October 27th 2012

S P E C I A L R E P O R TT E C H N O L O G Y A N D G E O G R A P H Y

A sense ofplace

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The Economist October 27th 2012 9

TECHNOLOG Y AND GEOGRAPHYSPECIAL REPORT

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Berkeley

Stanford

MountainView

Design DistrictMission Bay

South of Market

Santa ClaraSan Jose

DowntownSan Francisco

San FranciscoBay

Si

li

c

on

V

a l l e y

S A N T AC L A R A

A L A M E D A

CONTRA COSTAM A R I N

SANMATEO

SANFRANCISCO

P A C I F I CO C E A N

Menlo ParkPaloAlto

Google

Hewlett-Packard

Tickengo

Facebook

Oracle

CiscoYahoo!NetApp

Intel

Apple

AdobeeBay

C A L I F O R N I A

BayBridge

Golden GateBridge Airbnb

CraigslistDropboxKaggleNextdoorOpenTableSalesforce.comSideCarTruliaTwitterUberYelpZynga

20 km

San Francisco

Urban area

Caltrain

Highway 101

have their own crop of venture funds. Much of Europe is ser-viced from London too, and London and Silicon Valley funds, aswell as local ones, are active in Israel. Is Europe small enough forinvestors to feel the bene!ts of proximity? Adam Valkin of AccelPartners in London thinks so. "I woke up in Berlin today and Iwas in the o#ce at 9am,$ he says. His colleague, Philippe Botteri,adds that on a bad-tra#c day it can take him three hours to drivefrom San Francisco to San Jose.

Younger hubs are also trying to conjure up Marshall’s"something in the air$. Alexander Ljung of SoundCloud, a sitefor publishing audio !les, was drawn to Berlin from Stockholmby the German capital’s "strong intersection of technology andart$ and "creative chaos$. He sees a "sense of reciprocity$ amongits start-ups: his Sunday activity is "trying to advise people$.

Almost every hub has its co-working spaces, acceleratorsand incubators where tiny !rms of perhaps two or three peoplework cheek by jowl. The provider of the space may o%er equityor just a place to work, meet and learn. There are also regular con-vivial gatherings, such as Silicon Drinkabout in London, wheretroubles can be shared as well as drowned.

Capital from past successes is being recycled too, throughinvestors such as Stefan Glaenzer of Passion Capital in London,Christophe Maire, a Berlin-based entrepreneur, and Kai-Fu Lee, aformer Google executive who now runs Innovation Works inBeijing. Watchers of the British tech scene are waiting to see whatMike Lynch, the founder and ex-boss of Autonomy, will do withthe money he made when his software !rm was bought by Hew-lett-Packard. HP pushed him out in May.

Nothing quite like the ValleyBut no other place has seen the cycles of investment, suc-

cess, failure and regeneration in the information-technology in-dustry that have made the Valley what it is, so no other place asyet has the Valley’s scale and resilience. Some still questionwhether other young ecosystems would have the strength tosurvive anything like the dotcom bust of a decade ago. Theyprobably would, but until a crash happens, no one knows.

For cities as big and diverse as London and New York, itmay not matter much. They have other strengths. And many oth-er cities too may be about to discover an asset they did not knowthey had. It is neither people nor money, but something else inthe city air: data. 7

IN 1995 GEORGE GILDER, an American writer, declaredthat "cities are leftover baggage from the industrial era.$

Electronic communications would become so easy and univer-sal that people and businesses would have no need to be nearone another. Humanity, Mr Gilder thought, was "headed for thedeath of cities$.

It hasn’t turned out that way. People are still &ocking to cit-ies, especially in developing countries. Cisco’s Mr Elfrink reck-ons that in the next decade 100 cities, mainly in Asia, will reach apopulation of more than 1m. In rich countries, to be sure, somecities are sad shadows of their old selves (Detroit, New Orleans),but plenty are thriving. In Silicon Valley and the newer tech hubswhat Edward Glaeser, a Harvard economist, calls "the urbanability to create collaborative brilliance$ is alive and well.

