The world of technology is in a constant state of flux, with artificial intelligence (AI) advancing at an unprecedented pace. Every week brings a new chatbot, AI image generator, or software breakthrough, as companies strive to build increasingly capable systems. However, beyond our screens, some experts argue that physical innovation has not kept pace with the digital revolution. This divide between 'bits' and 'atoms' is a growing concern for economists and technology experts alike.
The 'bits' refer to digital technologies such as software, smartphones, and AI, which have accelerated rapidly. In contrast, the 'atoms' represent the physical world, including robotics, manufacturing, transport, energy, and infrastructure, where progress has often been slower, more expensive, and harder to bring into everyday life. While this doesn't mean physical technology has stopped advancing, it does raise questions about the pace and impact of innovation.
Reusable rockets have reduced the cost of space travel, gene-editing tools have transformed biomedical research, and battery technology has steadily improved. However, for many consumers, the world doesn't feel as futuristic as expected. Predictions made in the 1950s, 1960s, and 1970s envisioned a world filled with flying cars, widespread household robots, and routine commercial space travel by the early 21st century. Instead, the biggest technological revolution of the past three decades has been in software.
Robotics expert Dr. Sue Keay explains that the comparison isn't surprising because software and physical engineering operate on different timelines. Hardware is a complex challenge, requiring design, manufacturing, testing for safety, certification, and reliable operation in unpredictable real-world environments. Advances in AI are helping robots understand language and surroundings better, but the physical world still presents obstacles that software alone cannot overcome.
Keay emphasizes that reliability is a significant hurdle for robotics. Machines that perform well in laboratories may struggle in different lighting, changing environments, or when faced with unexpected obstacles. While the cost of humanoid robots has fallen, expectations need to match reality. Keay doubts that current humanoid robots will ever be seen in Australian homes due to safety concerns.
Economist Tyler Cowen's book, The Great Stagnation, argues that many transformative inventions that reshaped society, such as electricity, cars, antibiotics, and aviation, have already been discovered. Today's innovators face increasingly difficult problems. Other researchers suggest that new ideas are becoming harder to find, requiring larger teams and greater investment for the same productivity gains.
Centre for Future Work chair Jim Stanford highlights a gap between AI's capabilities and its real-world applications in the economy. He argues that most technological innovation depends on investment in machinery, equipment, and infrastructure. Business investment in these areas has been sluggish for much of the past decade, although spending has picked up recently. Australia, despite its world-leading research in robotics, medical science, and quantum technologies, struggles to translate research into large-scale manufacturing or globally dominant technology companies.
Stanford believes that Australia's challenge is not a shortage of ideas but decades of underinvestment in industries capable of commercializing them. The country's focus on resource extraction, property development, and finance has come at the expense of manufacturing, advanced engineering, and physical infrastructure. Some economists warn that Australia risks falling behind in physical technologies that underpin future industries.
The question remains whether AI can reverse this trend. Stanford argues that the excitement surrounding AI has outpaced its demonstrated economic impact. He believes that the current AI boom will eventually collapse, and there is little evidence of economy-wide productivity improvements. Keay, too, emphasizes the difficulty of building machines that can operate safely and reliably in the real world, questioning the pace of physical innovation.
In conclusion, while AI continues to advance rapidly, the physical world's progress has been slower, raising questions about the future of innovation. The divide between 'bits' and 'atoms' is a complex issue, and experts caution against underestimating the challenges of physical innovation. The question is whether today's digital breakthroughs can eventually deliver the same sweeping physical transformation that electricity, automobiles, and aviation brought to everyday life.
