The Idea Factory: Bell Labs and the Great Age of American Innovation (38 page)

Yet the Bell Labs brain trust had also concluded that their present strategy of hollow pipes remained more feasible. Apparently, Jim Fisk and Bill Baker agreed. “A telecommunications network is emerging in our nation which will match the historic upsurge of our society’s demand for the transmission and distribution of human knowledge and personal experience,” Baker said in a speech about networks for the future at a Chicago symposium in 1968. The “new science which will provide the massive telecommunications capabilities of the future,” he explained, still depended on waveguide pipes, which would carry all the traffic and easily handle the demand for Picturephone circuits. The future, in other words, still looked the same to Baker as it had to Fisk at the beginning of the decade: the Picturephone, waveguides, electronic switching. These were the Bell System’s bets, and they were sticking with them.

A
NY SCIENTIST WHO WORKED
at Bell Labs—especially anyone in Bill Baker’s research department, whose job was probing the unknown—understood that failure was a large part of the job. Experiments sometimes literally exploded; results often disappointed; gut feelings frequently turned out to be indigestion. Moreover, new innovations that portended a grand future—the germanium point-contact transistor, for instance—could quickly be rendered irrelevant by a new iteration of a similar idea, such as the silicon transistor or (later still) the integrated circuit. In retrospect, of course, the evolution of technology looks like an ever-ascending staircase, with one novel development set atop another, leading incrementally and inevitably to all the benefits of modern life. Bill Baker was expert at crafting precisely this public narrative. “Within my lifetime,” he testified to the Federal Communications Commission in 1966, “the United States has progressed from a nation held together by post and telegraph, in which the ability to span the country by telephone had barely been demonstrated, to one in which the complex telephone network is an indispensable component, intimately linked with the growth and operation of
communities, private organizations, government, public safety and national security.”
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In truth, Baker, having spent years at the bench working on chemistry experiments, knew that science and technology weren’t a matter of assured upward progress. The waveguide, for example—those hollow pipes that had entailed years of research and millions of dollars—effectively died as a possible future in the fall of 1970. That September, the Corning glass company announced that it had succeeded in creating thin glass fibers so pure that they could transmit light with very low losses for thousands of feet. Corning did not yet have a manufacturable product, but they had demonstrated that Charles Kao’s research and intuition were correct: There was a future for lightwave communications, and it was almost certainly in fiber optics rather than in waveguide pipes. By the end of November 1970, Rudi Kompfner agreed: “Optical fibers will be at the center of the stage in the future,” he wrote to a colleague.
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No one was keeping an actual ledger during the 1960s on how well Bell Labs was doing in planning for the next century, but had they been, they might have put electronic switching and the laser work in the column of spectacular and prescient successes. During those same years, there were other achievements at Bell Labs that would, in time, alter the world. One occurred when several computer scientists at Murray Hill got together to write a revolutionary computer operating system they called Unix, which would serve as the basis for a host of other computer languages.
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Another breakthrough—the charge-coupled device, or CCD—was invented during work on new forms of computer memory. The CCD was a light-sensitive electronic sensor that used the varying responses of electrons to different amounts of light to create photographs and images of extraordinary detail.
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The CCD would become the foundation of digital photography as we now know it, but Bill Baker perceived its value to national security long before its commercial potential was understood. “I took it out to the NRO immediately,” Baker would later recall, knowing that the National Reconnaissance Office, the spy satellite agency he had helped found, could use it for espionage.
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Meanwhile, the other side of the ledger was filling up, too. The integrated
circuit of Kilby and Noyce, which built on the engineering and materials-science achievements of Bell Labs, seemed more a missed opportunity than a misstep.
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But nobody could offer such a mitigating rationale to explain the waveguide and Picturephone, two interrelated and fabulously expensive follies.
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It seems worth considering not only how those endeavors failed, but what those failures represented. Innovators make different kinds of mistakes. The waveguide, for instance, might be considered a mistake of perception. It was an instance where a technology of legitimate promise is eclipsed by a breakthrough elsewhere—in another corporate department, at another company, at a university, wherever—that solves a particular problem better. It was perhaps understandable, moreover, that a breakthrough in the creation of pure glass fibers wouldn’t come from an organization such as Bell Labs, where materials scientists were experts on the behaviors of metals, polymers, and semiconductor crystals. Rather, it would come from a company like Corning, with over a century of expertise in glass and ceramics.

