How Has the Tech Sector Evolved Over the Past Decade?
Tech Sector Evolved Over the Past Decade
Technology is a huge part of the economy and it’s often the growth sector for an entire market. Tech companies are all about innovation, creation and growth, and they often reshape the way we live, learn and communicate. The big names in the industry are well known to most investors: Google, Amazon, Apple and Facebook (the Big Five).
But even these firms can’t keep their dominance of the sector without constant innovation. The pace of technological change has been accelerated over the past decade by advances in artificial intelligence, cloud computing and robotics. These developments have helped to bring down costs and increase speed of production. And these innovations are expected to continue at a faster pace over the next 10 years.
The rapid evolution of the industry can create rabid competition and lead to a quick turnover in winners and losers. Computers that occupied whole rooms and could only hold 16 GB of data are a thing of the past. Now computers are smaller and more powerful than ever, with a new generation of tablets, cell phones and computers on the horizon. That rabid competition and fast cycle of obsolescence makes tech stocks an important consideration for virtually any equity investor.
How Has the Tech Sector Evolved Over the Past Decade?
Tech companies also can run into regulatory hurdles, as well. Many companies face scrutiny from regulators over consumer privacy, security and fears that the tech giants may be monopolizing certain industries. This scrutiny, as well as economic uncertainty, can cause the stock prices of tech companies to swing up and down more frequently than those of other sectors.
As a result, investing in the tech sector can be a bit riskier than it might seem at first glance. But with the right research and analysis, there are plenty of opportunities to find solid tech companies that can deliver consistent returns over time.
The technology sector includes any company whose products are based on or facilitated by the use of coding. At one point, the industry was almost exclusively hardware and software, but as more internet companies flooded during the dot-com boom, the category grew to include anything based on code, including media and content companies that used the web as their medium and internet-enabled businesses like e-commerce and the sharing economy.
A lot of the companies in the Tech Sector are focused on a consumer base, while others are business-to-business. For example, social media giants such as Google and Facebook have a B2C focus, while cloud-based IT companies like IBM have a more B2B focus.
The tech sector has become a global industry, so it can be affected by geopolitical unrest, raw material shortages and changing government regulations. This can impact the companies’ bottom lines, especially when they’re highly dependent on foreign markets. However, the companies that have proven their ability to adapt and overcome challenges have been the ones that have been able to continue to grow. The same is true for the companies that are able to provide simple, user-friendly applications and make it easier for consumers to adopt their offerings.