The world is a very different place than it was in the late 90s, and the well-established tech firms of today are unlikely to face the same pitfalls as their digital ancestors. But not all are safe.
Twenty years ago today, the dotcom bubble officially burst, ending a period of rampant hype and investment into technology stocks with a bang, and many whimpers.
Dotcom businesses once listed as potential cash cows, like Pets.com, Kozmo or eToys, imploded. Others from the era, notably Amazon and eBay, managed to cling on. "The dotcom recession was caused by irrational exuberance," J.P. Gownder, vice president and principal analyst at U.S. market research company Forrester, told"[It was] a bubble that took a real, transformational phenomenon—the internet—and compressed its potential for economic value into an unrealistic time frame—a couple of years.
That economy may not be as susceptible to bursting in spectacular fashion as seen in the past, but this week it was made clear that it canThe 20 year anniversary of the dotcom bubble implosion this week came as the U.S. stock market suffered one of its biggest plunges since the 2008 financial crash, albeit for very different reasons. CNBC reported the top five tech giants lost more than $320 billion of value as a result.
"Yes, there are still new players coming into the scene with inflated valuations, lately we've seen that with artificial intelligence and fintech," technology industry analyst Joe McKendrick toldThe meteoric rise in the value of cryptocurrencies in 2017 provides a more recent example of how all bubbles eventually burst. During that year, the value of digital money Bitcoin spiked from below $1,000 to nearly $20,000 in just 12 months, before eventually crashing amid a mass sell-off.
Turning to modern companies, he added:"They operate in the cloud and have been moving their customers in this direction as well. This enables greater economies of scale for expansion, and less pain when there's a need to scale back. There's less reliance on hardware sales.
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