Saturday, August 16, 2008 2.0 Boom and Bust?

During this past year I have been observing the same excesses that lead up to the original meltdown at the end of the last decade and earlier in this one.

Now, I am over 60 years old and I have seen these cycles many times before, and not just in the computer industry. As a matter of fact, before retiring, I used to teach economics and finance at two universities.

In industry I observed a 'melt-down' about every 8 years. 6 years of build up leads to excess that seems to require a 2 year correction.

When I have been attending conferences and even in the local Internet Café everyone seems to be buying into all of the new and latest technology – the 'bleeding-edge' stuff. Now, I did that myself when, in 1972, I purchased a Lytton EBS 1241 computer for $32,000. The storage medium was punch paper tape, and processing memory was 4K (no M, no G, no T). Like many others I went into debt to finance the purchase. Did I rue the day? You bet.

Worse than the losses of everyone who speculated in this latest real estate bubble; the value of this hardware 'crashed' to about 5% of the original value within 18 months.

Here's what I think. By far the most popular laptops that I saw at the conferences, about 80%, were Apple – MacBook Air. Now, I know that about 80% of those individuals were also living high, off their expense accounts; marketing like crazy – mostly for .com start-ups that had never made a profit, nor likely ever would.

Many of those 'start-ups' were only concepts, they had not even gotten to Alpha testing, let alone market acceptance. Stand by to watch for this next shoe to drop, the 2.0 Boom and Bust.

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