We are officially in a credit crunch. Banks have so many bad loans on their books that they claim they do not have money to lend (even though the U.S. government has been providing them billions of dollars for this purpose).
How is this going to affect technology companies? There are a few ways that I see:
Electronics Consumers – Purchasers of consumer electronics products will not be able to purchase as many of the latest technological devices and gadgets as they are used to. Even though many electronics products have been coming down in price steadily, many products are still hundreds to thousands of dollars. Most people simply cannot afford to pay cash, and are forced to pay higher interest rates unless they have top credit or they know how to fix bad credit.
Early Adopters – The latest technology is always more expensive than technology that has already been accepted by the masses, so early adopters will have to pony up more cash for their purchases. This will lengthen the time it takes for new, innovative products to be tested and migrate over to the mass consumer market. This will hurt the last category…
Technology Companies – Many companies have already gotten out of some markets (e.g. Pioneer and HDTVs), and even some nationwide retailers like Circuit City have declared bankruptcy. What I am most concerned about is that – depending on how long the economic recessions and credit crisis last – we could enter a technological dark ages where almost NO new technologies are being brought to market. (Remember, a generation in high-tech industries is typically 18 months or less!) With the shrinking economies and resulting layoffs that are occurring around the world, research departments must be affected. The short term lack of cash flow today might affect technological progress in the future.
I hope things turn around quickly… I want my future grand-kids to be amazed when they ask me about all of the technological gadgets that I had to live without.
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