Many still remember the tech bubble burst in 2000, but others have no idea what have happened in the early 2000’s when most tech companies stocks fell to the ground including Amazon that went from 107$ to 7$ per share, and many more went bankrupt.
Tech market more unstable than others:
Every few month, a new event (bankruptcy or failure), reminds us how unstable the technology industry is, and this instability is not specific to one tech category, in fact it is affecting all the different categories from software to hardware.
Recent tech failures and reasons:
Myspace, From 2005 until early 2008, Myspace was the most visited social networking site, and in June 2006 surpassed Google as the most visited website in the United States. Wouldn’t you invest in such a site with worldwide reach? Think again! since 2008 Myspace started declining, and after being purchased for $580 million and generating $800 million in revenue in 2008 … it was sold in June 2011 for $35 million. What, Why? Facebook overtook it, taking the majority of users, that with a bad user experience led to the decline of the biggest social network in 2008.
Zynga, Founded in 2007 by Mark Pincus (1966 , US, San Francisco, Jewish, Harvard), they offered many games on Facebook, and were able to establish early a special relation with Fb that allowed it to reach much more users than other gaming companies. The relation with Facebook ended early 2013, and reality kicked in, but since 2012 Zynga was posting disappointing quarterly results. Many journalists are questioning the company viability, because it would be difficult for Zynga (especially after losing the special relation with facebook) to make new titles to replace old ones whose novelty is fading.
Blackberry, in August of 2007, shares in the Canadian maker of BlackBerry smartphones peaked at two hundred and thirty-six dollars, now they are trading barely above 10$. What happened ? Apple iPhone a touch screen smartphone was launched in 2007, and since many other handset makers started producing touch screen smartphones while blackberry was very slow to react and jump on the touchscreen wave.
Strong tech companies? are there any?
You may think that some companies will never suffer from instability and that they are strong, diversified and have enough flexibility and innovation to overcome any downturn … here’s some of these strong companies and their points of weakness:
Microsoft: MS’s main revenue comes from selling the Windows software, with the big increase in tablets use, Windows Operating system is losing it’s market share to iOS and Android operating systems, and you never know when one of these OS will actually jump to PC and compete with the Windows OS in it’s own territory.
Google: Google’s main revenue comes from advertising, on it’s search results page and entities (such as YouTube), with the latest NSA privacy scandals, i won’t be surprised if one day, people decide to use other search engines, furthermore Google is open for penalties due to favoring it’s own services in and giving these services top position in search results.
Apple: Even-though the company have a lot of cash, is innovative and has a large following, iPhone sales represent a big chunk of Apple’s revenue, more and more handset makers are producing high end handsets that compete directly with the iPhone, thus shrinking the Apple’s market, almost the same way Microsoft shrunk Mac’s market.
Technology sector very fast paste make it difficult to invest.
Unlike other sectors where you may lose half or 3/4th of your investment, the tech sector is very fast, and very risky, do you remember Attari? so it’s basically not a new trend, tech has and will always be a sector where you should invest fast and sell faster.
Tech Journalism, is not real journalism!
Most of tech journalists are wannabe journalist and are actually bloggers, the reason so, is that technology and literature (requirement to become journalist) are at opposing positions in the educational system, usually those who wish to be journalists are bad in technology and those good in technology are bad in literature….
Not having real journalists means that articles almost always lack the necessary amount of criticism, and that there’s no rules on what and who will be covered which results in blatant favoritism.
Companies that i expect to fall soon:
Twitter: It has no sustainable business model, it is more appealing to celebrities than the standard person.
Groupon: With all the cash injected, and revenue made, it still haven’t became mainstream.
Pinterest: Still far from reaching mainstream, and lacks a sustainable business-model and usability.