Moore's Law is only 11 words long, but it's one of the most misunderstood statements in technology.

The basic rule--which states that the number of transistors on a chip doubles every 24 months--has been the guiding principle of the high-tech industry since it was coined by Intel co-founder Gordon Moore in 1965.

It predicts technological progress and explains why the computer industry has been able consistently to come out with products that are smaller, more powerful and less expensive than their predecessors--a dynamic curve that other industries can't match.

Still, most people manage to mangle the rule, one way or another. Many people, for instance, state that Moore's Law says the number of transistors doubles every 18 months--a time frame never laid down by Moore.

Others claim that Moore came up with it while driving down Highway 101 in Silicon Valley. (He says he came up with it while preparing an article for Electronics magazine.)

Worst of all, many postulate that Moore's Law is in danger of running aground because the world no longer needs more powerful computers.

For example, the magazine The Economist theorized on May 8, that the rule was becoming irrelevant, partly because Google CEO Eric Schmidt said the search company relies on less-than-cutting-edge servers. "The industry is simply too efficient," he said. And Kim Polese, founder of corporate software company Marimba, was one of the software executives who told The New York Times that the rule's force was petering out, because people wanted to spend less time at work and more time with their families.

In a bit of magazine performance art, Red Herring ran a cover story on the death of Moore's Law in February--and subsequently went out of business.

Moore's Law, after all, is not a law of physics. It is merely an uncannily accurate observation on what electrical engineers, when organized properly, can do with silicon. Companies that can keep their tech teams humming will reap profits and power. Those that can't will fade away.

One way to view the rule in action is through the history of the 1GHz chip. Both Advanced Micro Devices and Intel released 1GHz microprocessors during the first week of March 2000. At the time, analysts claimed the chips offered more performance than people needed. In fact, the chips probably still offer more than most consumers need.

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Myths of Moore's Law - CNET News