beta particles.The technol- position data from 150,000 vehicles be- a small rm based in Reno, Nevada, an- ogy is now being developed by BetaBatt longing to members of its Premium Club nounced a new kind of lithium-ion bat- of Houston, Texas, which co-developed so that they can choose the fastest lane on tery, the technology that powers many the new design. There is a growing de- a congested road, says David Schrier of portable devices. Its prototype has three mand for long-life batteries in medical ABI Research, a consultancy. times the capacity of existing batteries applications, he says. Meanwhile ITIS, a British company, is and can be fully charged in six minutes. It all sounds promising. But no matter one of several rms experimenting with Lithium-ion batteries are so named how hard researchers work to cram more mobile-phone signals to monitor trac because during charging and discharg- energy into batteries, they are vastly out- on roads that lack sensors or cameras. Its ing, lithium ions migrate between the numbered by other researchers dreaming software hooks into a mobile operator’s battery’s positive electrode (anode) and up new ways to consume it. 7 network and uses a statistical approach negative electrode (cathode). Altair’s trick to deduce trac speeds as phones are was to coat the anode with lithium-tita- handed o from one cell tower to an- nate nanocrystals, says Roy Graham, the other. The data must be cleaned up to ex- company’s development director. This clude pedestrians and cyclists, but this enlarges the surface area of the anode idea has great potential, says Mr Schrier. from around three square metres per No jam Another way to dodge trac is to gram to 100 square metres, increasing the predict where and when it will form. In capacity of the battery and boosting the tomorrow? Redmond, Washington, at the headquar- rate at which ions are able to move to and ters of Microsoft, employees have been from the anode, which is what deter- testing a trac-prediction system called mines how long it takes to charge. In June, Transport: New techniques are being JamBayes. Users register their route pref- Altair secured a $477,000 grant from developed to spot existing trac erences and then receive alerts, by e-mail America’s National Science Foundation jams, predict future ones, and help or text message, warning them of im- to further its design by using nanoparti- drivers avoid both kinds pending gridlock. JamBayes uses a tech- cles on both electrodes. This could fur- nique called Bayesian modelling to ther increase power density and reduce S SITTING in trac as inevitable as combine real-time trac data with his- charging time, says Mr Graham. Ideath and taxes? Perhaps not. Many torical trends, weather information and a Hard on the heels of Altair’s an- countries now have dedicated trac- list of calendar events such as holidays. nouncement, Toshiba revealed that it too monitoring centres linked to networks of Eric Horvitz of Microsoft, who developed has developed a battery using nanotech- cameras and sensors. Throw in trac- the system, says it is accurate 75% of the nology that is capable of charging to 80% spotting aircraft, accident reports and the time, and 3,000 employees use it daily. of full capacity in one minute. The com- known positions of buses tted with sat- A system called Beat-the-Trac, de- pany is still working on improving the ellite-positioning gear, and it is possible veloped by Triangle Software of Camp- stability and reliability of the design, but to see exactly what is happening on the bell, California, with funding from the plans to start selling the new batteries roads. Drivers could switch from busy to National Science Foundation, goes fur- next year. Hiroko Mochida of Toshiba quiet routes and avoid congestionif ther. It not only warns drivers of impend- says the initial uses will be in electric cars only they had access to this information. ing trac but also suggests an alternative and power tools, where high capacity And now they do. Systems such as the route via e-mail or text message. Andre and rapid charging are particularly neces- Trac Message Channel and the Vehicle Gueziec, the rm’s boss, thinks trac sary. Toshiba will not go into detail about Information and Communication Sys- forecasts will become as prevalent as its new design, but, like Altair’s, it seems tem (VICS), in Europe and Japan respec- weather forecasts. Indeed, in June, KXTV to use nanoparticles to increase the sur- tively, pipe data from trac centres into News 10, a TV station in Sacramento, face area of the electrodes. in-car navigation systems via FM radio California, began showing Triangle’s There have also been recent improve- signals. Drivers can see where the trac trac forecasts for the coming week. 7 The Economist Technology Quarterly September 17th 2005 Case history 15

Better by design

Software: Product life-cycle management software that helps companies design, manufacture and manage their products is becoming increasingly popular among big rms

N DESKTOPS and tables in oces PLM software, in short, provides the by accretion over many years. PLM’s ori- Oand homes around the world, and framework within which companies can gins go back to computer-aided design on the laps of latte-sippers from Miami to take new ideas and implement them (CAD) software, a range of computer- Mumbai, you will nd computers made quickly in actual products. PLM is be- based design tools which engineers and by Dell, the world’s biggest PC manufac- coming the enabling tool for innovation, architects began using in the 1980s. turer. For a company that shifts tens of says Navi Radjou, a PLM guru at Forrester, In the 1990s, this evolved into pro- millions of boxes each year it is a mam- a consultancy. As a result, PLM is cur- duct-data management (PDM) software, moth task to keep track of all the dierent rently the fastest-growing segment of the which features CAD design tools com- components that go into each of its va- business-software market, according to bined with a database of information rious models, and to ensure that 400 sup- AMR Research, another consultancy. Last about components. This makes it possi- pliers around the world are kept year the PLM market was worth $9.65 bil- ble to work out quickly how much a de- informed of changes in design or speci- lion, and grew