Tech sector flying low but gunning for takeoff
Valley companies’ quarterly results have made it hard to plot a trend this week. Apple reported a quarter that the company’s PR pros have dubbed “the best non-holiday quarter in Apple’s history.” By contrast, Yahoo’s revenue headed down for the third straight quarter. Google hung in there with a 3 percent increase over 2008.
What’s happening right now is the Great Tech Sector Shakeout of 2009, as the Internet economy shifts its feet to get its balance back. Hard data has been hard to find, but analysts and angel investors seem to agree that the tech economy is still shrinking, but the rate of shrinking is slowing. They can feel the whole tech sector slowing its own fall and preparing to head back upward in another senseless growth spurt like thosein 1996, 1999 and 2006.
The smart thing to do is to keep costs down by budgeting for a continued recession, but begin putting the pieces in place for a comeback that feels like it will start in the next few months. I hope Facebook has their IPO plan ready.
The talk among entrepreneurs at our MobileBeat 2009 conference last week was that Silicon Valley has discovered the smartphone and has already begun the process of leapfrogging Europe’s wireless industry. PC makers are figuring out how to make money from itty bitty netbooks.
A lot of this has to do with attitudes and acceptance. Once you accept that netbooks aren’t going away, you start thinking around the $300 price point instead of $2,500. Same for $99 iPhones with unlimited data plans. Americans feel they should be able to hit the Internet whenever they feel like it. PC and phone makers, and wireless carriers, too, all will have to get used to meeting that expectation.
The palpable change out here is that a lot of companies are probably going to face-plant. Yahoo is one. Any newspaper is another. Twitter won’t. Facebook could go either way. The most important thing to remember is that today’s economy is largely a product of our collective imaginations. We imagined it was time to stop buying ads. We imagined it was time to conduct a layoff. We imagined it was time to stop buying stuff. It’s not going to last, can you tell?
I don’t think Yahoo’s going to pull up in time, but that’s not an economic disaster. It’s a necessary job reshuffling. Yahoo’s got a lot of smart people who show up in the morning, but they just can’t get ahead. Time for them to do something else, somewhere else. Come on, it’ll be more fun.
