Selling the Sizzle Fizzles
"Somehow Enron has made the public forgetful about how hard companies work. During the day and evenings, I work with engineering, sales, marketing and some of the sales accounts, our accountant (who has a day job elsewhere) comes in around 7PM to work on our company, and when I get home sometimes I get in contact with our international site around midnight to 2AM. That's reality for most startups. Why doesn't the media talk about that, rather than implying the Enron's of the world are every company and everyone?"
I think the bursting of the high tech, dot com bubble is a lot more than just about shenanigans at Enron, Worldcom, Adelphia, Tyco, blah blah blah.
America has long been loyal to hype. This toothpaste will change your life. This car will get you the girls. This dot com will change the world. Sizzle. Madison Avenue. Evangelizing, Hype.
During the peak of the bubble, CNBC and other networks breathlessly reported every utterance of that guy with the beret from JDS Uniphase. (I made the joke here, or maybe on Usenet, that things were getting really strange when people in the gym were talking about "JDSU" as if they knew what it did.) CNN and CNBC were doing daily reports on "day traders" and the Ameritrade guy was invited to visit the White House ("Sure thing, Mr. C.!""). Chirpy comments on how "B2B" would be bigger than steel were made by gushing airheads.
This is hardly new. About 15 years ago we had 20 PC companies all claiming they would each have 30% of the PC market. So more recently we have had 20 wireless/telecom companies claiming they had the solution to the last mile problem or the corporate networking problem. A lot of them have already failed...gone, kaput, vanished.
(Ditto for several other segments. Companies were going to knock Cisco off, were going to take away Oracle's business, were going to replace Intel. I don't fault them for trying, but they hired and built as if they believed their own hype.)
The "Space Available" signs all over Silicon Valley are not there because of Enron and Worldcom. Companies began running out of cash and imploding more than two years ago.
I read Grove's article and didn't agree with his comparison of the current problems with the Japanese invasion of the early 80s. The big problem in high tech is NOT the situation with Arthur Anderson, Enron, Martha Stewart Omnimedia, and other hollowed-out companies. Rather, the problem is that our industry has become an industry of overselling, of hyping, of promising the moon.
And when the sky high promises are not delivered on, the money begins to run low. And when the money runs low, the wolves smell blood. The collapse occurs soon thereafter.
I hope, Amy, that your company escapes this fate.
I think things will get much, much worse. If we look around, we already see that people are putting more focus on real estate and their homes. (Perhaps a new bubble is forming...I don't know.) America is losing some of its infatuation with new gadgets. This doesn't bode well for people paying lots of money to upgrade to the latest "3G" cellphones, with little MPEG movies playing on their phones as they download their iPods with techno. We are not Japan.
And, as I have discussed many times here, most consumers simply don't see the need for blazingly fast CPUs. Some do, and they will buy them. But most don't. (This was clear to me a few years ago, and I talked to Paul Engel and some others who read this forum about it. My 400 MHz CPU was doing fine...and I actually edit DV movies on it, which most consumers aren't doing and apparently _won't_ be doing.)
Corporations may continue to need faster machines and networks, just as they did in 1995 and 1990 and so on. But we need to look at the big picture and see that their demand probably won't be enough to return us to the days of hype and glory.
Meanwhile, a lot of those companies each hyping themselves and expecting to get 30-50% of their markets will be changing their names to "Space Available."
--Tim May |