Cheap and easy electronic communication has probablyhelped rather than hindered this. First, connectivity is usuallybetter in cities than in the countryside, because it is more lucra-tive to build telecoms networks for dense populations than forsparse ones. Second, electronic chatter may reinforce rather thanreplace the face-to-face kind. In his 2011 book, "Triumph of theCity$, Mr Glaeser theorises that this may be an example of whateconomists call "Jevons’s paradox$. In the 19th century the in-vention of more e#cient steam engines boosted rather than cutthe consumption of coal, because they made energy cheaperacross the board. In the same way, cheap electronic communica-tion may have made modern economies more "relationship-in-tensive$, requiring more contact of all kinds.

Recent research by Carlo Ratti, director of the SENSEableCity Laboratory at the Massachusetts Institute of Technology,and colleagues, suggests there is something to this. The study,based on the geographical pattern of 1m mobile-phone calls inPortugal, found that calls between phones far apart (a !rst con-tact, perhaps) are often followed by a &urry within a small area(just before a meeting).

Data delugeA third factor is becoming increasingly important: the pro-

duction of huge quantities of data by connected devices, includ-ing smartphones. These are densely concentrated in cities, be-cause that is where the people, machines, buildings andinfrastructures that carry and contain them are packed together.They are turning cities into vast data factories. "That kind ofmerger between physical and digital environments presents anopportunity for us to think about the city almost like a computerin the open air,$ says Assaf Biderman of the SENSEable lab. Asthose data are collected and analysed, and the results are recy-cled into urban life, they may turn cities into even more produc-tive and attractive places.

Some of these "open-air computers$ are being designedfrom scratch, most of them in Asia. At Songdo, a South Koreancity built on reclaimed land, Cisco has !tted every home andbusiness with video screens and supplied clever systems tomanage transport and the use of energy and water. But most cit-ies are stuck with the infrastructure they have, at least in theshort term. Exploiting the data they generate gives them a chance

Urban life

Open-air computers

Cities are turning into vast data factories

10 The Economist October 27th 2012

TECHNOLOG Y AND GEOGRAPHYSPECIAL REPORT

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to upgrade it. Potholes in Boston, for instance, are reported auto-matically if the drivers of the cars that hit them have an appcalled Street Bump on their smartphones. And, particularly inpoorer countries, places without a well-planned infrastructurehave the chance of a leap forward. Researchers from the SENSE-able lab have been working with informal waste-collecting co-operatives in São Paulo whose members sift the city’s rubbishfor things to sell or recycle. By attaching tags to the trash, the re-searchers have been able to help the co-operatives work out thebest routes through the city so they can raise more money andsave time and expense.

Exploiting data may also mean fewer tra!c jams. A fewyears ago Alexandre Bayen, of the University of California,Berkeley, and his colleagues ran a project (with Nokia, then theleader of the mobile-phone world) to collect signals from partici-pating drivers’ smartphones, showing where the busiest roadswere, and feed the information back to the phones, with congest-ed routes glowing red. These days this feature is common onsmartphones. Mr Bayen’s group and IBM Research are nowmoving on to controlling tra!c and thus easing jams rather thanjust telling drivers about them. Within the next three years theteam is due to build a prototype tra!c-management system forCalifornia’s Department of Transportation.

Cleverer cars should help, too, by communicating witheach other and warning drivers of unexpected changes in roadconditions. Eventually they may not even have drivers at all.And thanks to all those data they may be cleaner, too. At theFraunhofer FOKUS Institute in Berlin, Ilja Radusch and his col-leagues show how hybrid cars can be automatically instructedto switch from petrol to electric power if local air quality is poor,say, or if they are going past a school.

Enforcing the law may also become easier. Andrew Hud-son-Smith, director of the Centre for Advanced Spatial Analysisat University College London, thinks that within "ve years or sopolice forces will be able to predict and prevent some crimes bywatching Twitter and other social media. The thought may givecivil libertarians the creeps, but some Londoners, recalling thepart played by instant messaging in last year’s riots in their city,may wish the police already had such foresight.

