It would stand to reason that the economic problems in the U.S. will spill over into the Canadian technology sector and cut into revenues from giants like Research in Motion, Nortel Networks and the wireless carriers.
Notice I did not say that’s actually going to happen. I only said it stands to reason, meaning if consumers and business executives behave in a rational manner, then the U.S. credit crunch is going to affect the Canadian tech sector directly and indirectly.
So what would happen if Americans behave in a rational manner? They would cut unnecessary expenses and pay off debt. This means that consumers, instead of watching YouTube videos on their wireless devices and sending each other photos over EVDO and HSPA networks, would get the cheapest data plans or maybe even forgo cellular service altogether. Businesses would still give wireless devices to users who actually need them, which would be subject matter experts, front-line sales staff or other workers dealing directly with customers who do not always have access to landlines when paying customers demand immediate attention. Restricting wireless access in this manner would probably reduce demand for broadband wireless services, such as EVDO, HSPA and WiMAX, which in turn would reduce demand for the equipment.
Canadian consumers and business decision-makers would behave in a similar manner if a drastic reduction in American consumer spending were to reduce demand for goods and services produced by Canadian exporters, which in turn would reduce their demand for goods and services – including wireless data – in Canada.
But few people behave rationally when it comes to spending money, which is why no expert is going to be able to predict how the debt crisis is going to affect the tech industry. Few consumers need to spend $50 a month on wireless data, but no one needs to smoke cigarettes or drink booze either. Can you name one tobacco manufacturer or brewery that went out of business during either the Great Depression or the recessions in the early 80s or 90s?
Surfing the ‘Net on your smart phone or PDA is cool and is addictive to consumers and executives alike. If you’re an IT manager, you’re probably getting demand for wireless data from powerful suits other than the front-line sales or product experts who need to be available 24/7 to customers. Perhaps the senior assistant executive vice-president of bottle washing, who spends half of his or her days working on PowerPoint presentations to potential customers and investors, is saving megabytes of data on to his or her portable device. Can you convince these people they don’t need a deluxe wireless plan? The carriers and equipment makers sure hope you can’t.
Any predictions of the future for the tech sector need to account for both rational and irrational behaviour on the part of consumers and businesses. What’s certain is any vendor that depends directly or indirectly on expensive wireless data plans will need to hope large numbers of people will use wireless data whether they need it or not.