PIXABAY
In the UK we spend billions every year on technology and communications. Like many, we are a nation of tech junkies and follow fashions and fads with massive enthusiasm. If we look at the tech we love the most today, it’s hard to imagine it not being around in the future. But popularity, market leadership and financial success – even on a global scale – are no guarantee of longevity.
Looking at the many and varied reasons for tech transience, change seems to be built into the DNA of the technology industry:
1. Nothing lasts forever
The Fortune 500 is synonymous with the biggest and most successful businesses. Companies on this list employ so many people and bring in such vast amounts of money that it seems almost impossible that they could ever fail.
Yet, since the listings were first published is 1955, research has revealed that 9 out of 10 of the Fortune 500 have disappeared (gone out of business, acquired, merged or just got much smaller). While tech companies make up only a part of the list, the lesson is that change is a fact of life for these huge companies as much as the rest, and as Mark J. Perry, the author of the study put it, “creative destruction fuels economic prosperity.”
2. The next big thing
In the tech world, there is always a ‘next big thing’, a tech trend that visionaries see as opening up new markets and driving major change in the industry. As these new ideas emerge, they frequently disrupt traditional approaches or become the fashionable alternative, hoovering up investment, media attention and consumer excitement.
Artificial intelligence, augmented and virtual reality, and the Internet of Things are among the disruptive technologies currently making the transition from media buzzwords into our real lives.
If we come back in 5-10 years, the smart money is on one or all of these technologies turning into a massive global money machine, perhaps taking attention and success away from some of today’s most important tech brands.
3. Even the big names fail
For tech companies, market dominance and success are no guarantee of a long-term future, and tech businesses are particularly vulnerable to rapid decline. Companies are continually reinventing and replacing their own products in an effort to ride the wave for as long as possible, but when the big names fall, they call fall pretty hard.
Nokia is perhaps one of the best case studies. This once dominant mobile phone manufacturer reach a market capitalisation of around $245bn in 2000 – it was riding a wave of massive global growth. Yet that was about as good as it got, as consumers switched their spending during the smartphone revolution.
Just over a decade later, Microsoft acquired it for ‘just’ $7bn. Comparing their fortunes with Apple just underlines this fall from grace. Back in 2000, Apple’s market cap was a fraction of Nokia’s at $4.8bn – today it is $800bn, and Nokia is barely mentioned in the same conversations as Apple anymore.
4. Money talks
Investment and the availability of finance drives the tech industry forward. Technology – and software in particular – is the favourite bet for the Venture Capital industry, which pumps tens of billions into the industry every year.
Software gets the most VC funding of any industry (c.38%), and the startup, fast growth businesses it creates are often major drivers of tech innovation and change, with ‘disruption’ being part of the plan for many of these growing companies.
The tech startup scene has created a culture all its own, and it’s a culture based upon becoming the next big thing. It’s no surprise therefore that changing consumer habits are built into the planning, and why fast moving markets, acquisitions and failure continually shape the industry.
5. Tech fashions change
As tech consumers, we can be pretty fickle when the next big thing appears on our screens. We are so accustomed to change and for most of us, brand loyalty isn’t powerful enough to keep our business in the face of better features or the momentum of the biggest tech trends.
The rise of social media only accentuates this. It wasn’t so long ago that a service called FriendsReunited made waves by giving people a new way to find and connect with long lost friends. It was new, different and created thousands of great stories of people reconnecting with old friends and colleagues.
Launched in 2000, its rapid growth to a membership of 15m led to its acquisition in 2005 by ITV for £120m. By 2010 it had over 23 million users. But, just eleven years after ITV’s investment the site had closed completely, overtaken by broader social media trends and Facebook in particular.
More recently, this summer saw the announcement by Amazon that LoveFilm by Post – a DVD rental service – was to close. When Amazon acquired it in 2011 it had over 1.4 million subscribers, but streaming has killed it off in just six years.
Together, these trends, market forces and historical lessons tell a story of constant change, reminding this generation of tech enthusiasts that if we love our gadgets and gizmos, we should enjoy them while they last.
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