I blame the Segway. In 2001, it was billed as the "IT" device,
and given over-the-top endorsements by tech celebrities like Steve
Jobs and John Doerr. It was "as big a deal as the PC" and
"bigger than the Internet."
Nevertheless, no one had any clue what it was, and speculation
raged. The marketing strategy was a masterpiece of hype, and in the
end, a recipe for disappointment. In December, the miracle
invention was revealed to be an electric scooter - a plaything for
campus cops and tourists.
Today, the hype cycle is a given for new tech products.
Samsung Electronics Co., Ltd.
(KRK:005930) tease new smartphones with
mystery press events
, which in turn play out something like Napoleon's coronation:
glitzy, golden, and overambitious. Buzz for new consumer gadgets -
the kingmakers of our time - can build for a year before we find
out anything concrete; the rumor mill has been
discussing an Apple television
since January. It's not just techies who get a little carried away.
Apple rallied hard last year into the iPhone 5's introduction last
September, only to begin its long decline the following week.
Samsung had a similar experience several months earlier, as the
Galaxy S3's release marked a peak for the company's stock.
) was the victim of anti-hype in 2012, and it languished for much
of the year. Windows 8 was vilified long before its launch, and it
wasn't until the new operating system hit the shelves in
mid-November - and was merely mediocre - that the company began to
climb against the market indices. Currently,
) is riding high on the release of its Haswell chip, which has
generated a rash of media stories and
a surge in Web traffic
in the last few months. That's an encouraging sign for those who
the PC isn't dead
, but like other product cycle rallies, this one should probably be
taken with a grain of salt.
New devices and technologies are routinely advertised as
revolutionary, but then, revolutions rarely live up to their
promise, and old regimes often enjoy a longer life than we expect.
The iPhone 4 remains a bestseller for Apple.
) has been on deathwatch for several years now, but continues to
survive on the momentum of past successes and, now, renewed hope
for the BB10.
No one will be shocked by the idea that, at times, the market gets
ahead of itself, but hype can also affect the data that investors
turn to in order to stay grounded. Witness the PC industry.
According to Gartner, computer shipments fell 11% year-over-year in
the first quarter, after running negative for the second half of
2012. This was generally interpreted as evidence of the PC's
demise, but the numbers could also reflect anticipation for a big
upgrade like Haswell. Alternatively,
an analyst at Sterne Agee suggests
that computer manufacturers will wait for Windows 8.1, expected
later this year, before refreshing their product lines. It's also
possible that the market is holding out for
an anticipated fall in the price of Ultrabooks
. Collectively, the PC world is making big promises about the
future, and consumers might be interpreting that as: Wait six
months and you'll get something much better.
Meanwhile, smartphone makers promise little. Haswell and Windows 8
were known quantities six months before their release, but Apple
and Samsung keep their lips sealed about future handsets. Factors
like carrier subsidies and long, one-year product cycles discourage
buyers from waiting for a future device they can only speculate
about. The biggest improvements - new form factors, lower price
points, compelling apps - are often unlooked-for, and consumers
don't know what they're missing until it's staring at them from a
Hype can drive an entire industry, and make it look better than it
actually is. Because investors like the cloud, CEOs like it, too;
naturally, CIOs (chief information officers) love it. Even if the
new technology weren't great, or the cost/benefit was ambiguous,
there would still be an incentive to adopt it. On the other hand,
market enthusiasm allows cloud companies like
) to fund long-running losses, and drive growth by discounting
their prices. The result is a slew of good numbers, and a few bad
ones that are easily brushed aside with a little soapboxing about
the new economy or the Web 2.0 or "
vive la revolution
The market tends to look its best at a peak, and companies their
strongest before a fall. It's a good point to bear in mind, not
because it allows us to predict anything, but because it keeps us
from placing too much faith in predictions. With the
(INDEXNASDAQ:.IXIC) at all-time highs, up 15% year-to-date and 30%
since the beginning of 2012, investors are less cautious than they
have been, and there's nothing to say they're wrong. It may be a
good time, though, to assess the dangers of an enthusiastic market,
and to make sure we're not getting ahead of ourselves.
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Disclosure: Minyanville Studios, a division of Minyanville
Media, has a business relationship with BlackBerry.