What Happens When Tech Bubble Bursts?

There is some concern, not universally shared, that another "Internet technology bubble" is brewing. Some might argue the growing valuations of "revenue-free" Internet app startups are justified, because those companies might become platforms, as Facebook and Twitter have done.

You can see the logical flaw at work, whatever you think about valuations. In every bubble, it is possible that a few firms actually will become platforms. But most will not. Lots of firms will develop useful tools, but never become platforms. There's nothing wrong with that. But it is not a reason to give unrealistic valuations to "revenue-free" companies that might someday discover a revenue model.

That is not to minimize the legitimate new developments in Internet software. Collaboration, as it turns out, is a big deal, in fact far bigger than even suppliers of business collaboration tools might have suspected. A major shift in computing architecture to "cloud" mechanisms will lead to a whole new list of industry leaders. We just don't know who they are, just yet.

Still, failure rates are high in the venture business, high in the start-up business and won't be any different this time around.

The BBC struggles with concept of 'tech bubble' • The Register