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The Almighty Buck Technology

How Does a Poor Economy Affect Tech Innovation? 302

Posted by kdawson
from the counter-cyclical-investing dept.
sshuber writes "It's no secret that the US and other parts of the world are currently having some economic problems. How is this affecting new technologies under development? With the large numbers of layoffs, are we seeing projects, such as things under R&D, that are being axed? Are companies playing it safe and sticking with what they know sells in lieu of pushing the envelope? Finally, how is this affecting the open source community, either positively or negatively?" A lot of open source work happens with the backing or at least the sufferance of corporations. Do laid-off tech workers contribute fewer cycles to open source projects, or more?
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How Does a Poor Economy Affect Tech Innovation?

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  • by ergo98 (9391) on Tuesday May 27, 2008 @03:23PM (#23560527) Homepage Journal
    There's a lot of foreboding potential out there, and a lot of big numbers have been lost on the market...but the numbers just don't seem to support that poor of an economy.

    Yet, at least.

    Nonetheless, everyone keeps talking like the world is in the depths of a worldwide recession.
    • Re: (Score:3, Interesting)

      by everphilski (877346)
      There are some who claim "it's" over already, based on historical indicators that have proved relatively reliable in past recessions.

      no one really knows [cnn.com], I guess, is the answer, but "recession" is such a blanket statement it can't (and doesn't) apply everywhere. For example, Alabama home prices have gone up year-over year aprox. 5%, and the woods and fields around my home are still being torn town and built into subdivisions, even in this so-called "recession". So there are still people out there building
    • by Chapter80 (926879)
      Where are my mod points!

      This whole submission is based on the premise that "the US and other parts of the world are currently having some economic problems."

      While I won't disagree that there are "some" economic problems, I think the amount and severity of economic problems are minimal. If you think the current economy is in bad shape, then you are listening to the political candidates too much.

      I doubt that there has been a time in the history of mankind has the world been so prosperous. Sure, pocket

    • by nurb432 (527695)
      Depends on where you live and what your areas dominate market is.

      For some of us, our area is struggling. Others, are doing just fine.
  • by Alex Belits (437) * on Tuesday May 27, 2008 @03:24PM (#23560543) Homepage
    ...my productivity on pretty much everything taken a huge nosedive.
    • Re: (Score:3, Funny)

      by argent (18001)
      I was thinking I could do some work while looking for work, but looking for a job is a full time job.
  • by InvisblePinkUnicorn (1126837) on Tuesday May 27, 2008 @03:25PM (#23560547)
    In a sagging economy, people couldn't care less about new tech. The only way I could see a poor economy effecting tech innovation is if the new tech will clearly effect a cost reduction to the consumer. Without those effects, tech innovation will continue to be negatively affected by the current economic downturn.
    • Heh. (Score:5, Insightful)

      by SatanicPuppy (611928) * <.moc.liamg. .ta. .yppupcinataS.> on Tuesday May 27, 2008 @03:55PM (#23561099) Journal
      So what you're saying is, either it will effect tech or it won't? You must be an economist.

      The first thing you want to do when you're belt tightening is cut jobs; employees are huge overhead. But how do you cut jobs when the work still has to be done?

      Answer? Automation. If you can't automate, you'll outsource, and outsourcing itself often requires new technology.

      When the bubble popped, a lot of tech people took it in the shorts, and since that's the last big economic wobble, it's the one everyone is thinking about. But in reality there is no guarantee that a downturn will be bad for tech, or tech industries...It depends on what sectors experience the lowest growth. (Sadly, I do economics too.)
      • Re: (Score:3, Interesting)

        by shbazjinkens (776313)

        Answer? Automation. If you can't automate, you'll outsource, and outsourcing itself often requires new technology.

        It's surprising to me that an economist would say this, because as an engineering student I always believed it until I took economics. Automation involves a huge setup overhead and a few more expensive employees for maintenance. In the factories I've worked in they will throw a bunch of "temporary" employees in places where there were previously full-time employees making 2-3x the "temp" wag

  • Depends... (Score:5, Interesting)

    by EastCoastSurfer (310758) on Tuesday May 27, 2008 @03:31PM (#23560647)
    When gas was 99c/gallon, people weren't all that interested in new fuel technology. Now with oil going up and up, I expect we'll finally start seeing some real break throughs in alternative energy research.