by 10%; AMR expects 8% sign change or a new product might cost, cationseven as similarly global teams growth this year (see chart on next page). among other things. of designers are continuously updating PDM systems also helpfully centralise its product line to stay ahead of the com- A brief history of PLM product information into a single, author- petition. Like many other large rms, Dell PLM’s sudden growth is largely the result itative databasesometimes called the uses clever software to handle all of these of its spread beyond the niches where it system of recordthereby doing away tasks. It is called product life-cycle man- rst evolvedin the aerospace and auto- with paper plans and reducing the scope agement (PLM) software, and it is becom- motive industriesinto the broader mar- for error or misunderstanding. And any ing integral to the operation, growth and kets of consumer electronics, clothing changes to a product’s plans are quickly protability of many big companies. and packaged goods. In the past, says visible to the team designing the produc- As its name suggests, PLM software Walter Donaldson, IBM’s general man- tion line on which it will be built. Nikon’s can manage the entire life-cycle of a ager for PLM, he would nd himself talk- camera division, for example, used to product, from concept and design to pro- ing to the vice-president of engineering. produce around 15,000 design drawings duction, marketing and even recycling. But these days he is more likely to nd a year that had to be distributed and ap- Using PLM software, for example, when himself talking to a company’s chief op- proved. Using PDM, it has reduced the Dell’s engineers design a new computer, erating ocer about how to use PLM to amount of paperwork by 80%, and draw- they can reuse parts of previous designs, become more competitive. The latest ings can be retrieved ve times faster. and so keep to a minimum the number of trend, says Mr Radjou, is that large retail- Such systems have now been ex- new parts and suppliers. The software ers are starting to invest in PLM to manage tended so that they are not just for design- also ensures that old and new compo- their private-label goods and compete ers and engineers, but also include tools nents t together perfectly. But according better with big consumer-goods rms for use by senior managers and market- to PLM devotees, there are many other such as Procter & Gamble and Unilever. ing people. According to AMR, CAD still benets: lower prototyping costs, re- Vendors of PLM software, such as Ca- accounts for 53% of spending on PLM, but duced time-to-market for new products, dence, UGS, PTC, SAP, Dassault and Ag- non-CAD spending is growing twice as less waste, improved product quality and ile, generally sell suites of software that fast, or 13% a year. The latest PLM systems faster turnaround of marketing materials. do many things, and which have formed may include requirements manage- 1 16 Case history The Economist Technology Quarterly September 17th 2005 PLM software provides the framework within which companies can take new ideas and implement them quickly in actual products.

2 ment and portfolio management adoption of PLM in package design. tools, so that managers can, for example, Purchasing like mad Pharmaceutical companies that fre- look across the range of products in de- PLM market revenues, $bn quently repackage their products, but velopment to make sure they match the must comply with strict regulations that FORECAST demands of the market in question. If 13 vary from country to country, can use they do not, then specications can be PLM to track design changes and make tweaked or products killed o. 12 sure that each package conforms with the PLM systems also allow packaging to 11 local regulations. Once the software is in be mocked up quickly and then dis- place, people in the legal, medical and de- played to focus groups via the web, so 10 sign departments can look at the design that the most eective packaging can be 9 in parallel and approve itrather than identied. In theory, all of this means waiting for paper documents to circulate. that the needs of the market can be antici- 8 Chris Farinacci of Agile says that 50-60% pated and communicated back along the 7 of pharmaceutical product-recalls are to chain to the research and development do with packaging problems. department. PLM has, then, evolved from 2003 04 05 06 07 humble design tools into elaborate sys- Source: AMR Research A poster child for PLM tems that help companies develop and Some rms, of course, face many of these manufacture products that their custom- craft’s parts together and the mainte- challenges at the same time. A good ex- ers actually want to buy. nance processes once the aircraft is in ample is General Motors. Speaking at a The desire for greater competitiveness service. This eliminated assembly pro- recent conference in London, Diane Jur- and faster response are two reasons why blems, so that the rst plane to be con- gens, a PLM guru at GM, said the com- PLM is growing so quickly. But its adop- structed was perfect: there was no pany regards PLM as crucial to its tion is being driven by other factors, too. physical prototype. The parts were man- survival. Her job title is, rather improba- One is globalisation. When rms start to ufactured and put together, and the plane bly, director of global product develop- design, manufacture and sell products in took to the air. ment process and systems integration many dierent countries, each with their The need to comply with dierent and information systems and services. own requirements and regulations, they regulations provides another reason to But her job is essentially to make the face a huge increase in complexity. Heinz adopt PLM. New restrictions on the use of world’s biggest carmaker more ecient. uses PLM software to keep track of the dif- lead, cadmium, chromium and other ma- GM employs 325,000 people, has 19 ferent ingredients that go into its ketchups terials in electronic equipment will come design centres around the globe, and and other products in various countries, into force in Europe in 2006. So compa- builds cars in 32 countries. To add to the to cater to local tastes. By centralising this nies need to be able to track what is going complexity, it has dierent brands in dif- information, it