The year 2008 wasn't quite the annus horribilis of the tech industry--that honor belongs to 2001. But it was close.
What seemed like a decent if uninspiring year for the industry, despite bad news from the real estate markets and creeping trouble in the financial sector, went south in September.
Not long after Lehman Brothers went into bankruptcy and the extent of the wreckage on Wall Street was becoming apparent, one of the first big tech companies to sound the alarm bell was German software maker SAP.
For people who follow the booms and busts of the tech industry, SAP's place among the first to announce earnings trouble was a shocker: big corporate software companies are supposed to be among the last tech companies to run into trouble. The theory is that customers invest in this sort of software to create efficiencies and save money while they scrimp on other technology, like PCs and new-fangled stuff like social-networking software.
But in this worsening recession, common wisdom need not apply. The modern tech industry has never experienced this deep of a slump in the overall economy, so how it will fare is unclear. Some fear it could be years until the economy--and the tech industry with it--rights itself. Others are quick to point out that tech has experienced neither the over-employment nor the over-investment of the dot-com years, and as a result there isn't as much fat to be cut now.
The caveat: the dot-com bust was for the most part self-contained. Non-tech industries didn't crash the way tech did seven years ago. This time around, it's everyone's problem, and there's little question tech will suffer. Already, Silicon Valley giants like Sun Microsystems, Symantec, and Applied Materials have announced major layoffs. Others, such as Hewlett-Packard, have politely asked their employees, in a cost-cutting effort, not to show up for work for a while around the holidays.
The question mark is what happens to start-ups and the venture capitalists who fund them. By now, the October tough-love meeting that venture capitalists at Sequoia Capital had with the companies in which they've invested is legendary. The basic messages were "R.I.P., good times" and start scrimping.
Now, there's even concern regarding the survival of some second-tier venture capital firms, as it becomes harder for them to call in money from their investors.
But don't get too pessimistic about tech: perhaps more than any other sector of the economy, the tech industry is accustomed to booms and busts. The PC bust of the late-1980s consolidated the industry around companies such as Intel, Microsoft, and Dell. The dot-com bust cleared the way for consolidation around the likes of Google and Yahoo. And through it all, Apple has risen and fallen and risen again. Perhaps a little culling of the Web 2.0 herd will allow hot, young companies like Facebook to thrive.
There's one other reason for a bit of solace: this time, no one is blaming the world's financial problems on the excesses of Silicon Valley.
Consolidation and financial uncertainty at the nation's largest securities firms will close some doors to tech companies aiming to go public, slow the process for M&A deals, and add more worry lines to tech investing.
At the Web 2.0 Expo in New York, just a stone's throw from the turmoil on Wall Street, it was hard not to notice the financial-industry meltdown.
Tech mergers and acquisitions fell by a third compared to a year ago. Decline fueled by credit tightening and havoc on Wall Street, says a new report by The 451 Group.
A shaky overall economy inevitably spells trouble for the tech industry. Here's a breakdown of how it could play out.
CNET News interviewed more than 20 executives, venture capitalists, and bankers to see what they think. While there's little consensus, one thing's for sure: they're plenty worried.
If you bought shares in most tech companies in October 1999 and sold them today, you would have lost money. And then there's inflation.
Online-advertising budgets are likely to be flat or decreasing, and companies such as Google and InterActiveCorp that rely on ads can expect to feel the pain, financial analysts say.
Whatever job cuts occur in the technology sector in the coming months, they're unlikely to be as deep or as lasting as the cuts that occurred in the dot-com bust.
Responding to the down economy, Cisco, Yahoo, Seagate, and others are forgoing booth exhibits at the Consumer Electronics Show.
Retailers looking for the annual surge in sales face rough going this year, as the economy crumbles and consumers play hard to get.
Follow the companies that are shedding workers with this layoff tracker, which is updated as news surfaces.
This 14-day series takes an intimate look at how the recession is affecting the companies and the workers of the technology industry.
CNET News follows the economic downturn and its impact on the tech industry, from the industry giants to the scrappy start-ups.