    OSS should also benefit from a slower economy. Why pay MS 100k for MSSQL licensing when I can get postgres?

    Innovation won't stop and will continue to happen. It just might be in different areas.
    • by blhack (921171)

      When gas was 99c/gallon, people weren't all that interested in new fuel technology. Now with oil going up and up, I expect we'll finally start seeing some real break throughs in alternative energy research.

      Well....consumers weren't thinking about alternative fuel sources, but businesses sure as hell were. Businesses exist for one reason: money. Oil was the cheapest, most cost-effective way to get from Point A to Point B for a long, long time. It isn't as though energy-from-dandie-lions has existed for all this time, and the "big evil corporations" have been ignoring because they like pissing their money into the pockets of oil tycoons.

      The rise is gas prices has caused consumers to start wanting hydrogen c

    • Re: (Score:3, Insightful)

      by hoppo (254995)
      This is an excellent point. Any situation will bear golden opportunity for some. For every period of expansion, there will always be some period of recession that follows. During the expansion time, you see innovation in "newsworthy" areas -- new, cutting edge products that are years out from being monetized. During recession periods, the innovation shifts to less exciting areas -- efficiency improvements, etc.

      Look at the paid search space. It was most likely an inevitability that the market would grav
  • by daveywest (937112) on Tuesday May 27, 2008 @03:31PM (#23560657)
    Consider the small telecommunications company I work for. Our big projects are years in the making -- like trenching a fiber optic line across 3 states through a mountain range. You can't just put that on hold for 2-3 years.

    We're cutting back on extravagances. I'll probably wait one more year for the new computer I was supposed to get last month.

    An economic downturn will kill an already unhealthy company, but a good employer with a stable balance sheet knows how to weather the storm.

    • by msimm (580077)

      but a good employer with a stable balance sheet knows how to weather the storm.
      *cough* pink-slips
  • by gehrehmee (16338) on Tuesday May 27, 2008 @03:33PM (#23560685) Homepage
    It's been pointed out recently to me (at least here in Alberta, Canada), that university enrollment drops when the economy's strong, and picks up when the economy slows. There's at least a couple factors here. One, when the economy's not doing great, a university campus is a relatively secure place to be while you wait out a temporary drought. Secondly, while the economy's doing good, it's generally easy to get a well-paying job, which presents a stronger competition vs the academic route. On that note, the economy's looking pretty rosy up here right now, so we're definitely looking for potential students at the University of Alberta's Computing Science department! [ualberta.ca]
    • Third, there are a bunch of girls in their late teens and early twenties walking around in small tops and short skirts.
  • My employer (Score:3, Interesting)

    by trrwilson (1096985) on Tuesday May 27, 2008 @03:34PM (#23560695)
    My employer let go of 90% of the future projects staff, which equated to 75-90 people. No VoiP, or WiFi in the near future, PC/Laptop refreshes were put on hold, server refresh abandoned, the plan to change the entire server OS on file/print servers from 2000 to 2003 was abandoned...and some other stuff that I can't remember.
    • by Culture20 (968837)
      Which will equate to servers and workstations dying in three-four years, and business shutting down for a day or two while backups get restored to a new "server" purchased from your neighborhood brick and mortar.
      If the loss of revenue is less than the cost of replacing those machines, then your PHB is a genius. I'm not a gambling man, though.
    • To me, that looks like pure panic. In the long run every one of those actions is going to cost them. Luckily, the place where I work is showing no signs of panic. The only action taken has been to let a few underperformers go, they're still planning on hiring 400-500 new engineers this year.
  • workers (Score:4, Insightful)

    by lupis42 (1048492) on Tuesday May 27, 2008 @03:34PM (#23560709)
    I would expect at least some laid off workers to do some open source work just to keep their skillset current.
    • by eln (21727)
      Probably some of them that have sufficient savings to weather a long period of unemployment, but I think people like that (even though 90% of Slashdotters claim to be in that position) are in the minority. Many more will likely make finding a job their full time job, through interviewing, networking, and looking for short-term contract work to fill the gap in earnings.