has been able to optimise into their products. PLM systems can pro- ferent regions, such as Holden in Austra- its recipes and reduce costs. duce a bill of materials for each product, lia and Opel in Germany. It must balance For companies that rely on outsourc- making it easier for a rm to check that its the desire to centralise where possible ing or have multiple design and manufac- products comply with local regulations. with the need to localise where neces- turing centres around the world, PLM can Regulation has also prompted the sary: American buyers expect a new car 1 simplify things by allowing people in dif- ferent countries to communicate and collaborate within a single, secure envi- ronment. Rolls Royce, for example, used PLM to facilitate around-the-clock de- velopment by engineering teams in Brit- ain, India and America of the Trent 900 engine for the Airbus A380. Another factor driving PLM is that pro- ducts themselves are becoming far more complex, which makes it harder to ensure that all the dierent parts will t together and work properly. PLM can help to mini- mise such problems for even the most complex products, such as aircraft. Dassault Aviation claims that its Fal- con 7X corporate jet, launched this sum- mer, is the rst aircraft ever to be designed entirely in a virtual environ- ment. PLM software was used to link Das- sault with 27 subcontractors to create a digital model of the aircraft. Everything was meticulously modelled, including the robots that build the tools to t the air- The Falcon 7X: PLM eliminated assembly problems The Economist Technology Quarterly September 17th 2005 Case history 17

From its origins in the aerospace and automotive industries, PLM is now moving into consumer goods such as cameras and razors

2 smell, for example, but Asians do not. the world of PLM. It is shaking o In 1997, GM was taking an average of its engineering origins and is 48 months to develop each new vehicle, moving, he says, into the main- compared with 36 months at Toyota, one stream parts of business. IBM is of its biggest competitors. GM was big currently working to help busi- and unwieldy, and had competing teams ness and engineering schools of designers, says Ms Jurgens. So in 2000 better understand the technol- the company decided to sort out the ogy. Clearly, if lots of newly mess, and bought a PLM system from minted business graduates have UGS. Today, 10% of GM’s employees use been taught about PLM, they are it. Parts and whole subsystems from one more likely to want to use it vehicle can now be easily reused in an- when they get jobs. other. Changes to a vehicle’s design can Mr Radjou notes that the be immediately reected in the design of trend towards outsourcing is al- the dies that stamp out the doors and ready forcing medium-sized com- body panels. And new models can be panies to adopt PLM in order to crash-tested thousands of times in virtual service their larger customers. reality. GM also uses PLM to collaborate PLM is a collaborative tool, and with its suppliers. This makes it possible the more that working practices for everyone to see what a part should such as design and manufactur- look like and where it ts into the overall ing are broken down into mod- design, to ensure that it ts perfectly. But ules, the more scope there is perhaps the best illustration of the suc- for even smaller companies cess of GM’s PLM initiative is that the de- to plug into bigger rms’ velopment time for new vehicles is now PLM networks. But the just 12-18 months. vendors are not really pro- viding anything for them The trickle-down theory yet, says Mr Radjou, which GM’s experience also highlights some of is why Microsoft is getting into the challenges involved in adopting PLM. the space. At the same time, By its very nature, it changes the way that other technology vendors such as people work and interact. Industrial de- IBM and SAP are also starting to incor- signers, for example, may nd them- porate PLM features into their other busi- selves having to work very closely with ness software. engineershaving previously been sepa- This is a testament to PLM’s success, rated by incompatible le formats. The re- but paradoxically could cause it to disap- search & development department may pear. I’m not sure PLM will survive as a Oce suite. not be accustomed to dealing with the stand-alone category, says Mr Radjou. So PLM could marketing department. And old habits Instead, he says, PLM functions will be become almost as die hard. Many GM sta did not ordina- broken down and bundled into other ubiquitous as Power- rily share their les and data, says Ms Jur- applications, such as supply-chain man- Point presentations or gens. And designers, in particular, were agement systems and even desktop pro- Word documentsbut by then it will reluctant to switch to the new PLM- ductivity software. Oracle, the world’s almost certainly be called something friendly design software. second-largest software company, will other than product life-cycle manage- Where next for PLM? The next step, probably buy one of the PLM vendors ment. It is the hallmark of a successful says Mr Donaldson of IBM, will be to and incorporate its software into its gen- technology that it becomes almost invisi- broaden access to the technology and eral business suite, Mr Radjou predicts. ble. And so the nal, triumphant stage in bring medium-sized companies, not just Microsoft is working to add collaboration the gradual ascent of PLM could be that it engineering and consumer giants, into and document-sharing features to its disappears altogether. 7 18 Reports The Economist Technology Quarterly September 17th 2005

formation to connect them to a particular person or project. Oddly, however, just as it is becoming harder to nd things on your computer, it is becoming much easier to nd things on the web. Search engines such as Google can search billions of pages in a fraction of a second: if you have a broadband con- nection, it is usually quicker to look up the phone number of a restaurant via Google than to boot up your address-book soft- ware. The desktop-computing metaphor, and the notion of folders in particular, has fallen behind. It is time to shed this relic of the past. It is time for folders to die with dignityand to yield to a new, more web- like way of storing and nding things.

