The Boom is Over

It is all over Techmeme and FriendFeed: Sequoia Capital (the venture capitalists behind Yahoo and Google, to name just two), have called off the tech boom and told their companies to start preparing for the worst.

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Lets think about this for a second. Is the technology sector as a whole vulnerable to this downturn? Yes, but probably not that much.

Consider Google as an example. Google gets bundled with every install of Firefox ( and if memory serves, some OEM PCs as well). And Google is pretty much the homepage of the Internet. So Google’s traffic probably wont suffer that much.

However, Google make money off ads,and it requires advertisers to buy those ads (or be charged for them). Now this could be very bad or very good depending on the industry doing the buying.

For example, Jeremiah Owyang just said on FriendFeed:

“The economic downturn is a good thing for social media, it’s going to force innovation, revenues, and productivity benefits –the other tools will fall by the wayside. Agree or disagree?”

So either ads will become more aggressive in an effort to lure ever reluctant consumers into the open.

Or they will cut back. Some ads just don’t work as well as traditional methods.

My bet is that, as Jeremiah said above, the online space of ads and social media will be leveraged to an ever greater degree and firms try their level best to stay above water.

So why did Google’s stock drop yesterday? Again, I think that investors are nervous that Google, while having a very broad range of services, hasn’t spread its revenue streams widely enough.

Google need to figure a way to monetize Youtube ( for starters), rapidly. Youtube gets millions of views per day that Google earn $0 from.

I’ll tell you what Google should do. They should go to Adobe and license that audio-to-keyword tech in CS4 and run every video on Youtube through it.

Gmail is another one. Personally I have never EVER clicked on a link from the Ads in the sidebar. Sure they are accurate and frighteningly well targeted, but I have never clicked on them.

For the tech industry as a whole, software is integral to the lives we now live. It ain’t going away anytime soon.