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Technology - the party really is over

• Rory Cellan-Jones
• 8 Oct 08, 12:50 GMT

On Monday last week I wrote here that the technology party might be over, and that the gloom pervading the financial sector could begin to affect high-tech firms. Since then - gosh, it seems a long time ago - a few things have happened.

Banks have tottered, an entire country has gone to the brink of bankruptcy, the London Stock Exchange has suffered its biggest one day fall for more than two decades, and the UK government has unveiled a £50bn rescue plan for the banks. As Torrid Tuesday has followed Manic Monday, the BBC's crack alliteration team has been under enormous pressure.

And, almost unnoticed, technology companies have been sucked into this vortex of gloom. Let's look at a couple of companies beginning with A. Last Monday, Apple's shares opened at $128. Last night, they closed at $89 - and remember they had briefly topped $200 earlier this year. There has not been a shred of bad news about the iPod, the iPhone, or the iMac - but investors appear to have decided that these are just the kind of goods that hard-pressed consumers will now be more reluctant to buy.

On this side of the Atlantic, one of our more interesting technology businesses Autonomy, which specialises in search technology for big businesses, has recently entered the FTSE 100. But over the last week its shares have been tumbling as rapidly as the index as a whole. They started above £10, and last time I looked they were around £7.60. This despite a trading update in which the chief executive said Autonomy expected its third quarter results to be "significantly ahead of expectations".

The market has decided that the big enterprises which are Autonomy's customers will be trimming their spending too. And it's not just a few companies suffering - the New York Nasdaq and London Techmark index have been sailing steadily lower over the last 10 days.

So much for the big technology businesses - what about the fledglings? Bad news there too, I'm afraid. Not a single new technology firm has come to the stock market this year, according to the British Venture Capital Association. And further back the evolutionary chain, venture capital investment in start-ups is now stalling in the US, and it's hard to see that pattern not being repeated in the UK.

The reaction to this state of affairs by some is to decide that technology no longer matters and that the process of change will now go on hold for a few years. Or, as a colleague put it after overhearing me discuss some new smartphone: "The world is falling about our ears and all you can talk about is your silly little gadgets."

I think that is short-sighted. We are right in the middle of some fascinating shifts in the way we use technology - from the rise of social networking, to the mobile internet and the advent of cloud computing.

Last time we had a serious downturn in technology investment at the beginning of this decade, the world did not stand still. In a harsh climate, smart new ventures - from last.fm to Skype - were born, and consumer behaviour was transformed by the arrival of broadband.

So investors and entrepreneurs may be entering a chilly period when making money from new ideas becomes that much harder. But I think "silly little gadgets" will continue to transform our lives - and the visionaries who can look to the long-term and spot the Googles of the future may find that this is a profitable time to do business.

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