Mistakes of perception are not the same as mistakes of judgment, though. In the latter, an idea that developers think will satisfy a need or want does not. It may prove useless because of its functional shortcomings, or because it’s too expensive in relation to its modest appeal, or because it arrives in the marketplace too early or too late. Or because of all those reasons combined. The Picturephone was a mistake in judgment.

The Picturephone began on a high note of optimism. “We have now received a clear go-ahead from AT&T on the Picturephone program we proposed,” Julius Molnar, Bell Labs’ executive vice president, informed the staff in late summer of 1966.
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The actual Picturephone technology was being upgraded and redesigned; instead of the egg-shaped futuristic device that had made a splash at the World’s Fair, Molnar told the staff, the set would be a “Model 2,” or Mod 2, as it was called at Bell Labs, a squarish device, designed by a renowned industrial designer, that was both more elegant and more functional. Molnar’s goal was to field test the device in 1968 and begin a rollout of “commercial face-to-face picturephone service” soon after.

A small exploratory marketing study of the Picturephone, comprising
ninety-nine employees from major corporations and nonprofit institutions, was compiled at the end of 1967. Meant to investigate the views of “a cross-section of business customers,” the study’s conclusions sounded no alarms. The market potential for Picturephone service appeared to be strong among the survey participants, the study concluded: “Many would be willing to pay more than $50 monthly for a Picturephone service designed to meet their needs.”
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By the spring of 1968, there was no turning back. “The trials of Picturephone have now progressed to a point,” Bell Labs president Jim Fisk said in a speech at the time, “where any skepticism as to its interest and utility is only a replay of the skeptical response which greeted [Alexander Graham] Bell when he tried to promote the telephone over 90 years ago.”
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O
FFICIALLY
, the Picturephone rollout began with a trial at the Westinghouse Corporation in Pittsburgh, starting in February 1969; during the summer of that year Bell Labs devoted an entire issue of its magazine, the
Bell Laboratories Record
, to explain the science and engineering of the new launch. The possible impacts of the Picturephone, Julius Molnar suggested in an introductory note, could well be seismic: By lessening the need for shopping trips or for conducting in-person business, “there will be less need for dense population centers,” as well as reduced traffic. “Picturephone is therefore much more than just another means of communication,” Molnar wrote. “It may in fact help solve many social problems.” AT&T began offering Picturephone service in Pittsburgh and Chicago at the end of 1970. Other electronics companies—RCA and GTE, for instance—readied similar technologies. If video telephones were the future, they saw no reason to let the Bell System reap all the rewards.
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But within about twelve months, Bell executives saw that the anticipated demand for the Picturephone service was not materializing. In a speech to Bell Labs’ department heads in March 1972, Julius Molnar went through the results: “Most of you probably know that attempts to introduce it in Pittsburgh and Chicago have hardly been howling successes,” he began. “In Pittsburgh after a year and a half there are only
eight paying customers with 30 sets in service.” The monthly price in that city for Picturephone service was $160. But in Chicago, where the price was set at a cut-rate figure of $75 per month, the results were nearly as worrisome. “After a vigorous sales campaign,” Molnar acknowledged about the Chicago business, “they have 46 customers with 166 sets in service, with another 128 sets on order. Much better than in Pittsburgh, but still not quite encouraging.”
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According to Irwin Dorros, one of the Bell Labs executives involved in the launch, the team working on the Picturephone had never doubted its eventual success. “Groupthink,” as Dorros puts it, had infiltrated the endeavor. Yet as the Picturephone’s demise became more evident, even its most ardent proponents began to ask why it was failing and why they hadn’t anticipated that outcome.