More mundanely, existing data about crime can be ana-lysed more systematically. #Law enforcement’s main problem isthe fragmentation of information,$ says Mark Cleverley of IBM.Local policemen may know that street robberies are likelier oncertain days of the week; combining information like this withother data (such as weather, time of day and so forth) makescrimes easier to prevent. In Memphis predictive-analytics soft-

ware helped to reduce serious crime by 30% and violent crime by15% between 2006 and 2010.

However, the real prize, says John Day of IBM Research, liesnot in single areas such as tra!c or policing but in making wholecities better by drawing on data from multiple sources for multi-ple purposes. Smartphones and cameras, say, can track the %owof people as well as that of cars. A social-media %urry may showthat more people than expected are going to turn up at a rockconcert, suggesting that tra!c should be redirected, more publictransport laid on or more police deployed.

Even brilliant technology is not much use if cities are badlyrun or their politics are dysfunctional. Di&erent departments orlocal authorities have to work together. In Rio de Janeiro’s #con-trol centre$, o!cials from several departments watch screensside by side. When a thunderstorm strikes, the airport andschools can be closed and tra!c redirected from this single cen-tre. In newly built places institutions have to be designed alongwith the infrastructure. Simon Giles of Accenture, a consulting"rm, explains that when his "rm worked on a #creative digitalcity$ in Guadalajara, Mexico, a structure of trusts was created tooversee the development and running of the place, helping toensure that the bene"ts of development are shared equally with-in the community.

Another problem is how to pay for all the analytics andnew infrastructure in cities. Private provision is one possibility.For example, German insurers are providing their customerswith weather-warning systems developed at FOKUS, says Ul-rich Meissen, head of the institute’s electronic-safety depart-ment. Cisco’s Mr Elfrink points out that cities themselves couldcharge for many smart services. Residents might pay a few dol-lars a month for online medical consultations, alerts that theirchildren have reached school or internet access on the bus.

But quite a lot of things to make city life better can be doneinexpensively by residents themselves. Many governments andcities are encouraging this by making public data available. TheEuropean Union is sponsoring a project called CitySDK, involv-ing eight cities from Manchester to Istanbul, to give developersdata and tools to create digital urban services. One pilot, in Hel-sinki, is meant to make it easier for citizens to report problems.Another, in Amsterdam, will use real-time tra!c data to allowpeople to "nd the best way around town and avoid tra!c jams.A third, in Lisbon, will guide tourists.

1950 70 90 2010 30 50

developed developing

54.5

17.6

66.6

25.3

72.3

34.9

77.5

46.0

82.1

55.8

85.9

64.1

The lure of the cityUrbanisation rate, %

Source: UN

F O R E C A S TEconomies:

The Economist October 27th 2012 11

SPECIAL REPORTTECHNOLOG Y AND GEOGRAPHY

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Mr Biderman says there is an even richer seam to be minedas people !nd and create their own data in real time. For exam-ple, air quality can be continually monitored by cyclists andcross-checked with time, place and weather. In fact, just aboutany object can tell a story. An earlier SENSEable project tracked3,000 bits of rubbish from Seattle to nearby dumps, to Portland,via Chicago to Florida and California, and to land!lls all overAmerica. Information like this may make people think aboutwhat they throw away. Some may even do something about it.

Many ideas are brewing in the world’s cities, from grandprojects to single apps. Some will be dead ends; others will relyon the enthusiasm of citizens, which will not always be in plenti-ful supply. But in lots of imperceptible ways, from better tra"cmanagement to bins that tweet when they are ready to be emp-tied, city life is getting better. 7

One projecttracked3,000 bitsof rubbishfromSeattle.Inform-ation likethis maymakepeoplethink aboutwhat theythrow away

PRINEVILLE, OREGON, IS home to only about 10,000 peo-ple but to hundreds of thousands of servers. In January

2010 Facebook decided to build a huge data centre on a 124-acreplot in the high, juniper-pocked desert east of the Cascademountains. The !rst building is as long as an aircraft carrier. Asecond, nearing completion, is slightly bigger.

