If Tech Bubble Bursts, Would USA Be Harmed?

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    Apr 23, 2014 12:09 AM GMT
    NYT: This year, Facebook purchased the mobile-messaging application WhatsApp for $19 billion, or about $350 million per employee and $40 per user, only some of whom even pay the $1 annual fee for the advertisement-free platform. But what was perhaps most remarkable about Facebook’s acquisition of WhatsApp was that the start-up was making any money in the first place. In recent years, Facebook has shelled out 10-figure sums for Instagram and the virtual-reality headset maker Oculus V.R., both of which had scant or no revenue. Ditto for the safe-sexting-enabler Snapchat, which reportedly turned down a $3 billion offer from Mark Zuckerberg.

    Those numbers seem as bubbly as a hot bath or cold Champagne, a sure sign that Silicon Valley valuations have soared far higher than Silicon Valley balance sheets can support. A recent downturn in tech stock prices is perhaps indicative of this uncertainty.

    But if tech really is a bubble, would the rest of the country be harmed if it burst?

    http://www.nytimes.com/2014/04/27/magazine/if-a-bubble-bursts-in-palo-alto-does-it-make-a-sound.html?hpw&rref=magazine
  • tj85016

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    Apr 23, 2014 12:18 AM GMT
    I don't consider those companies "tech", they're just more media that always goes through boom and bust

    GE went from $75 to $12 and is still around with 1000x more "tech" than Facebook will ever have (now that the crooked GE Capital has been reigned in)
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    Apr 23, 2014 12:29 AM GMT
    tj85016 saidI don't consider those companies "tech", they're just more media that always goes through boom and bust

    GE went from $75 to $12 and is still around with 1000x more "tech" than Facebook will ever have (now that the crooked GE Capital has been reigned in)


    I beg to differ, most of the big web companies are essential software companies providing software as a service. Software is tech IMO.

    If there is a "bubble burst" in any large industry, there's going to be an impact on the economy.

  • tj85016

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    Apr 23, 2014 12:41 AM GMT
    ^^

    no they're not, they're just server houses with "apps", they're just like magazines and newspapers 50 years ago - media

    it's not as if they developed HTML, COBOL or FORTRAN, they just write code in existing programming language
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    Apr 23, 2014 1:13 AM GMT
    tj85016 said^^

    no they're not, they're just server houses with "apps", they're just like magazines and newspapers 50 years ago - media

    it's not as if they developed HTML, COBOL or FORTRAN, they just write code in existing programming language


    So none of the software companies that just write code in existing languages are tech companies? What would qualify them as a tech company in your opinion?
  • tj85016

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    Apr 23, 2014 1:26 AM GMT
    ^^

    they are, but I don't consider their failure(s) to be an economic threat to the country, someone will always pick up the slack for insignificant things like picture sharing or online games

    Oracle, SAP, IBM, Cisco, Adobe, Microsoft, Apple on the other hand . . .

    More important "tech" is also drugs, materials science (metals, electronics, bio, chemicals), hardware

    I really don't consider Instagram and game sites, etc important "tech"
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    Apr 23, 2014 1:52 AM GMT
    ^ If the tech bubble bursts here, it may allow places like China to ascend in strength.
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    Apr 23, 2014 2:04 AM GMT
    woodsmen said^ If the tech bubble bursts here, it may allow places like China to ascend in strength.


    China is ascending whether the bubble bursts or not.
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    Apr 23, 2014 2:32 AM GMT
    th3ro said
    tj85016 said^^

    no they're not, they're just server houses with "apps", they're just like magazines and newspapers 50 years ago - media

    it's not as if they developed HTML, COBOL or FORTRAN, they just write code in existing programming language


    So none of the software companies that just write code in existing languages are tech companies? What would qualify them as a tech company in your opinion?

    You're both right. Facebook, Instagram, Snapchat.. They're all various forms of social media. However, they all innovate and push new technology.

    TJ is thinking more in terms how the stock market classifies "tech". But for the sake of the article, "tech" is basically any software/hardware/service in Silicon Valley.
  • tj85016

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    Apr 23, 2014 2:39 AM GMT
    ^^

    the way Wall Street classifies "tech" is a joke and it's just a label for brokers to use to sell securities

    Heck, pets.com used to be "tech"
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    Apr 23, 2014 11:34 AM GMT
    Remember when Myspace was " the thing" yep that's In the trashcan now. And remember when DIGG was gonna fetch 200 million before not being sold until a few years and then the sum was a TONNNNNNNNNNNNNN less.
    http://www.cio.com/article/710888/Digg_Sold_for_Just_500K_Four_Years_After_Turning_Down_200_Million_From_Google

    In other words..... FB/ all tech companies will eventually Die and be worthless so best cash-out now while you can diversify,
  • NerdLifter

    Posts: 1509

    Apr 23, 2014 4:40 PM GMT
    The word "tech" has now become synonymous with software to some, which is bit a jarring to me. I come from a Mechanical Engineering background and always think of "tech" as manufactured physical goods, whereas software development and usage of that software is inherently non-physical with a lot of parallels to a service but not perfectly analogous.

    That's all a debate on semantics though.

    How about we call it Potential Dot-Com Bubble 2.0?
  • buddycat

    Posts: 1874

    Apr 23, 2014 6:41 PM GMT
    tj85016 said^^

    no they're not, they're just server houses with "apps", they're just like magazines and newspapers 50 years ago - media

    it's not as if they developed HTML, COBOL or FORTRAN, they just write code in existing programming language


    True, it is not like they are a consulting firm that provides software to companies. These will provide a variety of services. While some will be working on websites, others like myself would be working on desktop applications. Facebook is a website using web technologies like HTML, CSS, Javascipt/AJAX, or PHP. Of course some of these sites have a back-end written in languages like Java or C#. They are a tech company though since they are technology based, I would say. They have a lot of programmers and tech people working for them. Of course they aren't selling a product like Apple or IBM, they are providing a website and app to users. They aren't like a newspaper, since users provide the content. I am not a personal fan of Facebook and certainly wouldn't bother with it due to privacy issues. The whole idea of providing a web site to users that is free and not providing goods and services for money is weird to me. I wonder how long this will last? Now doubt Zuckerberg will be still rich from it but how long will everyone else benefit?
  • buddycat

    Posts: 1874

    Apr 23, 2014 6:52 PM GMT
    NerdLifter saidThe word "tech" has now become synonymous with software to some, which is bit a jarring to me. I come from a Mechanical Engineering background and always think of "tech" as manufactured physical goods, whereas software development and usage of that software is inherently non-physical with a lot of parallels to a service but not perfectly analogous.

    That's all a debate on semantics though.

    How about we call it Potential Dot-Com Bubble 2.0?


    It is odd some of the usage of some words regarding software. Words like science, engineering, or architect are often used. None of these really apply since it is not something involving the physical world.
    I think for their purpose tech is just any company based in technology. I wouldn't even classify a web site as "software" in the traditional sense since it is not compiled, it is written in scripting languages meant to be interpreted by a browser. Actually I would call this the social networking bubble since the dot com companies not have been doing the crazy things they did before sinking all their money into re-investing. Companies today are working across multiple platforms, leveraging the web without being completely relying on it.