Why This Recession Won't Be Another Dot-Com Bust

Despite layoffs, companies are better prepared
By Kristina Loew,  Newser User
Posted Jan 17, 2009 10:03 AM CST
Why This Recession Won't Be Another Dot-Com Bust
An IBM employee demonstrates a customized cell phone, to unveil IBM's technology: the Invisible Barcode Technology Electronic Clipping System.   (AP Photo/Damian Dovarganes, file)

The tech industry is going through tough times, including widespread layoffs, but it's not going to be another dot-com bust, predicts the Economist, laying out the differences between 2001 and 2009. In 2000, technology companies grew nearly 16%, only to contract by 6% a year later. “The IT industry simply imploded,” says one vet. “It felt like the sector’s reason for being had disappeared.” But the industry is now global, and demand will continue to grow in the likes of China and India.

What's more, last time the IT industry was the cause of the crisis, not the victim, as companies had vastly overspent on technology. Now tech divisions are much leaner, and execs looking for big spending cuts won't find them in IT. Most tech firms are also better managed and have more cash on hand. While this recession is expected to be longer than the last one, the Economist predicts that smart phones, open-source software, and services will help spur a quick recovery.
(More IBM stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.