      Either that or they'll make posting to Slashdot their full-time job and just collect unemployment checks, but unemployment benefits won't ca
  • by Cutie Pi (588366) on Tuesday May 27, 2008 @03:35PM (#23560723)
    Have there really been large numbers of layoffs in the tech industries? I thought many tech companies, particularly those with large overseas businesses, were doing pretty well. See IBM for example.

    This whole question reeks of someone wanting the Slashdot community to do their research for them, starting with some pretty questionable assumptions. Maybe the answer to this question is better served by looking at how past recessions hit the tech industry and their innovation output.
    • by Lord Ender (156273) on Tuesday May 27, 2008 @04:00PM (#23561169) Homepage
      Employment for health care and IT is still very strong. If you were a HELOC pimp, you're in trouble; but you never really contributed anything to the economy in the first place, so count yourself lucky and go get a real job.
    • Maybe the answer to this question is better served by looking at how past recessions hit the tech industry and their innovation output.

      Well, if this [wikipedia.org] is any indicator, it should take about 250 years for the tech sector to pick up.
  • Is tech innovation about sitting down one day and saying "I'm going to invent tech." Or is it really a convergence where a solution in one field is applied to problems for another. I suspect the latter, and it takes young, bright minds to want to make those connections. Let me be clear, talented people do exceptional work through their middle and senior years, but revolutions are the domain of the young.

    Well, cool, I dodged the question mainly because I don't know. We've had a downcycle every 7-8 years sin

  • by bsDaemon (87307) on Tuesday May 27, 2008 @03:41PM (#23560821)
    We're having economic troubles because people are dumb - not because something has actually happened.

    "oh woe is me, the housing market is collapsing!" no its not. Now's a great time to buy. In fact this is really the sort of situation that benefits people in their mid-late 20s. Real Estate values were inflated before. Now those people can more easily afford to buy houses.

    now, back on topic... if there is any sort of actual shift taking place, it is not likely to be the big corps that want to try and ring every last drop out of "business as usual" who will benefit.

    If people perceive times to be tough and getting worse, with regards to the environment, energy "crisis," etc - then the people who can move in and offer solutions to those problems are going to win. They're going to attract the money from the people that have it to get the stuff to market.

    I'd like to think that in the next 5-10 years we're going to see a lot more people interested in home power generation -- solar and/or wind, appliances that use less power, etc.

    We're also going to see people and companies wanting solutions which provide maximum advantage for minimum cost. That means we'll see a lot more open, standards-based solutions to problems. We're likely to see more foss solutions to software problems, open hardware solutions to hardware problems, etc.

    Likewise, if programmers are now no longer employed by megacorp a, they'll likely have a few more hours a day to contribute to foss projects -- or start smaller ventures based on foss solutions to some of the more pressing problems of our day, and into the future.

    or maybe i'm just high
    • by mcmonkey (96054)
      You may be high. And if so, I'm jealous.

      But you are correct--is it not human nature to take advantage of good times to plan for the bad. Where was the interest in alternatives to the gasoline-powered auto when oil was $30 a barrel?

      Yes, some forward thinkers were working on hybrids or alternative sources of hydrocarbons such as biodiesel and ethanol, but those efforts were certainly not the front page news they are today.

      Even those technologies with no apparent practical utilization will see their features
      • Re: (Score:3, Funny)

        It's the programmers who are securely employed who will have the time and energy to contribute to open sores.

              actually it's usually people with an overactive social life that contribute to open sores.
    • by Socguy (933973)

      "oh woe is me, the housing market is collapsing!" no its not. Now's a great time to buy. In fact this is really the sort of situation that benefits people in their mid-late 20s. Real Estate values were inflated before. Now those people can more easily afford to buy houses.


