Tech’s Big Comeback

With PC sales stronger than expected, it was no surprise that Microsoft posted blowout numbers, even surprising some of the more skeptical company watchers. They gave a lukewarm forecast, but if you can manage to look beyond the myopic quarterly view of the world, you can see that Technology industry is on an upswing, starting primarily with the start-ups. Michael Copeland and I have co-authored a piece on Tech’s Big Comeback, and have posted an excerpt of that story on CNN/Money website.

The tech industry in many ways is following the classic arc of boom-and-bust cycles produced by transformative technologies of the past, from the steam engine to electricity to the automobile.

Here are some signs we found that historically have indicated an upswing. VC investments are rising, and no not in Web 2.0 companies that have garnered less than $100 million so far. Chips, Clean Energy, Networking…. you know the real technology companies. You can read more on this here. (The complete story is at Business 2.0 website, which required subscription.) A lot of people have looked at the rise of online advertising but missed its impact.

It starts with the melding of advertising, search and e-commerce developed by what are now referred to in Silicon Valley as the Big Five—, eBay, Google, Microsoft, and Yahoo. Advertisers are flocking to the Web; Internet advertising, $9.6 billion last year, was up 26 percent in the first half of 2005 and is projected to hit $12 billion for the year.

This money is going to the likes of Junipers, Ciscos and others. The tailwind effect, as one of my editors used to say! I think a lot of people are missing the signs because the current upswing is not like the ones in the past. It is a bottom up swing, as we highlighted in our last story, The Fifth Wave. Broadband, Wireless, Consumer Electronics, and other such trends are the forces of change. People are looking at folks like Microsoft and Cisco, when they should be focused on Qualcomm, Apple and Verizon Wireless.