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No industry creates corporate behemoths and then destroys them as spectacularly as technology. It's not just Blackberry Ltd. The merger deal between Applied Materials and Tokyo Electron announced on Tuesday is another sign the sector is consolidating and dreams of glory are waning.
Tech companies famously hoard cash on their balance sheets and this is only partly because they are so profitable. Apple, with its $146-billion (U.S.) treasure chest, Microsoft ($77-billion), Cisco Systems ($51-billion) and Oracle ($39-billion) keep billions on hand in case they need it to defend their market share.
This defence has numerous forms. Acquiring a new firm with a disruptive technology is one method. Another is taking over a competitor, as Oracle did in buying BEA Systems in 2009. Tech companies, even dominant ones, must work feverishly to avoid becoming the next Netscape or Nortel.
Recent deals, however, are defensive in a different way. Fairfax Financial Holdings CEO Prem Watsa and Michael Dell are both leveraging themselves to the eyeballs not to invest in future growth, but to hide BlackBerry and Dell from shareholders so they can be downsized and restructured. The Applied Materials merger is a response to dying personal computer sales – again, a consolidation.
The excitement surrounding technology has diminished. Subsectors like cloud computing that are showing growth are, for now, interesting only to IT professionals and software developers. For the rest of us, the cloud is merely a more efficient way of accomplishing the same things, with our employers reaping the financial benefits. Big Data is a term only an actuary could truly love.
I began my career during the technology bubble and find it stunning that technology is now boring. Tyler Cowen, an economics professor at George Mason University, argues in The Great Stagnation that the low-hanging fruits of technological, Internet-based progress are now behind us and development will proceed more slowly. The longer we wait for the next big thing in technology, the more likely it is that Prof. Cowen is right.
Spoiled by rapid technological change over the past two decades, investors are growing justifiably impatient with the endless corporate blocking and tackling as industry giants look to consolidate market share rather than expand.
The technology giants of yesteryear, BlackBerry among them, are falling by the wayside or morphing into utilities. We're all looking to uncover the next Microsoft, Apple or Cisco. Maybe they're not coming.
Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights , and follow Scott on Twitter at @SBarlow_ROB .