      Great plan! Now lets go find a bank who want's to give me, a late 20something, a mortgage.
      • by bsDaemon (87307)
        Get your parents (early 60-something) to co-sign? There are ways. I'm too much of an abused worker right now, and going to hide out in school again, to worry about it right now... plus i'm still a month shy of 24.

        yay for "early 20s" -- like being a teenager, only with my own car insurance.
      • Coworker of mine is 22 and just got approved for a mortgage. Have you even tried? If so, why were you denied?

        I just got a mortgage 3 years ago at 22, but admittedly it would have been during the whole "era", although I got a traditional mortgage through a traditional bank. It's not hard to have good credit in your early 20's.
      • Save your pennies if you really want it. 15% down payment and an adequate and steady income (the old standard was that you didn't buy a house that cost more than three times your yearly salary) and the banks will be knocking down your door.
    • Re: (Score:3, Insightful)

      by SatanicPuppy (611928) *
      Well, as to your first point, yes and no.

      There is a real issue; people losing money on the stock market, people dealing with fuel and food costs, people losing money on real estate...All those things mean that there is less money running around in the economy, and less money means economic issues.

      Now generally recessions are a problem of herd mentality. Plenty of people who haven't lost any money are deferring purchases because they're worried that they may lose money, and that restricts the flow of money f
      • by bsDaemon (87307) on Tuesday May 27, 2008 @04:27PM (#23561613)
        A few banks did some stupid things which should have been illegal and sold bad debts (mortgages to people who obviously couldn't afford them) to investors.

        One they started getting fallout from being retards, more investors jumped ship. A lot of those people dumped money into oil and other comodities, running the price up -- creating another bubble to burst. Of course, even at ~4.00 a gallon, it's still cheaper than 1 venti green tea frap at starbucks, which even with a b&n discount card at the one in the store costs 4.37. Gas is 3.97 here, so if I buy 8 fraps to get the same volume, it costs me $3.20 more, which is a lot closer to a second gallon of gas than it is to another stupid frap. Gas is over 80% cheaper by volume than Starbucks is.

        The Federal Reserve then kept lowering interest rates to "encourage growth" (because for some reason anything less than "growth" (and even then, the growth has to be at least thiiiiiiiiis big to count....) counts as "recession" these days), but that just created inflation and discouraged foreign capital investment, lowering the dollar's value.

        If I were Congress or the President, I'd make trading petrol futures a capital offense. Margin trading would be earn you public floggings. Frankly, what I might do to the federal reserve board would probably have gotten me kicked out of the SS for inhumane treatment, I hate them so much for crimes of stupidity.
        • Commodities are irritating to a lot of economists, especially in times like these. It's the big finance equivalent of hiding your money under your mattress.

          Lowering rates is weird; there is the risk of inflation, but frankly, the real lowering of the value of the dollar is our national debt, and the fed is really for trying to manage our economy by controlling lending rates.

          Gas is relatively cheap; we're paying now effectively what europe has been paying for decades. In the long run, it's still enough to drive the adoption of alternatives, and that's beneficial for our economy.

          We're the best placed in the world to come up with a good, marketable fuel solution, simply because most other countries have artificially screwed with their fuel demand. China and India are subsidising cheap gas to fire their economies; this prohibits the adoption of a solution, because economics don't favor one. On the other side, Europe's historically high fuel taxes have already pushed them to adopt fuel efficient cars and public transit...They're not going to feel the pinch like we will.

          Interesting times.
          • Re: (Score:3, Informative)

            by nicklott (533496)

            Europe's historically high fuel taxes have already pushed them to adopt fuel efficient cars and public transit...They're not going to feel the pinch like we will

            Wanna bet? Diesel is > $10 a gallon in most of the UK right now and 25 years of right wing governments have pared public transport outside london down to an unusable skeleton. I can assure you that people are feeling the pinch: http://news.bbc.co.uk/1/hi/uk/7420792.stm [bbc.co.uk].

