A New Field Of Tech Innovation
The rate of innovation in the technology industry slowed after the crash in 2001
because investment money dried up and what was left moved to real estate, where there were profits to be made. When the real estate bubble burst, however, investors came back to technology and found quite a lot of innovation, from online yearbooks to mobile phone applications, ready to be taken to the market.
The first computers were essentially just big number crunchers. That was exactly what was needed to support the high level calculations that had to be made for the space program, so during the rush to reach the stars in the late 1950s and into the 1960s there was an enormous influx of capital into the tech industry. All the aerospace centers, such as New York, Los Angeles, Seattle, and Houston, became tech centers as well.
When the personal computer was developed, the real money in technology was still in massive computers for massive companies or government agencies. The personal computer was simple, capable of running simple games and doing alphanumeric work such as word processing and calculation. But people liked it in a way that no one in the industry really anticipated, and that opened up a whole new market.
That market proved to be extraordinarily rich, and unexpected demand drove unprecedented innovation. In the space of a few years the personal computer was revolutionized again and again. In fact, the improvements came so steadily and were so significant that average-income families routinely bought new computers, not because the old one wasn't working, but because they wanted the new gadgets. This created a boom that already had a good head of steam when the Internet arrived, creating a whole new arena for innovation.
It was inevitable that at some point that boom would taper off, and the end was dramatically accelerated by the speed with which technology expanded. Anything that could be put onto computers was, regardless of whether there was a way for it to make money or not; and in the rush to be the first into every little niche of the e-universe, programmers and investors lost sight of business principles. They tore blindly forward, creating a precarious and unsustainable economic environment.
Consequently, the bust came suddenly and wiped away billions of dollars in supposed wealth. Overvaluation, speculative competition, and the eagerness of investment advisers to put their clients into stocks that were going up and up and up all contributed to a huge amount of capitalization that had no substance underneath it. The fact that it was just a bunch of hot air provided little comfort to those who had put their life savings into the market, and disappointed investors started looking elsewhere for promising ventures. In droves, they found an attractive financial product called "mortgage-backed securities."
That boom was short-lived, and the bust that followed it once again wiped out masses of capital. To the casual observer the effect of the housing bubble was only record foreclosure rates and tightening lending rules at the bank, but its most lasting effect will probably be on the technology industry. While the investment money was aimed in another direction, tech entrepreneurs changed out of their rumpled shirts and into pressed shirts with ties. They grew up a little, and they learned a thing or two about making money.
Instead of crazy, cool ideas without any solid foundation in business, those entrepreneurs are bringing phone applications, online yearbooks, sophisticated back-end products that make the Web more intelligent, and all kinds of other intriguing new products to the market.
by: addyieweeks
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