Most began their list of reasons with one fundamental realization: People just didn’t like the idea of Picturephones that much, and the market research indicating otherwise had been flawed and inadequate. Customers simply liked the impersonal aspects of a regular phone call—or they at least felt that video added little additional satisfaction to electronic communication.
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Then came other realizations. The Picturephone equipment and service were all far more expensive than the cost of regular phone service. Picturephone calls required such tremendous (and costly) bandwidth that long-distance service was out of the question. For all these reasons, the technology couldn’t attract enough users to attract even more users. “To start up a service, you have to think about: I have one, you don’t have one—so I can’t talk to you,” Irwin Dorros says. “So I can only talk to you if you have one. So how do you get a critical mass of people that have them?” Many years later, a computer engineer named Robert Metcalfe would surmise that the value of a networked device increases dramatically as the number of people using the network grows. The larger the network, in other words, the higher the value of a device on that network to each user.
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This formulation—sometimes known as Metcalfe’s law—can help explain the immense appeal of the telephone system and Internet. However, the smaller the network, the lower the value of a device to each user. Picturephone’s network was minuscule.
Price cuts didn’t seem to be working. And so its value was vanishingly small, with little prospect of any increase.

For years, Bell Labs executives in Murray Hill, Holmdel, and Whippany had communicated with one another via Picturephones in their offices. “I used it all the time,” Dorros recalls. “I used it every day. I thought it was terrific.” Not all the directors and vice presidents, however, liked the service. Rudi Kompfner, for instance, positioned a still photograph of himself in front of his set—in John Pierce’s admiring recollection, the image showed Kompfner to be remarkably attentive and invariably interested in whatever was being said—so that he could move about his office during a chat.
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Eventually, as the Picturephone initiative died out and the reality of its technological and economic failure set in, the Bell Labs bosses stopped using Picturephone service or had it disconnected. Forty years later, some would still defend the device, seeing it as far ahead of its time and too ambitious for the technical capabilities of that era’s network. The newfound popularity of video chats over the Internet might seem to validate this view. But to an innovator, being early is not necessarily different from being wrong. And in any event the Picturephone’s rejection in the marketplace was swift and decisive. As he looked around his Holmdel office just a few years after the Chicago rollout and his eyes rested on his Picturephone, Bob Lucky recalls, “I thought I had the last one in the world.” And on that day it occurred to him, he adds, that there was no one else to call.

J
im Fisk announced his retirement as president of Bell Labs in December 1972. It was actually the second time Fisk had announced he was leaving the Laboratories. The first had been twenty-five years earlier, just after his successful work on World War II radar sets, when he had accepted a post in Washington as the chief of research for the Atomic Energy Commission. To mark that 1947 departure—a temporary one that lasted only a few years—Mervin Kelly had held a dinner party for Fisk. It was a classy affair, as well as a jovial one: Bell Labs’ top researchers (dozens of men attired in ties and three-piece suits, and not one woman) came out to toast Fisk, first sharing martinis and oysters and then dinner and cigars. A professional photographer had been hired to document the festivities, and the record of that evening—an album of black-and-white photographs, preserved among the valued possessions of Bill Shockley—documents a group of men, none of them yet famous, on the cusp of an era that would soon be transformed by their work.

Before dinner, Julius Molnar, Walter Brattain, and John Bardeen mingled about in the crowd. Mervin Kelly shared a few confidential moments, his foot on a barstool, with his research chief Ralph Bown. Bill Baker was present, too. In the photographic portfolio from the evening,
snapshots of Baker captured him surrounded by a small group, saying little, drinking nothing, but listening with polite enthusiasm, as was his habit, while Mervin Kelly held court. As dinner was served, the men were seated, and Fisk faced the audience at a long table on an elevated stage. Kelly and Shockley sat beside him on the dais. So did Harvey Fletcher, the head of physical research who so many years before had worked with Kelly counting oil drops at the University of Chicago laboratory run by their mentor, Robert Millikan. John Pierce was onstage, too, in a frenetic and lively mood, riling up the crowd with comic drawings he held up to the audience. Of all the elite Bell scientists and engineers gathered together on that evening in 1947—long before anyone had heard of a transistor or contemplated the idea of a laser—only Claude Shannon appeared to be absent.
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