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Market conditions right for 'digital bubble', warns KPMG

The convergence of media and communications could throw up so many unmissable opportunities and false dawns-of-new-eras that the collapsing weight of expectations could create a new "digital bubble" warned KPMG yesterday.

The convergence of media and communications could throw up so many unmissable opportunities and false dawns-of-new-eras that the collapsing weight of expectations could create a new "digital bubble" warned KPMG yesterday.

A paper, "The Digital Bubble: Balancing Operational Challenges With Growth", identifies the critical market conditions that are applying tremendous pressure onto media and communications companies.

The key issue, said report author and convergence partner Tudor Aw yesterday, was whether companies can execute the operational aspects of their digital strategies. Aw said convergence is not only taking them into uncharted business areas, but they appear to be taking leave of their senses. "Technology companies find themselves in the content business, dealing with companies with limited financial track records. And media companies are getting dragged into technology," said Aw.

The digital market is displaying the classic symptoms of an economy about to descend into bubble madness, he warned. Excess capital, investments based on speculation rather than economics and demand exceeding investment opportunities are all characteristics displayed just before the dot com bubble burst.

"When technology revolutions developed before, management [failed when they] over focused on top line growth and increasing market share," said Aw.

Dot com despair >>

Paradise lost >>

Comment on this article: computer.weekly@rbi.co.uk

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