Is a New Tech Bubble Upon Us?

Comments Off on Is a New Tech Bubble Upon Us?
Is a New Tech Bubble Upon Us?

For venture capitalists, entrepreneurs, policy-makers, and even ordinary investors, a big question is whether we're in the midst of an information technology bubble resembling the one in the 1990s. Today, some experts are making plausible cases for a bubble, while others say that such assertions are highly premature.

Regardless of which side of the argument you find yourself on, it's clear that new companies and business models are emerging almost out of nowhere. The Trends editors refer to the on-going transformation of the economy by digital technology as the "fifth techno-economic revolution."

While this revolution began in the 1970s, we're now just a little past its mid-point. As we've explained in prior issues, the exponential improvements in the price-performance of computation, storage, and bandwidth will create entirely new industries and applications, some of which will be as transformative as electricity, railroads, and mass production were in the 19th century.

Learning from Recent Technology Bubbles...

Amidst growing concern over the possibility of a new technology bubble, venture capitalist Ben Horowitz (of Andreessen Horowitz) argues that we are not in a technology bubble. More significantly, he believes Internet companies still have potential for even more significant growth in their valuations. His argument is based on the historical data about technology cycles shown here. Major technology cycles tend to be around 25 years long, with the bulk of the purchases occurring in the last ten years of the cycle. This has to do with adoption rates; the period coincides with the time needed for the oldest cohorts (who are less likely to adopt new technologies) to die off and for younger cohorts (who are quickest to adopt new technologies) to replace them. On this basis, Horowitz feels that the major adoption wave for the Internet technology platform is set to occur in the next eight years. Notably, the Trends editors argue that the fifth techno-economic revolution coincides with the overlapping of the PC Cycle, the Internet Cycle and what might be called the “Nano-Informatics Cycle” (a technological Cycle created by the convergence of infotech, biotech, and nanotech).

One of these fundamental technologies is called "assistive artificial intelligence...

To continue reading, become a paid subscriber for full access.
Already a Trends Magazine subscriber? Login for full access now.

Subscribe for as low as $195/year

  • Get 12 months of Trends that will impact your business and your life
  • Gain access to the entire Trends Research Library
  • Optional Trends monthly CDs in addition to your On-Line access
  • Receive our exclusive "Trends Investor Forecast 2015" as a free online gift
  • If you do not like what you see, you can cancel anytime and receive a 100% full refund