This isn’t really a new year predictions post since I’m really a few weeks late for those. As well as the obvious new year cycle, it feels like there’s another cycle turning in the IT industry.
It is arguable that the very first internet boom happened without the mainstream really noticing it, with companies such as AOL, CompuServe and AltaVista being amongst the first recognisable ‘names’ on the commercial internet. But history will record that the first internet boom was, approximately, from 1995 to 2001 and was known at the time as the 'dot com boom’ (or 'bubble’). This covered the rise and peak of Yahoo!, the rise and fall of Netscape, the first appearance of Google and the creation of new retail innovators such as Amazon. Then the bubble burst. But what’s obvious now is that the innovation didn’t stop. In the years between the dot-com crash (readily apparent in early 2001) and the rise of 'web 2.0’, many new innovations took place. Google went from being a very good search engine to a dominant one. YouTube, MySpace, Facebook, Last.fm, Digg and Wikipedia all began during this supposed 'crash’ period. The destruction of the first wave of web companies simply fuelled the second wave, as talented and knowledgeable people set about innovating as a means of making a living.
The current economic situation is having similar effects on the tech industry to the crash of 2000-2001. The silly-money IPOs have stopped. Companies without a business model might find their investors and banks being a lot less understanding.
But there are other, more positive effects: firstly, companies which were only ever being kept alive by continuing rounds of VC funding had to die some time, and now is as good a time as any. Secondly, the productive resources that these companies were tying up - principally the first-rate brains of the people working for them - are now free to find more useful things to do. The next boom is being built now in a myriad of small companies, university research projects and crazy brainstorms. 2009 will probably see the birth - or rise to prominence - of some really important businesses. We just don’t know what they are yet.
From a British perspective, this isn’t just an interesting observation; it has a much more important meaning. One of the UK’s major growth industries over the last couple of decades has been the 'financial services industry’, the very same industry which is currently shrinking at an astounding rate. But it has been this industry which has recruited many of the best and brightest people in Britain in the recent past. And, it’s sad to say, it would appear to have lead these people into a dead-end industry. But genuinely clever people don’t stay down for long. What is the financial services industry’s loss might just be the UK tech industry’s gain. There’s still plenty of mileage in innovation in an increasingly interconnected world. Mobile internet devices are only just starting to be powerful enough to be interesting, and the interplay between network technology and the need to be green hasn’t been exploited fully yet.
It might be a tad optimistic, but I’d like to think that a growing technology sector could be a big part of the British economy’s eventual recovery. Assuming, that is, that nothing gets in the way.Share