Recession around the corner? Doom doom doom… or not.

I read a great article in the Financial Times yesterday about the fear of recession, which must currently be hovering above the heads of everyone over in Silicon Valley. Just in the same way that in 2000 the tech giants tried to play down the likelihood of one taking place, we see even more alarming evidence through this constant dominance game play that’s taking place. The ‘Microhoo’ frenzy, the deeply complex politics that surrounded the 700 mhz auction, the ways in which different companies did or didn’t roll out all/some of their products at CES or the mobile device conference, talk and rumours that float around forums and blogs of mergers and alliances: these all have seeds of worry sewn into them, that to many are beginning to look like more than just the regular state of play.

My view is one of “so what?” because we passed through one recession at the start of the millennium and the other side of it has seen some awe-inspiring innovation. If this next one does happen, I hope it makes some of the giants think about consolidating their positions and looking to longer term and more sustainable strategies. And I really hope that some of the startups that hit the scene as it kicks off make it through to the other side so that we get to see the innovation boom on the up-curve. It would suck to be a founder and watch your idea drown because of bad timing.

The last recession came after the crazy boom/bubble of the dotcom. What is this one following? Certainly innovation in the PC makers domain, and what’s cool for them is that the revenues and cash flows of these companies is much higher and more stable than it was for the poor dotcoms that had to pass the rigors of the 2000 recession.

I’m not worrying for companies like HP and Cisco who have provided commentary on what they see on the horizon, because I’m optimistic any slump will be short lived. It will force some of the giants that have been toying with acquisitions to stop, take stock, evaluate their position, and develop inwardly – ensuring the integration and compatibility of the services that all their subsidiaries provide is adequate to move forwards once the other side of the recession is reached.

Really the biggest sector that will feel the heat of a potential recession is the advertising, search and social networking world. The Facebook craze has passed, and people are just waking up to the quantity of personal data that’s been created in the mean time, which is causing concern and making many review their use of social networking services. Facebook are fast becoming yesterday’s news because everything that everyone was really looking forward to with the company has happened – they have launched; half the online world has signed up; a platform/API has been launched; applications have come into our lives, annoyed us, and been tossed into an optional second page of our profiles or plainly deleted; Microsoft has bought a slice of the ad revenue cake (hello M$, what are you doing with this??); a program caused scandal with our personal data and shocked a realisation as to how open our details are to the world; and now we just wait for … what?

Google have spent their time since 2000 just growing and buying, almost in a whimsical way. They, for me, have been the most fun to watch in an acquisitions and general game play sense. They’ve definitely got the assets to chide them through this possible period, but what’s going to be their first move on the other side? I’m frantically waiting for Google to shock me. I’d be really pleasantly surprised if they could release an Amazon S3 rival and an Apple mobile device running their own OS on their own network. When you think of all it’s achieved, it’s amazing to think that their core business is still search and advertising. I’m looking to Google for a solution that keeps both consumers and businesses connected to the Cloud wherever they are and whenever they need to be. Someone wrote an article today that I got in the GigaOm daily email saying they believe Google should buy Adobe to gain their resources and knowledge, but they were looking more closely at AIR. Surely though, the potential that that kind of acquisition has is more complex and incredible than just AIR, but it’s a good point. Microsoft, too, would benefit greatly from adding Adobe to their portfolio.

Whatever way you look at it, if you’re a decision maker in the valley right now you should be looking to cut costs and push for the greatest possible market share. Startups – if you haven’t already, get your venture funding on speed dial. If today’s article in The Guardian is to be believed, the “Queue for the soup kitchen may start here”.