“Prediction is very difficult, especially if it is about the future”
Nils Bohr, Nobel laureate in Physics
Yes, forecasting can be hard. But on the supply side, the good news is that many technologies display constant growth rate over time. This means that capacity is growing exponentially and when plotted on a logarithmic scale, capacity is a linear function of time. Sounds familiar? Yes, this is Moore’s law: the number of transistor per chip has been correctly predicted by to double every 2 years on average since the 1960s, giving an annual growth rate of +40%.
Source: INVESTAURA using data from Motorola, Intel, AMD
That the IT and consumer electronics industry could maintain growth rate between 30% and 60% over long periods of time is really remarkable, not only because of the great technical performance enhancements involved, but also because of the seemingly insatiable readiness of the market to absorb those capacity increases and build new products around them.
But not all technologies follow Moore’s law, and the exponential growth model might not always be appropriate. In fact, there is now a better model: it is called the “Step and Wait” model (SAW). A paper by Gareth James and Gerard Tellis, professors at the USC Marshall School of Business and their co-authors Ashish Sood, at Emory and Ji Zhu at the University of Michigan, concludes that Moore’s Law does not apply for most industries, including the PC industry.
Source: Ashish Sood, Gareth James, Gerard Tellis, Ji Zhu