Never delete This new approach to organising data is being brought into being by the conver- gence of two trends: the plunging cost of Death to folders! hard-disk storage and the growing reach of search software. Have you emptied the rubbish bin on your desktop lately? Prob- ably notunless you edit a lot of music or Another problem, as personal com- video, the chances are that you have far puters start to ll up with thousands of more disk space than you need. A typical Computing: Cheap hard disks photographs, music tracks, saved web hard disk on even a cheap computer to- and fast search software could pages and other documents, is that the day holds 40 to 80 gigabytes of informa- le-and-folder metaphor requires users to tion, which is enough for millions of change the way we store and nd decide upon a logical ling system, and e-mails, tens of thousands of photos, and documents on our computers then stick to it, if they want to be able to hours of video. By 2009, a typical PC will nd things easily. The only thing worse have a 160-gigabyte hard disk, and the NYONE who uses a personal com- than creating such a nested hierarchy of biggest disk drives will have a capacity of Aputer will be familiar with the idea of folders, or directories, is not creating it. 1,000 gigabytes, or one terabyte, says agraphical user interface, which was in- Folders thus saddle computer users with Dave Reinsel, director of storage research troduced in the 1980s and became ubiqui- the menial task of keeping the ling sys- at IDC, market-research rm. Today, he tous in the 1990s. It did away with the tem neat and tidy, notes Philip Schiller, says, most users’ hard disks are about 30% need to type cryptic keyboard commands Apple’s senior vice-president of market- full. When storage space is so abundant, to manipulate les, making it possible to ing. You’re the janitor, he says. But most why throw anything away? manipulate them directly instead, using a computer users could not care less about As storage capacity has grown, how- mouse: double-click on a le’s icon to folders, a way of organising digital les ever, the ability to search such large piles open it, drag it to the bin to delete it, and that is a relic from computing history. of data has not kept pace. Until recently, drop it on a folder to le it away. To further complicate matters, data on most operating systems, including Micro- All of this made computers far easier personal computers is being Balkanised soft Windows, Apple’s Mac OS X and the to use. But the once-revolutionary notion as dierent pieces of software circumvent various versions of Unix had the same of les, folders, ling cabinets and other the creaking le-and-folder approach and search functions they had ten years ago. desktop icons is now showing its age. establish their own structures for organis- Only now are they being revamped. Even What started out as a helpful metaphor ing particular kinds of data. E-mail pro- today, Windows and, until this year, Mac now seems rather limiting. Why hobble grams were early examples of this trend: OS X performed the most primitive form digital documents with the limitations of most of them maintain what is, in eect, a of searching by matching a query against paper ones, such as the need to have a sin- database of e-mail, hidden away in its lenames one at a time. Searching in this gle xed location? A lawyer cares about own folder and often inaccessible to other way is akin to looking for a library book things like dates and cases, says Thomas programs. Contact-management, calen- by examining every book on every shelf, Rizzo, the head of Microsoft’s next-gen- dar and photo-album programs now do one at a time. Libraries, of course, have eration le system project, known as the same. To nd all the information relat- catalogues to make it easier to nd books. WinFS. How can a lawyer le the same ing to a personal contact, you may need to And now the same idea is being grafted document by both client and by date? He search within a contact-management pro- on to computer le systems. The rst im- cannot, notes Mr Rizzo, without using un- gram, a calendar, an e-mail program and plementation appeared in Mac OS X, but wieldy multiple-location workarounds the computer’s le systemthough le- Microsoft and Google are close behind. such as aliases and shortcuts. names do not always contain enough in- In theory, speeding up search is easy:1 The Economist Technology Quarterly September 17th 2005 Reports 19

As the power of desktop-search software grows, the need to organise things in folders disappears.

2 all you have to do is build a database, akin By doing away with the main draw- seen online at bailando.sims.berkeley. to a library catalogue, that has an entry for back of traditional le-searchingthat it edu/amenco.html. each le, along with information about its cannot see inside the les, only their Ironically, the search-based metaphor content. But for this database to be useful, namesApple, Google and Microsoft are also allows folders to be reincarnated in a it must be constantly updated. Every time hammering nails into the con of the old new and more useful form. Spotlight has a le is altered, its corresponding entry in le-and-folder approach. As the reach and a Smart Folder feature that looks like a the database, and the various indexes that power of desktop-search software grows, folder, but is in fact the result of a search. refer to it, must be updated too. This in- the need to put things in organised folders So you could, for example, create a Smart volves meddling with the computer’s op- disappears. With Spotlight, I just search Folder that contains all les, e-mails and erating system at a fundamental level, for everything nowI spend almost no other documents mentioning sausages and has historically been dicult to time browsing through folders, says that were modied in the last month: the achieve without a dramatic reduction in Steven Johnson, author of Interface Cul- search software then populates the folder the computer’s performance. ture, a book about computer interfaces. with anything that matches these search Apple nally solved this problem this criteria, and keeps the contents constantly year when it released Mac OS X 10.4, Let’s play tag updated. (The name implies that if these known as Tiger. Every time a le is That said, search engines cannot reach in- are Smart Folders, then existing folders changed, it is added to a queue for re-in- side every kind of le: they cannot yet dis- must be stupid ones.) dexing by Tiger’s built-in search engine, tinguish photographs of one person from The idea of establishing relationships called Spotlight. The re-indexing then oc- another, for example. Many kinds of le, between pieces of information, to allow curs when the computer is relatively idle, however, incorporate helpful tags that connections to be made and results to be which ensures that maintaining the le describe their contents. Digital cameras retrieved, is not new. Vannevar Bush, in database does not overpower the system. attach tags to photographs to record in- his famously prognostic and inuential The result is that documents scattered formation about the time, date and expo- essay in the Atlantic Monthly in July 1945, across the hard disk can be summoned sure details; MP3 audio les generally described how adding structured code with Google-like speed and simplicity. contain tags listing the track name, artist, words to associated microlm pages in Microsoft is doing something similar and other information. We believe that his imaginary Memex information-re- through its even more ambitious (but data is becoming more and more struc- trieval system would help researchers. It much delayed) WinFS project. The aim is tured. That’s good for being able to nd is exactly as though the physical items to build an advanced database, using ele- things and relate things together, says Mr had been gathered together from widely ments of Microsoft’s SQL Server, into the