2008: The Computer Hardware Industry Failure

Every technology starts with a motivation, and throughout the past year Benchmark Reviews has watched the computer hardware industry follow trends that seem all too familiar of yesteryear. In this article by Executive Editor Olin Coles, the past 2008 calendar year is summarized for it's accomplishments, but the real focus is on the coming year ahead. Will 2009 be the year that component computer hardware becomes important again, or will it be relegated to a niche hobby for enthusiast?

For most of the 2008 calendar year, headlines of powerful video cards and ultra-extreme motherboards have filled most tech blog news. If it wasn't the new third-generation (3G) Apple iPhone stealing the lime-light, it was a new HDTV technology or faster Solid State Drive. If you were to consume the industry buzz on a daily basis, you might become oblivious to the economic struggles everywhere else in the world.

This past year has opened my eyes to a number of problems inside the consumer electronics industry, and there were several moments of clarity when I read 'the writing on the wall' telling me a storm was coming. I don't profess to have any more knowledge about the course of our economy than the next person, but whenever a clue appears I don't ignore it. This is why I am prepared to take the heat for making a bold assertion: component computer hardware is a smoldering industry, and will soon become niche only kept existent by enthusiasts.

Let me explain why I've come to this determination. Back in May of 2008, I witnessed a major break-through for discrete computer graphics at NVIDIA's Editors Day event. What happened shortly thereafter? The traded value of NVIDIA stock (NVDA) sank an instant 33% almost overnight. Now the two aren't exactly connected, but in some relevant ways they are. NVIDIA offered a new level of graphics never before seen, and made software more efficient with their CUDA program language, but because they had fabrication flaws that effected a series of chips all other innovations were rendered meaningless. The lesson learned: money is what drives consumer electronics, not innovation.

This lesson extends itself to other areas, too. Take for example the HD DVD and Blu-Ray Disc format war. HD DVD conceded defeat because of expired funding, not for lack of consumer acceptance. By most accounts, Blu-Ray Disc was not the favored format. But again, money decided that fate long before innovation or consumer favoritism could save it. The past year is spotted with evidence, which I will outline in the next section.

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