            High taxes to try to discourage consumption are all well and good when the underlying price is low but now it's gone through the roof there's a very real danger that the economy is going to be seriously harmed. Many companies, particula

      • Now generally recessions are a problem of herd mentality. Plenty of people who haven't lost any money are deferring purchases because they're worried that they may lose money, and that restricts the flow of money further and effects industries that were not effected by the original troubles.

        Or maybe it's caused people to reexamine their priorities.

        I pay about as much for gas as I did last year at this time because I drive a lot less now than I did when gas was less costly. I'm lucky in that I live in an

    • Now's a great time to buy.

      Sorry, all of the froth isn't off the market yet. Stay out until this Autumn when the folks who have sat on the property through the prime Summer selling months get desperate. Then take your time and place an offer next Winter or so. Lending should be loosening up a little by then, too. Also, pick properties close to where you are likely to work - the price of gas isn't going down - or close to where other people are likely to work to reduce the potential price downside on you

    • Re: (Score:2, Interesting)

      by a1056 (1296899)
      In a way you're right, this is a good time to buy. But this assumes two principles. First, you do not have to sell your current home to buy a new home. Second, creditors are now being very conservative with their investments, so you have to have impeccable credit, savings and income to get a mortgage these days.

      That is also why many economists think this will be a time of very slow growth/recession, because mostly investors will only invest in knowns, safe investments that have guaranteed rates of return.
    • Re: (Score:3, Insightful)

      by penguin_dance (536599)
      I think quite a LOT of this doom and gloom is coming from the media and those who want to effect a change in political parties this year. No, everything is not perfect, but it's not going down the drain either. The problem is when you have a lot of people talking down the economy, it has an effect. Every problem or belt tightening becomes another sign that the economy is going downhill.

      One of the problems we're facing regarding the housing market is of our own making and the banks being able to create all k
  • In any company I've worked with, I've seen tech project put on hold, usually more about maintenance than the new projects.

    An email server may not needed to be upgraded, but a new wireless VOIP solution that allows for reduced cost of maintenance and usage most likely would be pushed to the front. Any innovations that can reduce cost and either maintain or increase productivity would be a sure thing in a recession.

  • In my career line of work (read: the full time job that pays my bills) I have seen only a few layoffs, however there have been a lot of budget cutbacks. Once we had our kitchen area/break room stocked with sandwhich fixings, snacks and fruit - now we have an empty area where you can bring in your own food. We've cut out almost all of our "social" activities as far as events and department outings. While I've seen an increase in our email blast campaigns and post card mailers, we've cut the amount of exposur
  • Things will probably be similar to the time period right after the dot-com-bust.

    Some money will still be spent on new development but projects will be chosen carefully.

    I would hope that more companies will turn to open source software. As a consultant, I sometimes find it frustrating when customers are so concerned about protecting their IP instead of their profitability.

    A bit obvious, but it is difficult to make money from commonly available data and services.

    After the dot-com-bust, I found myself getting
  • by Russ Nelson (33911) <slashdot@russnelson.com> on Tuesday May 27, 2008 @03:58PM (#23561139) Homepage

    Large numbers of layoffs
    What the fuck are you talking about? April 2007 unemployment: 4.73M, March 2008 unemployment: 4.49M, April 2008 unemployment: 4.68M

    What large numbers of layoffs?
    • You also fail to realize a couple things , what is the number of people who have given up looking for jobs after thier unemployment has run out ?

      Personally that is me , I gave up looking for work since every one wants to take advantage of the folks that are looking for work.

      Tightening my belt and my wife working a little over time when she can and we are getting along while I am trying to get some training for other then IT.
  • If your software development budget is being slashed, it would make sense to take advantage of the large pool of work being done at no cost to you. There are costs associated with customizing for your particular needs, but compared to an actual development infrastructure, it's minimal.

