Software Bubbles in 2012

Some software bubbles are bursting, softly. Hopefully, 2012 may become the beginning of a return to normal, similar to the slow process being faced by the house market. Hopefully, people will realize that friends are not those you met once who like a silly comment you posted online. Hopefully, real friends will not like such pitiable comments, and instead send an offline message or make a phone call to the person and ask in a really interested way: “How are things going?”. Countries should run on activities that create value, not on Prozac.

Some advertisers are finally realizing that the information provided to them about social network users produces targeted ads. Yet, that doesn’t translate into a correlated increase in sales. Obviously, they have to realize that themselves: as in any bubble, it is not in the best interest of a series of man-in-the-middle to surface such information.

There is nothing more “bubbly” than the small form factor market: phones and tablets. Let’s face it: people that can live out a mobile or tablet today are only consumers of information, or producers of irrelevant posts in social networks. The most you can sell them is a movie, for about U$10.00. There won’t be investment decisions of 100 million dollars made without drilling down into the underlying information. Yet, what if you could offer them the delusion of importance, tied to a two-year contract worth north of U$2,000? Well, make them fell as important as they want, and give them the newest and more useful (or useless?!) device, as long as they keep the payments coming.

There is a problem with any business that depends on misinformation of customers: it only lasts for a while. People are realizing that not all of them make comments that will change the world, and that they can live without embarrassing themselves on social networks in return for less than 5 minutes of “recognition”. Most important is that economic failures of business models based on misinformation of customers are making investors wish for a little more than the fictitious number of “visitors” before signing the cheques funding absurd ideas. That is the key moment when a bubble starts to die: when the investors awake to the fact that they can no longer find more people to place in the basis of the pyramid scheme. The pyramid scheme of social networks and ludicrous phone contracts is finally reaching that point. Happy 2012!