For the past ten years, technology companies have been in full swing, investing heavily in new projects, people, and resources. While the sector has celebrated meteoric success from many of its players, the tides are beginning to shift as the focus turns to a new set of benchmarks— profitability and sustainability.
Kevin Kruczynski, investment manager at GAM Investments, recently weighed in on how this newfound emphasis on profit may benefit the sector. He suggests that this trend will offer an attractive proposition to both current incumbents, and those keen to join the space.
Kruczynski argues that while the current environment of compressed margins presents a challenge to established players with more mature markets, it also affords them a new range of opportunities. Companies which can prove their mettle in this new economic climate will be rewarded as they busily work at streamlining existing businesses and shifting capital away from less-successful ventures. With higher profit margins and the potential for increased earnings per share, these players stand to gain significantly.
New entrants into the sector offer an equally thrilling proposition. In a market with more judicious investment and reduced competition for investor dollars, there is increasing scope for new companies to deliver credible returns on capital.
Kruczynski further opines that, in all likelihood, the financial benefits to those who seize the challenge of this changing industry will extend beyond just immediate payoffs. With increased attention to both cost control and return on investment, technology companies could become more strategic with new product offerings; leading to an increase in both innovation and costumer experience.
In conclusion, Kruczynski suggests that the return of an increased focus on profitability within the technology space could provide a stable environment for companies to prosper. And those that meet the challenge will no doubt reap the rewards— increasing earnings, cost efficiency, and the potential for forward-thinking innovation.