Facebook is not alone. Bulldozers are chugging away on a160-acre site nearby, digging for Apple. The iCloud will behoused here, in far-from-nebulous concrete and metal. The stateboasts a growing collection of such centres (see map, next page).Google landed farther north, in The Dalles. Amazon is in Board-man, on the Columbia river, which marks the border with Wash-ington state. Rackspace, a fast-growing keeper of other compa-nies’ data, is planning a facility in the same town. A group ofsmaller centres is clustered around Portland.

The internet, as Andrew Blum vividly describes in hisbook, #Tubes$, published this year, is a physical entity. Mr Blum,a journalist with Wired, a technology magazine, traced his waythrough the internet, from the wire that goes out of the wall ofhis house, along the street and thence through !bre-optic cables,into exchanges where network operators’ cables meet, throughrouters and switches, to data centres (including Facebook’s andGoogle’s in Oregon) and back home again.

All this equipment has to be kept somewhere. And as MrBlum shows for several di%erent types of kit, once one big com-pany installs a load of equipment, for whatever reason, othersare likely to be drawn to the same place.

The amount of data being generated is growing at an eye-popping pace: IBM estimates that 2.5 quintillion bytes are beingcreated every day and that 90% of the world’s stock of data is lessthan two years old. A growing share of these data is being keptnot on desktops but in data centres&buildings containing rackafter rack of computers.

Even in the age of superfast !bre-optic cables, companiesdo not like their data to travel too far. #Concern about latency [de-lay] used to be the privilege of big corporates, but it has started tomatter again for a certain number of applications,$ says VivekBadrinath, chief executive of Orange Business Services, the en-terprise arm of France Telecom-Orange. Companies with sales-men on the road, for instance, want orders to be entered and pro-cessed at once. His data centres are at most 150 milliseconds awayfrom any big city. Distance is not dead; but it is measured in timenot space.

Some data, such as !nancial and medical information, aremore sensitive than others. There are regulations and strict certi-!cation of the conditions in which they can be kept. At Bend-Broadband, about 30 miles from Prineville, the main customersof a new centre that opened last year are health-care and !nan-cial institutions.

Awesome OregonMany companies rent space in shared (or #co-location$)

centres belonging to companies such as Rackspace or Bend-Broadband. Some, such as Amazon or Google, are big enough tobuild their own. Facebook too has outgrown co-location. It hadbeen renting space in California and Virginia, but needed sites ofits own. It wanted one in the western states, to serve users on thatside of the country and with good connections to Asia. It is alsobuilding centres in the east, in Forest City, North Carolina (a statethat also plays host to Apple, Google and others), and in Europe,at Lulea, in northern Sweden. But why did it choose a little townin the Oregonian desert, miles from anywhere?

Jay Park, who runs the company’s design, construction andoperations teams for data centres, says Prineville is the #ideal lo-cation for the evaporative cooling system$ that Facebook uses.Data centres are power-hungry beasts. Energy accounts formuch of their operating cost, both to supply the servers and tocool them. Most contain a water-chiller which cools the air in theserver rooms, consuming lots of energy.

Facebook, though, cools its centres with the dry (and oftenchilly) desert air, which enters a chamber on the roof of thebuilding and is mixed with warm air recycled from the serverroom&a little in summer, a lot in winter. After passing throughtwo sets of !lters, the air is misted with high-pressure watersprays, then pulled through an array of fans. From there it dropsinto an aisle in the server hall where a perforated metal plateslows it down and helps distribute it around the server racks.Warm air is returned to the mixing chamber where the processbegan and used to heat o"ces if the weather is cold or expelledfrom the building if it is hot. The centre’s design also contains

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