[LinuxUsers] Effect of the Depression on Technology

[Roger E. Rustad, Jr]

http://radar.oreilly.com/2008/10/effect-of-the-depression-on-te.html

Effect of the Depression on Technology

Here's the state of play as I see it: it is expensive and difficult to 
borrow and this shows no sign of change; the US debt is rising instead 
of falling, propelled by the Iraq War and the reliance on China for 
material goods unreciprocated by a reliance from China on American 
goods; and this adds up to difficult times for business in America for 
at least three years and possibly longer. From these premises, it's 
possible to cautiously guess at what the future will hold. (Bearing in 
mind that every day brings new revelations about the grim state of world 
finance, so the crystal ball is murky at best)

First, this recession will be good for innovation because recessions 
generally are. During boom times, companies direct development and 
occupy great talent with at best evolutionary improvements over the 
state of the art. Companies are great chasers of new things, but aren't 
great at making new things. A recession means technologists cease to be 
paid vast amounts to duplicate the work of others. The Great Tech Bust 
of Ought Two gave us 37Signals, Flickr, and del.icio.us and there's a 
strong argument to be made that many companies spent the next six years 
chasing what they created.

Second, this recession will be great for free and open source because of 
the shortage of cash. Last recession saw the mainstream legitimisation 
of open source operating systems (youngsters, take note: there was a 
time when it wasn't automatically okay for an IT department to use 
Linux) because it was clear and away the most cost-effective choice. The 
saying I use is, "come for the price, stay for the quality". Perhaps 
this recession will legitimise many of the applications (CRM, finance, 
etc.) higher up the stack. (However, I'm not about to stick my neck out 
and predict 2009 as The Year of the Linux Desktop)

Third, open source services and cloud computing will benefit from the 
tight financial situation where conditions will favour opex and not 
capex. It wil be nigh impossible to borrow to buy hardware or a major 
software license. An open source software product is free to get through 
the door, and services around it are delivered from opex not capex. 
Similarly, cloud computing lets a company pay a little to use someone 
else's enormous capital investment. It looks like, if the rumours are 
true, Microsoft will launch Windows Cloud just in time. Don't expect to 
see anyone else putting in new data centres any time soon—in fact, the 
days of deep-pocketed investors covering high burn rates are over for a 
while.

Most consumer apps will be a harder sell with the US dollar in the 
gutter while the country haemorrhages cash overseas. This is bad but 
won't make profit impossible, you just have to really be making 
something consumers need. Apps like Wesabe might find a whole new 
audience in a recession (disclaimer: O'Reilly is an investor in Wesabe). 
The conditions don't suit speculative acquisitions, so expect a return 
to the focus on the bottom line that (very briefly) characterised the 
fallout from the '01 tech bust. Sorry, dreams of getting people to pay 
for your toothpick collector social network may have to wait until the 
return of the stupid money in 2013.

As Phil Torrone said, people will have more time than money. This is 
good for open source software, but also for hardware and Make-style 
reconnection with the objects around us. The low-cost high-impact 
physical events we've created (Ignite, hacker meetups, coworking spaces, 
foo/bar camps) will thrive even as big-ticket conferences feel the 
effects of pinched pennies. The killer app in the "web meets world" 
space may just come from a Maker with spare time who sees a great need.

That's how I see the world and what I think it might favour and 
disadvantage. How do you see it? What am I missing? Share your views in 
the comments, and a Head First SQL fridge magnet set for the commenter 
whom I find the most insightful.