Alway being one to give my opinion... :-)
I think rather than an outright crash, we're seeing a dichotomy in the high tech world. On the one hand, you have a high tech bubonic plague, on the other, there are scores of companies that can't hire people fast enough.
My own explanation is that the ones doing the swan dives fall into one of three categories:
1) Run-of-the-mill dot coms (e.g. pets.com, furnature.com) These
companies never had realistic revenue models. They could have made it, but only if they really gained a huge market share. But in the giddy world of 1998, no one bothered to look to closely at the bottom line numbers.
2) Support firms for the dot coms. These are mostly web design firms, and some consulting. Some of them even based their compensation on revenues streams from the deceased. Naturally as their food supply dwindles, so do they.
3) Copycats (e.g. Toysmart, Shoplink). Some are dot comes, some are services. In any case, they didn't gain enough market share to stay in the game.
Sure, companies like Altavista and Oracle are down. But the same
irrational exuberance that shot them into the stratosphere yesterday are beating them into the ground now. They'll make it through, though, because for the most part, their models are sound, even if not as wonderful as they used to appear.
Of course, what VCs always like to say is that they're investing in the people, not the product. This market proves the point. The economics of the computer age (I refuse to say "new economy") has changed a lot lately. The best comapnies are the ones who aren't doing what they started. Some of the big boys who demonstrate this:
- IBM was just big iron, today they sell software solutions.
- Oracle was just databases, now they want to be the next
Microsoft.
- Yahoo was an index, then a portal. Tomorrow, who knows?
--Mark
hershey@eyeshake.com