Moore's Law
Transistor density doubles roughly every two years.
Gordon Moore, 1965. The defining empirical regularity of the computer industry. Over more than 50 years, the number of transistors that can be packed into a chip has doubled roughly every 18-24 months. Compute per dollar has fallen by orders of magnitude as a result.
The law is empirical, not physical, and it's slowing. The exponential is starting to flatten as transistor sizes approach atomic limits. But the trend has held long enough that almost every digital business model assumes continued compute-cost decline.
For operators, Moore's Law has been the silent engine behind most software-business success of the past 50 years. The same product gets cheaper to deliver every year because compute costs drop. The law is slowing, which has strategic implications worth attending to.
Examples in the wild
Cloud computing pricing assumes continued Moore's Law improvements. As the law slows, cost reductions slow too. Many SaaS business models implicitly bet on continued cost decline.
Semiconductor companies that ride Moore's Law produce massive returns when it works and devastating losses when their specific bet on the next node fails.
Every consumer electronic you own is much more powerful and cheaper than the equivalent from 10 years ago. Moore's Law is the explanation.
Moore's Law is one of the mental models we apply through real cases inside the Pareto MBA — a part-time program for professionals who want to think clearly about business.