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N.J. Tech Year 2000: Review and Forecast (1/2001)
by Douglas Dixon
Year 2000: It was the best for dot-coms, it was the worst for dot-coms. The year threatened to begin with a Y2K crash, but the plummeting sound instead came from the NASDAQ. But even with all the turmoil, the march of technological progress continued unabated. Hot areas like wireless communications and biotechnology also continued to grow, especially in the New Jersey area.
The year began without the predicted Y2K crash, which turned out to either be an industry-wide hoax, or a compelling demonstration that you can do software engineering successfully and on schedule, as long as you have the full attention of upper management. Many companies finally had the opportunity to carry out long-delayed system maintenance and upgrades, and are much better positioned for the demands of the Internet economy in the coming decade.
New Jersey Technology
But as the air finally bled out of the dot-com economy last year, even the stocks of technology stalwarts like Intel and Microsoft took a beating, after growing relentlessly upward over the past decade. Intel reached over $75 last year before dropping over half its value to $35, and Microsoft, with additional anti-trust problems, reached over $119 before dropping even more to $48.
"It's been a very tumultuous time for technology companies," says Maxine Ballen, president of the New Jersey Technology Council (www.njtc.org). The NJTC tracks approximately 11,000 N.J. technology companies in its database. "We see 20 percent turnover per month," says Ballen, "mergers and acquisitions, companies moving out of state, and some out of business."
Wireless - Verizon
Last year saw an explosion in the availability and adoption of wireless phones, and wireless data access. Cell phones are getting smarter and Web-enabled, and handheld PDAs are getting connected.
"The convergence of wireless technology and Internet access has been a very exciting development this year," says Charles Hand, president of the New York Metro Region for Verizon Wireless, and a graduate of Rutgers University
Verizon only began marketing Web-enabled handsets at the end of 1999, and already near the end of 2000, 40 percent of the handsets sold at retail were Web enabled.
The Yankee Group projects that there will be 48 million Web enabled digital phones around the world by 2002, and 204 million users by 2005. "So it's really just beginning," says Hand, "but already there's a great deal of utility and functionality in the applications."
The next generation of wireless data service, the "third generation" or 3G, is on the horizon. In a trial conducted in the Trenton area with Lucent, Verizon demonstrated download speeds 10 times faster than what is now available. "A peak transmission rate of about 153 Kbits per second," says Hand, "which is more than twice of what is available on a 56 K modems for dial-up, and significantly faster than 14.4 K for current wireless."
Biotechnology is another major growth area, especially in our area. "This is an incredibly exciting time for biotechnology in New Jersey," says Debbie Hart, executive director of the Biotechnology Council of New Jersey (www.newjerseybiotech.com). "Over the past few years, factors have been building and are just now coming together to set N.J. up to become the biotech powerhouse it should have been all along."
Hart lists as key factors the State's commitment to developing incubators, Prosperity New Jersey's Innovation Garden State campaign, and education programs that are being developed to focus on biotechnology or pharmaceuticals, including the Rutgers University Pharmaceutical MBA Program with the HealthCare Institute of New Jersey, Burlington County College, and NJIT.
"At the same time, some NJ companies are becoming higher profile", says Hart. "This past year several New Jersey companies have been able to raise significant amounts of money, including Medarex, Celgene, Orchid Biosciences and Enzon."
So, what can we expect from 2001? "It is a very interesting time," says Ballen of the NJTC, "we cannot take anything for granted. The trends are still positive. The hiring trend has eased up slightly; more people are out there and available, although there is still a lack of qualified programmers. But access to financial capital is more difficult."
But, in the end, Y2K will be remembered most for the dot-coms. "The IT dot-coms got called on the carpet," says Ballen. "Some of the cockiness and attitude needs to be tempered. It's a more realistic environment now."
The year saw the demise of high flyers like Pets.com, which fell from a high of $14 per share last spring to under 25 cents per share. At the end, its most valuable remaining asset, and perhaps the enduring symbol of dot-com excess, was the Pets.com sock puppet.
New Jersey Technology Council
Biotechnology Council of New Jersey