Rizzo. Increasingly, users will start to at- separated sources and bound together to Windows ling system to enable access to tach tags of their own to les, too. form a new book. It is more than this, for les with the speed and complexity of a When saving a document ve years any item can be joined into numerous database query. We are fundamentally from now, rather than naming it and trails, Bush wrote. changing the way you store your data dropping it into a folder, you may well tag Flamenco, WinFS and Smart Folders inside your le system, says Mr Rizzo. it with a few keywords and drop it into a allow items that meet particular criteria Project-management software could, for database. You can just tag it instead of l- to appear many times in the same hierar- example, call up all les relating to a par- ing it, and you can rely on the search sys- chy, and to move around as their contents ticular project, or a jukebox program tem to quickly nd all the things with the or attributes change. Traditional folder hi- could ask WinFSto retrieve all les of type same tag, says Marti Hearst, a computer erarchies, in contrast, are rigid structures music. But although WinFS was origi- scientist at the University of California at resistant to updates and multiple views. nally intended to be part of Microsoft’s Berkeley’s School of Information Man- Looking further ahead, the combina- forthcoming Windows Vista operating agement & Systems. Her tag-based re- tion of databases, tagging and search will system, formerly known as Longhorn, it trieval system, called Flamenco, can be make it possible to navigate large num- was dropped as an integral element when bers of documents in all kinds of radically development fell behind schedule. Vista new ways. David Gelernter, a computer is expected in late 2006, but WinFS will scientist at Yale University, imagines not be released until 2007. searching using time and space axes: In the interim, both Microsoft and imagine picking New Haven, Connecti- Google have launched Windows-based cut, on a map and then zooming back to desktop-search products that lack the 1701 to see information about its found- deep and elegant integration of Spotlight ing. Ben Shneiderman of the University or WinFS, but do similar things. Windows of Maryland has devised a new way to Desktop Search (toolbar.msn.com) and display search results in which data ap- Google Desktop (desktop.google.com) pear as concentrations of information in a are separate, free software packages that tree-map: the colour, position and size must be installed on the desktop, though of thousands of results can then be taken Microsoft’s product will be incorporated in at a glance. As folders fade away and into Windows Vista next year. Like Spot- search software evolves, it seems that we light, both have a variety of plug-ins that may, at last, be able to nd what we’re let them index common le types, such as looking for when we need it. With the Microsoft Oce documents and mes- death of the folder, perhaps we can nally sages inside popular e-mail programs. get some work done. 7 20 Reports The Economist Technology Quarterly September 17th 2005

more involved in drug development? Frustration at the slow pace of research is one reason, according to Bob Beall, head of the Cystic Fibrosis Foundation (CFF). When the gene for cystic brosis was dis- covered, patients expected this knowl- edge to be converted relatively quickly into therapies. When commercial interest was slow to materialise, patients realised they would need to play a more active part, says Mr Beall. This patient power stems from a general medical trend, par- ticularly noticeable in America, where health-care consumers are encouraged to take greater responsibility for their own well-being; seven years of direct-to-con- sumer advertising of prescription drugs, bombarding television screens across America with commercials for the latest, greatest pills, have also raised both aware- ness and demand. At the same time, says May Liang, head of the Epilepsy Therapy Development Project, venture philanthropistsentre- preneurs who bring the same rigorous Just what the patient thinking and streamlined decision-mak- ing to not-for-prot foundations as they apply in their normal business livesare ordered transforming the eld. Their business savvy allows patient groups to speak the same language as the companies with exists in Europe and America to encour- which they need to deal. Ms Liang’s own age drugmakers to tackle orphan condi- foundation, for example, was created by Medicine: Patient-driven tions, the combination of tax breaks and three men with backgrounds in business approaches to developing drugs market exclusivity on oer are simply not and banking, whose young children de- enough for many rms to attract them to veloped epilepsy, and who came together for orphan diseases are turning the eld. So Ms Giusti, a former pharma- to stimulate interest in drug development. pill-takers into pillmakers ceutical executive, set out to do something CFF is another prominent player. Since about itand she has succeeded. In 1998, 2000, the group has spent almost $240m N THE face of mortal illness, patience is she and her twin sister founded the Multi- on research into this fatal inherited dis- Inot necessarily a virtue. When Kathy ple Myeloma Research Foundation ease. As well as nancing academic scien- Giusti was diagnosed with multiple (MMRF) with the aim of raising money tists, the foundation also provides myeloma, a form of cancer, doctors gave and awareness to jumpstart research- venture capital to biotech rms that are her just a few years to live. Like many pa- ers’ bright ideas into treatments. Just a few willing to take on the tricky task of nding tients, Ms Giusti took to the internet to years later, MMRF has garnered more a drug to treat the underlying genetic de- learn as much as she could about her ill- than $50m for research, there are now fect of the disease, not just treat its symp- ness. But that meant precious little when roughly 110 drugs in various stages of de- toms. The group has venture deals, which it came to treatments for her disease. At velopment for the disease, and Ms Giusti feature all the regular commercial terms the time of her diagnosis, in 1996, there has proven her doctors’ prognosis wrong. of milestones and royalties, with a num- were no exciting new drugs in develop- The idea of charities or patient advo- ber of biotech companies, including ment for multiple myeloma; in fact, there cacy and support groups funding drug de- Vertex. The rst drug emerging from that were no new drugs at all. The medicines velopment is nothing new. In the 1950s, partnership could enter clinical trials they recommended for me were the ones for example, the National Foundation for within the next couple of years. This sort they used on my grandfather, years be- Infantile Paralysis and its March of of money is particularly welcome to fore, says Ms Giusti. Dimes bankrolled the development of a small biotech rms which are nding it With only 50,000 suerers in America, polio vaccine. But today’s patients’ groups hard to secure early-stage nancing from multiple myeloma is one of thousands of are more intimately involved in the nitty- increasingly wary investors. The idea, orphan diseases that are simply not gritty of drug creation, creating their own says Mr Beall, is to take much of the risk of common enough to interest most drug- clinical-trials networks, establishing tis- drug discovery and development o the makers: there are too few suerers to jus- sue banks and even setting up their own shoulders of companies, in the hope of tify the cost of developing a new biotech companies. enticing them into the area. treatment. Although special legislation So why are today’s patients getting But such foundations are worth more1 The Economist Technology Quarterly September 17th 2005 Reports 21

Patients are getting involved in drug research and trials, and are even setting up biotech rms.

