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Is the UK in a Tech Bubble?

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The success – and subsequent bursting – of the dotcom bubble is well-documented. A business bubble such as that is created when speculative investors believe in an over-hyped product that simply cannot deliver what its proponents say it will. Rather than steady, sustainable commercial growth which supports the long term, it can lead to business failure and bankruptcy. That is then followed by a market shake-down in which only the strongest survive: hence the domination of the big dotcom players post-bubble, such as Google and Amazon.

With the arrival of Web 2.0, has come talk of a new technology bubble. Social media, cloud computing and related web activities such as social buying and networking, have brought new life to the web and have got many people very excited. These kinds of services do indeed seem to have an almost limitless potential. Nothing happens now, it would seem, without it being announced and analyzed on various social media channels. And with this excitement comes plenty of opportunity for hyping up new developments and for new companies to spring up to try and make money out of those developments. Social media has become, in some people's eyes at least, big business. Linkedin, for example, has now floated on the stock market. There are, it seems, many similarities between the current situation and the dotcom bubble, which it would be foolish to ignore.

Indeed, many of those who were working in the tech industry then urge caution, such as Stuart MacDonald, who was working for Expedia as its marketing officer back in 1999. Talking to Nick Bilton of the New York Times, he said 'So many of these people who didn’t see it all happen the last time think this is all fresh and new, but it’s really a lot of people saying the same things'. In other words, there is a definite concern out there that many people may be investing in something that has not yet proved itself.

That said, the world does genuinely seem to be changing. The way people use the internet has changed hugely: social networking and mobile technology mean that the internet is part of our everyday lives, inseparable from us. And there is some real money being made out there, with a company like Groupon worth millions. And that at a time when much of the retail industry is struggling.

New technologies do seem to represent the new world, as business who fail to keep up cannot compete. It seems that technology has now become so important that it is hard to see how the 'bubble' will burst. It may well be that many of the smaller companies trying to make money without anything new to bring to the table will fail, and for them, perhaps there is a bubble. However, much of the new era is being led by the old – companies like Google and Apple. They are not naïve investors, but seasoned veterans. If there is a new tech bubble, it seems unlikely it is as big as some might claim.

This article was written by Workbooks, a leading supplier of web based CRM systems.

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