Future value creation will come from the combination of Moore’s Law and Metcalfe’s Law. The two are multiplicative and feed off each other, too. Cheaper devices are made possible by Moore’s Law. This increases the number of nodes boosting a network's Metcalfe value. And an increase in the value of the network attracts more nodes bringing volume economics to bear on Moore’s Law. And the cycle continues.
Many semiconductor companies remain focused on capturing value by marching forward with Moore's Law, shrinking transistors and creating new capabilities in silicon. That's all goodness, but as Moore's Law becomes harder to pursue, they will need to find other ways to deliver value to their customers than just keeping Gordon's promise.
I believe that the challenge for the semiconductor industry will be to gracefully shift from delivering value almost exclusively through Moore’s Law, to delivering value through a combination of Moore’s and Metcalfe’s Law, and ultimately perhaps Metcalfe alone.
One thing semiconductor companies are really good at is doing things at SCALE. They make hundreds of millions or even billions of chips every year, made in factories the size of several football pitches. They make the most complex machines ever made by human beings. And they all work. Kind of amazing really. For them, it's go big or go home. They don’t do anything in small measures. They work at scale as part of their business model. And scale is what Metcalfe is all about.
Companies like Facebook, Google, Twitter, and Netflix have created value out of Metcalfe's Law and embraced scale by building massive user networks.
Semiconductor companies that are still trapped exclusively in the Moore’s Law paradigm may face commoditization and collapse if they can’t see beyond the next few steps in the game. Smart ones will already be planning for the era beyond Moore's Law and looking for ways to create value from scale derived from networks rather than the volume scale Moore's Law has brought for the last fifty years. Finding new ways to more easily connect IoT hardware and software platforms through APIs, and flexible computing platforms (cloud, SDI, etc) has to be where the most value is now for those companies.