2 than money alone. MMRF, for example, meeting held by MMRF which assembled So far, progress has been slow. On a has managed to instigate and co-ordinate the leading researchers and clinicians in budget of $4m a year, the group has valuable research collaborations. Such the eld. After presenting some early clin- funded clinical trials at the University of initiatives start with information. The ical data, instead of the usual rubber- California, San Francisco of two drugs, foundation has compiled a web-accessi- chicken dinner, I asked Kathy Giusti if we currently used to treat sickle cell anaemia ble database of 110,000 people with an could design the trial, says Dr Adams. and HIV, which showed modest activity interest in multiple myeloma, from re- With all the experts in one room, they against ALS. (In a strange twist of fate, the searchers and clinicians to patients and worked out exactly how the trial should neurologist who designed the trial, Rick even nancial analysts covering the bio- be run; it began only three months later Olney, has developed ALS and is now tech industry. MMRF also keeps track of lightning speed for the industry. participating as one of its patients.) all clinical trials on multiple myeloma, so Other groups are also pitching into ALSTDF has also spun o a biotech com- it has a clear view of exactly what is hap- drug discovery and development. Ge- pany, called Alsgen, to develop some of pening in the eld. netic Alliance, a network of more than the ideas emerging from its earlier work. 600 support groups representing patients I’ve learned a couple of things that are The power of information with inherited disorders, is trying to set a little disappointing, admits Mr Hey- It then turns this information into action. up a database of information about the wood. I thought initially that there were MMRF has put together a consortium of diseases in question for researchers to all these good ideas that just needed a medical centres in America and Canada consult. Not only does this provide one- push; it turned out that there weren’t a lot which can undertake clinical trials, with stop shopping for scientists, but also pro- of great ideas. The problem, says Mr Hey- common protocols for everything from vides them with information they might wood, is that much of the pre-clinical evi- patient recruitment to patent rights. The not easily nd elsewhere, such as nega- dence on which people were willing to consortium is working with Chiron, a bio- tive trial results. Like MMRF, the alliance take drugs to trial turned out, on further tech rm, on an early-stage trial of a new has also established a biobank so that its investigation, to be wrong. The founda- anti-cancer drug, with several new cen- constituent groups can deposit tissue tion now hopes to strengthen these scien- tres and compounds expected to enter the samples and clinical data, using standar- tic foundations by trying to establish a network over the coming months. dised consent forms, material transfer valid biomarkera biochemical or bio- MMRF’s power comes not just from its agreements and other paperworka po- logical feature that correlates with disease dollars but from its constituents. As a tential treasure trove for researchers inter- and can therefore be used as a surrogate patient-based organisation, it can tap ested in testing drugs for these conditions. measure of drug ecacy or safetyfor de- directly into one of the scarcest commod- The ALS Therapy Development Foun- velopers to use in their eorts on ALS. ities in drug developmentaccess to the dation (ALSTDF) has gone even further, For many other patient groups, how- right patients for clinical trials. hiring scientists and setting up its own ever, the trouble is not too few drugs on This connection to patients and re- laboratory to look at hundreds of existing the horizon, but rather too many. As Ms search centres is vital for small biotech compounds for their potential to treat Giusti points out, only 25% of the drugs in rms, says Julian Adams, chief scientic amyotrophic lateral sclerosis, a fatal development for multiple myeloma are ocer of Innity Pharmaceuticals, a can- neurodegenerative disease. The bench- probably worth pursuing: the key is to cer company. We are not like big mark for success is straightforward, says choose the most promising candidates, pharma. We are not the 800lb gorilla who James Heywood, its director, whose and focus precious money and man- can just put money on the table and buy brother Stephen was diagnosed with ALS powerespecially scarce patients for clin- our way into the clinic. The medical con- seven years ago: What piece of informa- ical trialson them. sortium is intimately involved with the tion would convince me to put Stephen Another challenge lies in co-ordinat- companies that tap into its networks, on the drug? ing the patient groups themselves, so that tracking their progress in those working on, say, my- monthly conference calls and eloma or ALS, are not duplicat- oering tiny rms help with ing, or worse, competing with, paperwork and other practical each other’s eorts. Above all, points that might otherwise there is the tricky business of hinder their eorts. explaining to patients, whose MMRF also brings together donations largely fund the ef- representatives from Amer- forts of groups such as CFF and ica’s drug regulator, the