Is it the beginning or the end? As 2013 hurtles to its conclusion, the debate on 2014 has just begun: Is the tech industry on the verge of a renaissance, or is the bubble about to burst? The glass-half-full types point to Twitter's titillating IPO; the other half insist that's when investors cashed in on social media's hype.
The truth, as always, is somewhere in the middle. It's indisputable Twitter's public offering will usher in a wave of IPOs. But the payoffs may not match the froth of the microblogging service, forcing would-be IPO candidates to seek corporate suitors. Twitter shares are hovering near $65, up 44% from Nov. 6, its opening day of trading.
The social-media storm comes against a backdrop of wrenching changes. Tech's old guard -- Microsoft, Hewlett-Packard, Dell and Cisco Systems -- continues to wrestle with the slowly dying PC market; smartphone sales, meanwhile, are expected to top 1 billion in 2014 -- roughly three times the population of the USA. (By early October, there were more than 1.5 billion smartphones in use worldwide.)
The fertile mobile advertising market -- expected to more than double from today to $25 billion in 2016 -- is inflating the boom, creating the promise of profitable companies at warp speed. Venture capital firms will raise more money in 2014 than the $28 billion in 2007, according to Venture Economics.
"Consumers are spending much more, percentage-wise, on technology. It is evolving at a pace I have never seen in my 30 years in the field," says Tom Kilroy, executive vice president of sales and marketing at Intel. "The 'Internet of Things' is what we used to call embedded technology -- in cars, hotels, billboards."
Boom II is different on several fronts, however. Incubators, angel investors and individuals are plowing cash into start-ups, sparing consumers from being burned. "Consumers got hurt the first time," says Kevin Rose, general partner at Google Ventures and co-founder of several start-ups, including news aggregator Digg. "Now, some well-off people may lose a small chunk of change."
This tech boom is fundamentally different from the one in the 1990s in another way. Established companies base their headquarters here instead of Silicon Valley, shifting the center of gravity farther north.
Last year, venture capital firm Benchmark Capital opened a satellite office close to the Tenderloin neighborhood. Spotify is there, with Twitter and Square in mid-Market Street.
Tech executives either live in San Francisco or maintain homes here. Yahoo CEO Marissa Mayer has a high-rise penthouse near Powell, and Facebook CEO Mark Zuckerberg bought a house, then adjoining lots, in San Francisco. (continued...)
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