For some time the received wisdom about the gap between developments in the US technology market and the European market has deemed that we lag perhaps six to 12 months behind the US.
I'm concerned that in the Republic, we've only looked at the several-months-lag model from one perspective. We have conveniently forgotten that it applies not just to the inflow of new technologies but to the economic environment that supported the companies that brought new technology shifts and accelerations.
I firmly believe that we are only just beginning to feel the surge of the wave that has carried away hundreds of companies, thousands of jobs and millions of dollars in funding that backed new ideas in the technology industry in the United States. After several weeks in Silicon Valley - weeks of listening to the worried voices of Irish entrepreneurs in the US and Americans negotiating this altered world - I think we continue to pretend the crushing wave will surge right around this small island and hit, oh, Britain maybe, or why not the Italians? But certainly not us.
Don't kid yourself. At this point in the Republic, following on the failures of some good companies along with those that many would have considered questionable at best, we still seem to spend much of our time viewing these collapses as strange anomalies. Even some of those who should be best informed show surprising naivety. I spoke to one Irish person in the US last week - someone who should well understand what is going on - who expressed astonishment at the demise of one Irish company in particular. It's a good company, this person said. What could possibly have gone wrong, and so quickly?
Hello? That's the whole point: why should the Republic be any different from the US? The economic slump for high-tech companies is shockingly severe in the US and, increasingly, here. This is a time when good companies fail. Their job orders and contracts and clients are drying up. Many of those who just happen, in the normal course of company development, to be in need of second or third-round financing cannot get funding. Many are forced, in effect, to sell off the company at bargain prices to bottom-scavenger investors.
Many of the Irish companies were well-structured, highly regarded, successful internationally and just at the point of taking off. They weren't the sillier of the dotcoms, at whose demise we can cynically laugh. These were company deaths that have struck very, very close to the heart of our belief in ourselves as a small but promising high-tech nation. Every stricken technology company knocks one more piece out of a puzzle many determined and committed people have been building for a long time.
In the US right now, predictions are that 80 to 95 per cent of Internet-related companies will no longer exist in another year. Already in Silicon Valley, the carnage is visible in such simple but telling gauges as commute times - everyone I spoke to noted how much easier it is to get to work across the region with so many removed from the workforce. Rents have dropped to an average of 60 to 70 per cent of last year's costs as buildings sit vacant.
One Irish entrepreneur in San Francisco told me how companies can now get fantastically renovated offices in the SoMa (South of Market) district of the city at a fraction of the original cost. The area was once home to hundreds of dotcoms with big venture capital bucks to spend on refurbishing old brick warehouses and sweatshops. They were the epitome of cool. They are gone and no one even remembers their names.
A report by Rosen Consulting in Berkeley, across the bay from San Francisco, notes that vacancies in San Francisco stood at 2.3 per cent at the end of last year. By March, that figure had risen to 16.5 per cent. Some four million square feet of office space now lies empty.
Transfer that scenario here. Think of how many Net-oriented companies we have - and how few have yet been hit - nothing like those 80 per cent predictions for the US. I fear the liquidators will have plenty of business over the remainder of this year as that six to 12-month lag catches up with us and the rest of Europe.
On the other hand, I strongly believe that the Republic has a diverse and largely resilient technology sector, both in terms of the multinationals based here and our own companies. The entire industry is not going to pack its bags and leave or fold. The importance of the Republic as a European base is clear, simply from the fact that few of the big layoffs at many of the US companies have hit their operations here - that gloomy axe has largely swung elsewhere.
And yes, all indications seem to be that the European, Middle East and Africa or Asian markets that Irish operations generally target are still more robust than the US market. Thus, cuts have happened in the US, not here.
But we are not shielded from the downturn. In particular, if the Net sector is crumpling in the US, it will assuredly fold here. Many of our Net-related companies will be seeking new investment in coming months. They will be hard pressed to find it.
Of course, much possibility still lies in the future in technology. It will remain a, and perhaps the, central plank of our economy. The Republic will produce new and exciting companies and new entrepreneurs. The most capable, experienced entrepreneurs of today's failed companies will be tomorrow's national assets. They'll be back for another go.
But we have much to weather yet. Any technology company that is not spending long hours now working out its survival options in a harsher economy is turning a blind eye to an obvious and real threat. Any Government official who cannot understand why good companies are failing needs to get real and to stop snoozily drifting in that Internet bubble. And the Government and its agencies - the IDA, Forfas and Enterprise Ireland - need some serious and concrete contingency plans rather than acting as if it's business as usual.
It's not.
Klillington@irish-times.ie
