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The Hype Cycle - predicting the tech winners and losers since 2008

9 March 2016 7:23 PM

Things that are new are often hard to understand so there are often inflated expectations or predictions of doom. This will help.

Image credit - NeedCokeNow - Own work, CC BY-SA 3.0

A picture is worth a thousand words, they say. And when it comes to understanding the often baffling world of technology a picture certainly helps.

The Hype Cycle was created by the US IT Group Gartner to graphically show the five stages they noted that new technologies tended to follow.

It was created in 2008 and Gartner have plotted the relative placement of emerging technologies along the curve most years since then.

The stages are useful for those looking to invest in companies and services as it does offer some insight into what is simply hype and what holds the promise of long term value.

The 5 stages identified by Gartner

1. Technology Trigger - A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.

2. Peak of Inflated Expectations - Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.

3. Trough of Disillusionment - Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

4. Slope of Enlightenment - More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.

5. Plateau of Productivity - Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology's broad market applicability and relevance are clearly paying off.

Uber and the Hype Cycle - an example

Let's consider the relative coverage and developments with Uber which is arguably sitting somewhere between stage two and three.

Uber was not the first ride sharing platform but it has grown to be the best known globally, in part, because of the huge financial support it has received and for its rapid expansion to new regions. That growth assured it of lots of positive stories often loaded with hyperbole as writers tried to both explain what the service offered and considered the implication on transport companies. Initial reporting predicted the death of metered taxis and company employed taxi drivers. Both are looking unlikely with a pending US court case that may find Uber drivers are employees. This was stage one and two.

As the number of users, and its fleet of drivers, grew so too would stories about the platform's understandable short comings. Then stories about challenges to its legal standing and concerns over safety and level of regulation saw a focus of negative stories on it rather than the industry as people had come to view the ride sharing industry as being Uber. Despite a significant valuation of almost $60 billion, the operation costs suggest that the company is not profitable which places it firmly in stage three.

But its sheer size and moves by legal bodies to find a way to regulate the company, rather than ban it, suggests that the lessons learnt will see it consolidate its user base and begin, over time, to define the new normal and move into a profitability phase, stages 4 and 5.

9 March 2016 7:23 PM

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