Why everyone stopped buying (telecoms, IT) all at once and caused the tech collapse.
"In February 1997, 69 countries accounting for 95 percent of world telecommunications traffic agreed to open their basic telecommunications service markets. In April 1997, 28 countries accounting for 80 percent of world trade in information technology (IT) goods agreed to eliminate tariffs on IT goods by January 2000."
"Unfinished Business: Telecommunications after the Uruguay Round"
Edited by Gary Clyde Hufbauer and Erika Wada
The market will not rebound until a new generation of technology will replace the one implemented between 1997 and 1999. The reason being:
Today's telecoms and IT -and the Internet is the best example- is implemented across the board very fast and everywhere. All at once. It happens in every corner of the globe. Hence you see a demand ballooning and falling off as fast as it raises.
If you have been in the tech business in the last twenty years is not difficult to see this:
Then, you would get technologies that took long to come to market. It took to long to implement. It was implemented in the OECD markets and very slowly percolated to other countries. Today is different:
The same technology implemented at the headquarters of a big multinational or bank it is implemented in all its branches at one go. The impulse that this gives to vendors is brutal. Everybody wants it and wants it now.
When GSM networks started to be implemented, they ad to be implemented in a case by case basis. As the market 'digested the technology, it gained momentum. It exploded. This because the take up rate of the mobile networks was high. Seeing is believing. Besides that, a whole new generation of road warriors had gained experience in implementing and the learning curve became steep. You had more of them and with more experience. Today you can cover a 10 million inhabitant country in barely a year.
Globalisation further spread technology. Just for illustration: The US companies doing business in Mexico, after NAFTA, required the Mexican partners to have video conference. This was implemented by Telmex and it gave a boost to ISDN. Besides, high tech had a strong appeal for young people everywhere in the globe. So there was no shortage of graduate IT engineers to implement these technologies.
Privatisation of telecommunications also helped. All those telecoms enterprises that went in a shopping spree in developing countries buying telcos being privatised changed the patter of the implementation and implemented the exact same technology they had at home. The latest. Competition forced the new entrants to implement the most cost effective technologies.At one moment, UPSIDE telcos were the biggest buyers of computers in Brazil. The same goes for billing systems, management system, OSS, you name it.
Now it is already built. Everyone who needed or could afford a phone already has one. Every company that needed to be connected is connected. Everyone who can afford a PC has already its connection. |
