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What Tech Crunch?

October 7, 2008

Originally posted at www.businesszone.co.uk

The current economic crisis, crunch, squeeze or dare we say it recession has been compared pretty significantly to the Great Depression of the 1930s. The comparisons are there to be seen, banking collapse, job losses, housing woes there is a doom and gloom from every corner of the free trading world.

However in technology, I am yet to be convinced we are feeling the full effects.

On the same day the world stock markets took one of their biggest one day hits eBay announced they had completed the acquisition of ‘Bill Me Later’, an online payment and credit facility. I must admit the irony of the timing was quite incredible.

And eBay are not alone, Facebook have raised $496M worth of funding with $240M being pumped into the social network this year alone. Digg.com announced a third round of funding to the tune of $28.7M, the list is considerable.

Of course, we don’t really know how well prepared these companies are for hard times, however funding rounds are an interesting guideline to the state of the techworld.

Even in the SME and start up market things are pretty buoyant. TechCrunch the technology blog has just successfully hosted TechCrunch50 a dragon’s den style conference aimed at introducing the best start-ups with the most influential VCs and entrepreneurs. The eventual winners were Yammer, a micro blogging service for business who walked off with a cheque for $50K and countless VC offers.

The already cash rich Green-Tech market is also becoming richer and awash with investors. Consumers look for ways to offload expensive and uneconomic goods are looking at the tech world for answers. A great example of this is General Motors. While GM are feeling the pinch, Tesla Motors the first car manufacturer in Silicon Valley and bleeding edge pioneers of electric sports cars are struggling with demand. Of course this is all relative, but again it’s an interesting angle on the current crunch.
While there is funding and clearly cash to go around in the corporate world, the consumer market is also keeping its head above the parapet.

Tech companies producing physical goods will obviously fair differently in this difficult climate, the expectation that the sale of luxury goods will fall is a proven model. While I fully expect lower-cost product from traditionally high-price brands we still have an insatiable appetite for consumer tech. A quick trip to Amazon.co.uk will tell you the top selling laptops are all low end cheap Netbooks. Apple the traditional paragon of high price tech is also considering big price cuts if the rumours are to be believed. The crunch is clearly having an effect, but sales are still up.

The boom in the current bust however will come from companies selling digital assets. The low manufacturing and distribution cost of a downloadable movie is infinitely more profitable than producing a physical DVD. It also self-sustaining, suddenly while that £15 trip to the cinema is considered luxury a £3.50 download from iTunes is considered the very essence of frugality.

So while things may look rocky in the high street and at the bank the tech world has a few reasons to smile, for the moment.

From → PR Activity, Web Tech

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