The coming consolidation
by Douglas E. Welch
June 16, 2000
© 2000, Douglas E. Welch
While I am far from an expert on the stock market and invest only
lightly therein, the large fluctuations of the last few months
started me to wondering about what the future holds for everyone
in a high-tech career. Unlike some, I am not predicting doom and gloom about a coming
stock market crash. Instead, I see maturity settling into Internet
companies as happens with every new industry. Witness the taming
of the PC hardware business over the last several years. Where
there were once thousands of hardware manufacturers, through merger
and acquisition 9 or 10 companies now dominate the industry. This
maturing process has several messages for all of us who work in
high-tech careers, some that we might not want to hear.
Consolidation
One of the first effects you will see in this maturing market
will be the consolidation of many independent companies into several
large entities. Just as publishing companies collect many magazines
under one banner, Internet companies will begin to collect various,
complementary companies under their control. I don't think we
will see more AOL/Time-Warner mergers very soon, but we will see
the continued growth of Internet powerhouses such as Yahoo and
Amazon as they seek to buy more and more companies in order to
diversify their markets. As these companies move into profitability,
this trend is sure to grow.
This consolidation, by itself, will have a major effect on high-tech
careers. It will mean the end of sweetheart recruiting and hiring
packages for all but the most elite high-tech starts. The Internet
industries will start to move from a worker shortage to a more
stable level of supply and demand. Most will begin to develop
a stable of in-house tech experts who create infrastructure for
all their "products" while smaller, editorial staffs will create
and maintain content for each individual Internet site. In this
way, much like the old studio system in Hollywood, companies will
start to reduce the redundant expenditures involved in managing
independent companies, as opposed to divisions of one company.
This could mean that the days of the high-flying tech entrepreneur
are waning. While there will still be a place for entrepreneurs,
more and more high-tech workers will be drawn back into more traditional
corporate roles. Granted, these corporate roles will be much different
than before thanks to the changes wrought by the last few years
of entrepreneurial growth. Some of the perks, casual dress, espresso
machines, higher salaries, will continue, but I believe the days
of outrageous expenditures are quickly coming to an end. Entrepreneurs
may move back into their more traditional "startup" role instead
of the high-profile CEO role that many find themselves in.
Less IPOs/More buyouts
As the Internet industry matures more and more you will see a
move away from high profile Internet IPOs (initial public offerings)
towards the selling of small companies to larger ones. Much in
the same way that small hardware and software manufacturers position
themselves to be purchased by tech heavyweights such as Microsoft,
large Internet-related tech companies will always be looking for
a new acquisition that can boost their fortunes.
So, while there will still be a place for a few entrepreneurs,
it is far more likely that you will make your fortune by selling
out, not going public.
Watching the industry
Regardless of where you are currently working, or your salary
level, it is important to closely watch the high-tech industry
as a whole. You need to constantly adjust your career plans according
to the changes you are identifying in the industry. When business
methods change, so should your career plans. This purposeful observation
of the industry can help you to make wise decisions regarding
your career and can help you rise above those who aren't paying
attention to the changing tide.
Despite the concern you might hear in the media when they cover
them, Internet businesses aren't about to dry up and blow away
any time soon. Internet companies are just entering a new phase
of their development. Maturation is a tough passage for people,
companies and even entire industries. You need not fear an outright
collapse, but you will find that many things change on "Internet
Time" including the entire Internet industry.
Douglas E. Welch is a freelance writer and computer consultant
in Van Nuys, California. Readers can discuss career issues with
other readers by joining the Career Opportunities Discussion on
Douglas' web page at: http://www.welchwrite.com/
He can reached via email at douglas@welchwrite.com |
