With over-valuing startups and lots of money being thrown around in the technology sector, many may fear that we are close to a tech bubble that could burst. Excitement around startups and new technologies have made decisions easier for venture capitalists and investors to put their money into future technology.
Can we really say we are in tech bubble? The signs are showing that if we are then it is very different to the last one in 2000. With the success of Instagram which Facebook bought for $1biilion, it shows that some areas of the tech world are succeeding and are not showing signs of slowing down. With Instagram and Facebook now generating healthy revenues, the view of over-inflating are far from the reality. Snapchat, the photo sharing application which reportedly turned down a $3billion offer from Facebook, is growing well and its value would be several times higher today. These are some signs that the technology sector isn’t being over-inflated but showing genuine signs of growth.
On the other hand there have been some examples where some acquisitions have had a negative impact to the industry. Google paid $12.5billion for Motorola which then saw it be sold to Lenova for a much lower value ($3billion). Anticipating growth and competing with tech giants doesn’t also work through acquisitions. Back in 2011, Rupert Murdoch sold the popular social network, MySpace for $35million, only 6% of what News Corp had initially purchased it for. These examples show signs that gambling of short-term success may not get you far.
Overall, my verdict would be that if we are in a tech bubble and in a world of over-inflating acquisitions, then it is very different to the tech bubble which burst in 2000. Some areas of the industry are showing real optimism, whereas other areas are being gambled upon with no realistic long-term growth.