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Is the technology industry maturing?
I recently posted the following on the SiliconANGLE blog: http://siliconangle.net/ver2/2009/11/02/taking-the-next-hill/ My post suggests that the technology industry is maturing, and describing the changes I believe this will have on the industry, including: * Accelerating tech M&A * Overall market growth decelerates * Competition decreases as competitors consolidate * The value proposition of the marketspace becomes better-understood and customers change their buying habits - tending to often buy the most well-established, full-featured products, rather than the 'hot' new entrants * Tech companies that do not diversify will fall behind those who offer a suite of products and services. I'd love to hear what the Focus community thinks about this 'big-picture' trend. Is the industry maturing and consolidating? If so, how is this affecting your purchasing preferences? Are you as likely to work with a startup as you were 5 years ago? 10 years ago?
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2 Answers
Chris - I have read both your note here on Focus as well as the posting that you mentioned. I am not an economist but have been involved with technology start-ups and trends for nearly thirty years. When you use the term "technology industry," you have cast an exceedingly wide net. Within this grouping, there are innumerable smaller segments. Many if not all of these are going through the processes that you described - early focus on one product, market realization, consolidation via M&A, and stabilization. I have seen this occur in the Internet Service Provider (ISP) industry where there were thousands in the US alone and they were then aggregated via roll-ups and acquisition by larger telcos once the market was established. The same is now happening with SIP trunking providers, IP PBX manufacturers (e.g. Nortel to Avaya), and so forth.
Technology industries will continue to evolve with new bleeding edge segments emerging, some of those segments prosper which then encourages a gold rush of clones. That then leads to consolidation and stabilization, and sometimes disapperance as new technologies take hold (i.e., 8-track to cassette to CD to IPod).
The important point that I gleaned from your post is that technology companies should not remain static with a single product or they risk becoming obsolete. Companies, just as technologies, need to evolve. IBM has done a good job of reinventing themselves from a mainframe company to what they are today. Maturation is another word for evolution and, in my view, that never ends.
Joel
Joel,
You're absolutely correct about the 'wide net' - I am certainly oversimplifying a very broad group of industries.
I was doing so to make that point that - as you say - the process never ends and also that 'tech' isn't 'special'. Like ANY industry it has a lifecycle - and it's late in that cycle in many segments - which requires a different approach to business management that many 'tech' managers aren't accustomed to - or even willing to accept.
In any case, thanks for chiming in - great points.
Chris
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