    Depending on the business, it adds more weight to the money-saving aspects of open source alternatives, but it's not a "slam dunk" reason to switch wholesale. I work with a lot of small businesses, and I'm set to push harder
  • I know people are probably going to mark me flamebait or troll on this one, but I have to point out that open source doesn't necessarily equal tech innovation, and in my opinion, it's probably a fallacy to think so. Tech innovation is a lot more than bits and bytes and computer code. To innovate, you generally need resources, and often exotic ones at that. For example, mag-lev trains using the next generation of iron-arsenic superconductors aren't going to be developed by open source, because they need m
    • by pembo13 (770295)
      Did someone suggest that open source was equal to tech innovation?
    • by cheros (223479)
      I just realised I could use some exotic resources :-).

      Joking aside, I think you're not quite answering the question (or maybe I looked at more constraints than you in answering :-). The original question felt IT related, you're talking about the heavier industries which require pretty solid investment to do *any* R&D.

      IT, OTOH, has become cheaper and cheaper, and despite the desperate attempts to keep us away from all that computing power (Vista is a good example), coders are finding way to use the powe
  • If anything, tech seems like its speeding up (at least to me). We're seeing OSS projects going from things that nerds run on their home networks for fun in the their off time, to things that nerds run on their massive corporate networks for fun (and profit) during their on time.

    Also, most of the old-time, tech-hating PHB types have retired, and big, corporate-network apps are starting to take over. "Email servers" have been replaced by "collaboration software". Telecommuting is becoming more and more com
  • will surely reduce the number of startups - but most of those that erm "don't start" will be the ones with less of a chance of success (i.e as a completely random guess, 50% less startups leading to only 30% less successful startups). People still have money to invest (it didn't vanish anywhere) they're just being more careful where they put it. On the point of OSS productivity. I think if you're not working then you're probably going to be sitting in your underwear on the sofa with a beer. If you're in a s
  • A poor economy makes it impossible to throw money at a solution and hope it to work. This has lead to the rise of Linux-based UMPCs such as the EEE and the OLPC project. When someone doesn't have $2000 to spend on a shiny new Vista computer with the 4 gigs of RAM it needs and a quad core CPU, they start looking at what they really need, and if they can save $50 by not having Windows and instead have Ubuntu, they will. If they can save $300 and buy a low-end laptop like the EEE rather then a more powerful on
  • Iterative types of innovation, such as the kind that R&D departments do is one thing.

    2 guys in a garage style innovation, is another thing entirely.

    I'd bet that second kind - the kind that then to revolutionize, rather than incrementally improve - will be the kind to suffer more (especially in the U.S.) when there simply isn't enough financial stability amongst the working class, which produces kids who become the creative class, to create the kind of free time and optimism that's needed for those peopl
  • Project shifts (Score:2, Interesting)

    by Anonymous Coward
    I work at a small software shop, and we write custom software.

    I've noticed a shift in our clients' thinking. New projects have to save the company money overall and more requests to include OSS libraries and products.

    Personally for me, I like the fact we're including more OSS products (MySQL, Postgres, Linux, *BSD, etc...). When I first started, I was a little out of place due to the fact I had spent so much time working with open source. Now that experience is useful to my company.

    But overall new softwa
  • If you have extra time, you want to stay in 'shape' so you might as well code and contribute.

    OSS can help you make contacts too.
    • It's hard to say without large studies, I suppose, but I have a hypothesis that (note, I'm not an economics student or scientist, just my general observations/musings here, as a layperson), not just in software development, but in general, recessions and depressions pave the way for the next economic boom cycle. As this applies to software development, I think the parent is right - just because you might not be working on a job that is directly related to software development, doesn't necessarily mean you a
  • I work for a company that is 100% open source based, and markets itself as everything open source to whatever needs our clients need. Usually this is either web presences, or local sysadmin work for businesses, schools, or non-profits. Anyway, this came up at our last monthly meeting, someone asked the CEO what he thought a downturned economy would mean, and the summed up answer was, it'll be good for business because more commercial companies and even non-profits are contacting us for products and service
  • by nguy (1207026) on Tuesday May 27, 2008 @05:50PM (#23562849)
    The barristas-turned-perl-coders go back to making coffee, graduate students go back to graduate school, product cycles get longer so people have time to actually think, and investors stop throwing money at every stupid idea and actually start rewarding innovation.

    A bad economy is when innovation happens.

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