News & Updates

The App Economy: The next bubble to pop?

By James MacTavish / Oct 05, 2014

App Economy Bubble

The dot com crash of the early 2000s held with it a lot of valuable lessons. As 1995 found internet creeping into homes investors were frenzied at the untapped economy ahead of them. With great expectations came with it over evaluations and blind investments that naturally saw the Nasdaq Composite drop 78%. Now with the rise of the app economy and the valuation of apps like SnapChat at $10 Billion from KPCB without a clearly presented monetization strategy, it begs the question, what makes this different from the overvalued dot com crash of the early 2000s?

With the rise of the internet and the advancements in computing and digital storage, the transfer of information has rapidly excelled from being transferred from books and teachers to now machine to human. Information is now stored electronically in a variety of methods, servers, web pages, apps, e-libraries and more, making the access to information all the more seamless.

As advancements in robotics and Artificial Intelligence continue to advance along with computing, transfer of information will take a dramatic shift from machine-to-human (M2H) to machine-to-machine (M2M). Objects that once acted singular from one another will now all interplay with one another in our lives outside of communicating with us. Our vehicles will monitor system diagnostics and seamlessly report issues to server databases at our dealerships and issue an appointment. In home automation, thermostat units will dynamically adjust temperatures within your house as the GPS from your car enters a 1 mile radius of your house, warming your house to your acceptable temperature upon your arrival at your doorstep.

The key element that establishes this type of (M2M) interplay beyond just being summed up as Big Data is the analysis and actions taken after this data has been transmitted. This is where apps fit in this new transfer of information. Apps will become contextual signals and sensors for our day to day lives allowing us to be the action point for all the machine to machine interplay in the background of our daily lives.

So is the App Economy riding a bubble that’s ready to pop? In a word, hardly. The app economy is still in its infancy only now starting to fundamentally change the way we live our lives. Although SnapChat’s $10 Billion valuation may seem high now and maybe even down the road, who knows how the app economy will evolve. Paired with growing software entrepreneurs, rapidly improving data speeds and hardware economies one thing is for sure, the app economy has all the essential components to become more than just a flash in the pan.