Food MMRF, that most drugmaking and Drug Administration, will end in failure. That, after with experts from academia all, is why the big drug compa- and industry to tackle bottle- nies are unwilling to invest: the necks in drug development. Dr reward does not justify the Adams is impressed by the nancial risk. Patients’ groups, group’s convening power. of course, quantify risks and When he was working at Mil- rewards using an entirely lennium Pharmaceuticals and dierent yardstick. The leading the development of biggest risk, says Mr Beall, is Velcade, a breakthrough drug if we hadn’t made this invest- for myeloma, he attended a ment at all. 7 22 Brain scan The Economist Technology Quarterly September 17th 2005 Medicine without frontiers awards, and has co-written four text- bookswith a fth, about systems biol- Leroy Hood, one of medicine’s ogy, now in the works. But, most boldest visionaries, has spent important, he has become one of medi- his career marrying biology cine’s boldest visionaries. with technology Even at a young age, Leroy Hood showed an independent streak. Growing EN years from now, you will not have up with his family in rural Montana, he Tto spend hours in a doctor’s oce to developed an early anity for the out- complete a comprehensive health check- doors and started hiking in the nearby up. Instead, with just a single pin-prick, a mountains as a young boy. While he ex- nanotechnology device will quickly mea- celled in the sciences, he was never a sure and analyse 1,000 proteins in a drop- nerd. He learned to play the piano, let of your blood. Based on this among other instruments, joined a suc- molecular ngerprint, your doctor will cessful debating club and, during high prescribe drug regimens tailored to your school, was quarterback in an American personal state of health that will not only football team that was undefeated for be able to reverse many diseases, but will more than three years. also prevent their manifestation in the He nally set his sights on biology rst place. when his high-school chemistry teacher That, at least, is how Leroy Hood, the asked him to help teach a class on the president and co-founder of the Institute subject for younger students. He agreed for Systems Biology, a non-prot orga- on the condition that he could base his nisation based in Seattle, lays out the fu- lectures on articles from Scientic Ameri- ture of medicine. The Human Genome can, a popular science magazine. One ar- Project has given us a parts list, he ex- ticle from 1956, about the structure of plains. The next step is to capture the in- DNA, made a lasting impression on him. formation from all the elements in a The same chemistry teacher also pushed biological system: DNA, proteins, cells the young Hood to apply to the Califor- and organs, and then create new math- nia Institute of Technology, where he ematical models that will represent the would spend much of his student and relationships between them. The ensuing professional life. digitisation of biology, he reckons, will revolutionise the entire health-care sys- Immune response tem and usher in a new era of predictive, As a PhD student at Caltech in the preventive and personalised medicine. mid-1960s, Dr Hood got his rst taste of Today, it sounds far-fetched. But as scientic controversy, when he became many of his colleagues and friends attest, involved in an argument over how the Dr Hood, an avid outdoorsman, has human immune system produces such a never been shy of climbing a mountain wide diversity of antibodies to fend o or going out on a limb. Throughout his ca- disease. Up until then, the explanation reer, the 66-year-old has made it a habit for antibody diversity had been based on to champion ideas that were initially un- the theory that one gene provides the popular but later proved correct. For one recipe for one protein, or polypeptide thing, he was one of the early proponents chain. (An antibody consists of four such of the project to sequence the human ge- chains, in two identical pairs.) But when nome, at a time when many of his con- it became apparent that the human temporaries had doubts about its genome contained at most 100,000 viability. Moreover, the very instrument genes, while the body could create hun- that turned the endeavour into a success, dreds of millions and possibly billions of the automated DNA sequencer, origi- antibodies, that explanation was thrown nated in his laboratory. into question. Yet the machine for which he is best Together with his mentor, William known is only one of many inventions Dreyer, Dr Hood proposed a radical new Dr Hood has successfully commercial- hypothesis. They suggested that antibod- ised. To date, he has co-founded more ies were encoded by a relatively small than ten companies, including Applied number of genes that can rearrange Biosystems, which went on to become themselves to make up new sequences, the biggest life-science instrument com- akin to creating new sentences by break- pany in the world, and Amgen, the largest ing up and reshuing a string of words. biotechnology rm in the world. He also The suggestion that some genes might holds 14 patents, has won numerous not have a permanent structure, but 1 The Economist Technology Quarterly September 17th 2005 Brain scan 23 Critics suggest that systems biology may simply be too complex for mathematics. Dr Hood is unfazed.

