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The Twenty-Year-Old Tech Bubble is Bursting

Will Ellis
Last Updated on July 28, 2022
The Twenty-Year-Old Tech Bubble is Bursting

In the last twenty years, tech companies have taken over the world. Anyone reading that sentence will nod in agreement without really noticing how strange it is. In the year 2000, the idea that everyone could communicate with everyone else, no matter where they were, was totally unthinkable.

But the unthinkable suddenly became real, and the systems to profit off of that event have become core to our society. Social media, facilitated by communications technology, can now influence any industry. 

If tomorrow a teenaged Tik Tok celebrity started a trend to get worker’s wages increased and it picked up steam, it would be hard for a company to publicly argue against that. This hypothetical event, and those like it that actually happen, are made possible by the tech boom of the last 20 years. 

But that boom is coming to an end.

How is the Tech Boom Coming to an End?


You might be wondering: What is signalling the end of the tech boom? Phones and computers still dominate our lives. The problems they solve have not gone away, so how could their solutions go away?

This is a good first question to ask. People need to be able to communicate quickly and remotely, and we cannot do that without communications technology. But it is clear that not every recent evolution in communications technology has been equally well-received. This is noticeable through simple sales.

Each new generation of the iPhone has sold fewer and fewer phones with its initial release since 2017. This is incredibly alarming to Apple, as they know better than anyone that your audience is either growing or shrinking. Now, there are many possible explanations for this.

What if people are just buying smart phones besides iPhones? Except that they’re not. The industry is oversaturated with smartphones. They are too numerous, too similar, and released too quickly.

This has caused people to not buy new phones simply because new generations of the same product pass them by. If you compare phones to computers or gaming consoles, new phones are released at a staggeringly fast pace. And for a few years now consumers have stopped trying to keep up.

Why is the Tech Bubble Coming to an End?


We mentioned that the problems that technology solves have not gone away. That is true. But while communications technology has solved many problems, it has created almost as many. 

Consider advertising campaigns. How much does an advertisement cost to make? How long should it run for? What makes one good and another bad? Ever since the advent of the radio people thought they knew the answers to these questions. Even when the internet came around the rules didn’t change.

But in the same time a marketing company would develop one ad ten years ago, a marketing company these days has to develop five. The reason is that people connect with individual ads less and less. They are constantly assaulted by information, meaning that they will only take in things which are new.

Everyone knows that the internet overwhelms its users with information. But this is significant because it builds a clear cause and effect relationship between what the ads are advertising for and the conditions they are creating. 

Nobody’s message—whether they are an individual or a company—is able to survive in this constant deluge of information. The only way to combat this is to communicate faster and louder. But this creates a feedback loop that is clearly unsustainable. More ads mean the need for more ads. Infinitely. Forever.

When will the Tech Bubble End?


Imagine two lines: One tracks the value generated by communications technology. That means purchases made one phones, discussions about products that lead to purchases, etc. For simplicity’s sake we are going to call that raw revenue value, even though it can be used in right and wrong ways.

The second line tracks the cost of making use of communications technology. This is harder to track exactly, but there are a few essential values that you cannot help but see. Every business needs computers. Every business needs marketing. Every business needs workers. Every business has needs.

Tech boomed for the first 20 years of the 21st century because it made the first line, value, go up. It also made the second line, cost, go down. The way things were done before communication technology took over the world was far less efficient. But now, there is a reversal happening.

The value generated by these technologies is going down. People trust them less, can’t afford them, and do not need them as much. The problems have already been solved. And at the same time, the cost of using these technologies is going up. Companies need constant revenue, but that means constant adherence to the ever-increasing pace of a system that is not built to be sustainable.

When will the tech bubble burst? When those two lines intersect. When the cost of participating in these systems is greater than the value generated by them, then the companies that are dependent on them will suffer a vast restructuring. But that is not the end of the world that it sounds like.

Conclusion


Here is a question: Isn’t the whole world dependent on tech companies? If they can influence any and every industry, then doesn’t a tech bubble bursting mean an economic collapse like we’ve never seen?

Tech companies would certainly like you to think that, but no. People have been working independently from the “innovations” of tech companies for as long as the tech bubble has been around. Most people do not need these tech companies as much as you might think.

Tech companies make the solutions to problems readily available, but it is people that solve problems. And when the marketing engines of tech companies grind to a halt, the people who made them possible will still be there. They will be harder to get to, but there will be plenty of people looking to fill the gaps.


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