Rasmussen College Director Comments on Technology Bubble on WOFL

Amy Kaufeldt: All right, Mike. Thanks. iPhones, HTC phones, BlackBerrys, there is a whole bunch more out there. Are there too many? We have so many different types of gadgets that do practically the same thing. Is that going to hurt us in the long run? You remember back in the 1990s, the Internet business boomed big time, but not too long after, the bubble burst.

So could that happen for technology? Here with us this morning to dive into that issue is Rasmussen College Technology expert, Hap Aziz. Thanks so much. Good to see you, Hap. Thanks for coming back.

Hap Aziz: Thanks, Amy.

Amy Kaufeldt: All right. We all remember the 1990s. The internet bubble, and when it burst, it wasn't pretty. A lot of people lost their jobs.

Hap Aziz:That's right. Actually, the Internet bubble burst on March 10th of 2000, so almost 11 years ago.

Amy Kaufeldt: Wow.

Hap Aziz: Part of it is understanding what happened with the run-up, how the bubble inflated. A lot of it was built on business models that said we wanted to expand quickly, not necessarily selling any product. One famous example is Pets.com. They had the sock puppet commercial on the Super Bowl, I think it's Super Bowl XXXIV. They tried to sell pets products. They were selling at a loss. They spent roughly 20 times the money on marketing than they did actually on bringing in revenue. But every time they sold something, they took a loss, because they were trying to build mind share. That is something that companies today are trying not to do, which is spend more money than they bring in.

Amy Kaufeldt: So we basically, you feel like we have learned our lesson from the Internet bubble, because it wasn't that long ago. Perhaps that won't happen with technology?

Hap Aziz: We like to think that. There are some companies today that are driving the technology boom that survived the i\Internet bubble back then. Google, Amazon, they are a couple of examples. Google does a lot of technology acquisition and it also drives the Android operating system. They are very careful now when they vet businesses to see which they should buy, which they should pass on. Also, companies are looking at generating actual revenue. Facebook, I just read, its valuation is now close to $75 billion with a "b".

Amy Kaufeldt: That is amazing.

Hap Aziz: They have a revenue of right now around $2 billion. So rather than losing money hand-over-fist, companies are trying to actually have a business model that sees them bring in revenue.

Amy Kaufeldt: Do we have too many gadgets that all do the same thing? I know we talked about this, with iPads, just a week or two ago. Do we have too many gadgets?

Hap Aziz: We have a great selection of gadgets. I think right now, the cell phone usage in the United States is at 62 million, 34%, 35% of those folks have smart phones and they are downloading applications. What we are seeing is a selection of gadgets that gives the consumer a lot of choice, which is good. We are seeing some gadgets take off, like the iPhone for example or Motorola's Droid devices. Some gadgets don't take off. But what's happening is when those gadgets don't sell, companies are learning and producing gadgets that people actually want. Right now, I wouldn't say that there is a glut of gadgets or too many used. Those gadgets like cell phones and tablets are actually being put to use by people.

Amy Kaufeldt: All right. It is survival of the fittest.

Hap Aziz: It is.

Amy Kaufeldt: All right. Hap Aziz, good to see you, as always, from Rasmussen College.

Hap Aziz: Thank you.

Amy Kaufeldt: Thanks so much. Mike.

Mike: Amy, thanks.