2 could splice and rearrange themselves, instrument was the automated DNA se- majority of biologists reacted negatively seemed outrageous at the time, and it quencer. It replaced confusing radio- to the idea. catapulted Dr Hood into the midst of a active labels with laser-activated In 1992, Dr Hood was invited to chair cutting-edge discussion in immunology. uorescent dyes, making sequencing the new cross-disciplinary Department As a result of all the hoopla, and despite faster and much more precise. of Molecular Biotechnology at the Uni- being only a graduate student, he was in- Back in 1985, however, when Dr Hood versity of Washington in Seattle. With vited to travel and give lectures at promi- participated in the rst meeting to discuss $12m in start-up funds from Bill Gates, he nent universities and national meetings the possibility of sequencing the human accepted. But the seeds of tragedy were (though he also spent hours in the labora- genome, biology was still very much a sown for the next thing, says Dr Hood, tory sequencing proteins by hand). In the manual science. People worked with Pe- even though he achieved a lot over the end, it took another ten years until all the tri dishes and cultures of goo, explains following years. Among other activities, tools became available to prove the the- Michael Hunkapiller, a former research his department operated two of the 16 ory right, which led to a 1987 Lasker prize fellow in Dr Hood’s lab who went on to centres for sequencing the human ge- for Dr Hood, Philip Leder and Susumu become president of Applied Biosystems, nome, and one of its members helped Tonegawa (who also received the Nobel and is now a venture capitalist. The mol- create the eld of proteomics, the cat- prize later that same year). ecules that aected biology were viewed aloguing of the proteins for which the ge- Frustrated by the limitations of man- at that time as too complex to analyse nome provides the recipes. But in the end ual laboratory work, Dr Hood concluded easily, he says. he was unable to convince the dean of that it was essential to invent new tools As a result, many biologists were wary the medical school to allocate more space that could drive biological discovery. So of the project. They worried that the tech- for his once-again growing department. when Caltech hired him in 1970 as an nology was not up to the job, that it Experiences like this convinced Dr assistant professor, he decided to divide would take too much time and cost a for- Hood that it is virtually impossible to de- his time between technology and biol- tune, thus drawing away valuable re- velop revolutionary new ideas within ex- ogy. By the end of the decade, his eorts sources from other research. Others were isting structures. So in 2000, at the age of had born fruithis laboratory created a repelled by the idea of big science, fear- 61, he decided to leave academia behind. new protein sequencer that was much ing that the sociology of the eld might Together with two former colleagues, he more sensitive than previous instru- change to one that would be dominated formed the Institute for Systems Biol- ments. And when a friend suggested by expensive, large-scale enterprises. ogywithout a penny of endowment. mass-producing the device, Dr Hood Already, the institute has more than went knocking on doors. Biology without borders 170 sta members and an annual operat- Finding a sponsor was easier said In the end, the projectwhich nished in ing budget of $28m, mostly from govern- than done. After 19 rejections, Dr Hood 2003, ahead of schedule and under bud- ment contracts and grants. Moreover, Dr was somewhat discouraged. Fortunately, getfundamentally changed how biol- Hood has been able to attract an amazing a venture capitalist heard about the ogy is practised. According to David calibre of collaborators, including Mi- prototype and oered him $2m to start a Baltimore, the current president of Cal- chael Phelps, the inventor of positron- company. Dr Hood was elated, but his tech, it highlighted the need to involve emission tomography, who chairs diculties were still not over. Today, scientists from elds outside biology, UCLA’s Department of Molecular and eager universities help professors to le leading many universities to adopt cross- Medical Pharmacology, and James patents and commercialise ideas. But disciplinary approaches to the subject. Heath, a physical chemist at Caltech who back then it was uncommon for aca- This approach is, of course, vintage Leroy belonged to Richard Smalley’s group that demic institutions to be so co-operative. Hood, observes Roger Perlmutter, execu- discovered buckyballs (soccer-ball Caltech’s president at the time, Marvin tive vice-president of research and de- shaped carbon molecules). Together they Goldberger, was reluctant to make com- velopment at Amgen, and who also have founded the NanoSystems Biology mercial deals, although he nally re- heads the board of the Institute for Sys- Alliance, with the aim of developing a lented and gave the go-ahead for the tems Biology. Since he joined Caltech as nanosensor device capable of making creation of Applied Biosystems. a faculty member, he has been trying to ve measurements from a blood sample The company’s success was based on marry engineering and the physical sci- by the end of this year, and 1,000 or more four machines, all of which originated in ences with biology in order to produce within ten years. These nanotechnology Dr Hood’s laboratory during the 1980s. tools that could revolutionise biomedical tools will be mass-produced and used by (As a result, Caltech still receives patent research, he says. every scientic investigator, even in royalties of approximately $10m a year.) Over the years, as the ambition of Dr small labs, predicts Dr Hood. Together, they opened up new elds in Hood’s plans grew, so did his sta. When Despite his track record, his new ideas biology. The protein sequencer, for exam- he rst arrived at Caltech in 1970 he had have proved as controversial as ever. Crit- ple, made possible the analysis of small fewer than ten people associated with his ics point out that systems biology may amounts of protein that had previously lab. By 1990, there were more than 100. simply be too complex for mathematics; been inaccessible. Next, the protein syn- Dr Hood then became interested in creat- others say the timetable for creating the thesiser assembled long chains of amino ing an entirely new department, explic- proposed nanotech instruments is too acids, making it possible to produce large itly dedicated to cross-disciplinary eorts ambitious. But Dr Hood, who has heard quantities of proteins. The third machine, and comprised of biologists, chemists similar arguments before, is unfazed by the DNA synthesiser, could churn out and engineers. But such a grand vision for the scepticism. It doesn’t bother me in pieces of genes to aid in DNA mapping the relatively small school did not sit well the slightest, he says. In the end what and cloning. But the most sophisticated with the rest of the faculty. In the end, the counts is what you do. 7