The Tech Bubble Effects: How hype hides the real value of technology

Some tech trends burst into contemporary business and everyday life but fail to live up to people’s hype-inflated expectations. They expect the new technology to change the way things work, but they’re often disappointed.

Overhype generates an unreasonable amount of attention on early-stage technology from investors and media. Studies show that hype around technology shifts investors' focus away from actual business indicators to brand and technology awareness. Unfortunately, this is how tech bubbles pop up – and burst.

While many developments show genuine promise of forming the backbone of new, fast-growing industries, hype typically forces companies to rush and waste their resources and reputations. Some overhyped technologies still need massive testing and a well-established ethical and legal framework to overcome to land on solid ground.

The first technology where the hype is premature is artificial intelligence. On one hand, many applications use AI. It’s now even in toothbrushes. On the other hand, the full-scale application of AI faces many ethical and legislative decision-making barriers.

Two years ago, analysts found that only 40% of companies associated with AI used their technology in practice. Large teams do the work, not AI. Companies strive to hide the fact that the entire range of algorithm tasks is performed by people. And even if a business does use AI, it’s often for primitive use cases — for example, chatbots or monitoring of fraudulent activity.

However, developments at the largest companies show an increase in the efficiency and potential of AI and neural networks. Several new AI and ML projects are associated with the growing availability of databases and analytics tools. Many collected and available datasets and neural networks are changing the approach to machine learning.

The prognosis that chatbots will replace call-center employees and become the main intermediaries between service companies and customers has not (yet) come to pass. Bots still perform some functions in banks, taxi services, and online stores, but their capabilities are limited.

The same goes for voice assistants. Google has announced a virtual assistant secretary, Duplex, that simulates speech and can book appointments or restaurant tables on behalf of the user. But neither the service nor voice assistants have begun to be adopted everywhere.

Voice assistants have become an additional search interface, and only 20% of mobile users make voice queries.

Bots have not yet become real assistants and companions, either. For chatbots to replace employees, chatbot intelligence has a long way to go. For example, developers have to find ways for bots to exchange data between applications and perform more complex and necessary queries.

For now, voice assistants are commonly used to check the weather or turn on music, and chatbots release managers from having to answer similar simple questions. While these simple tasks do not replace people, they still make life easier and have growth potential. Once they’re integrated with a large number of third-party platforms and datasets, both chatbots and voice assistants will perform more valuable functions and attract a broader audience.

Despite the variety of application scenarios, VR technologies haven’t become widespread in entertainment, everyday life, medicine, or other industries. The modern quality of VR pictures doesn’t create the effect of complete immersion, the devices are bulky and expensive, and prolonged wearing of helmets and headsets is physically impossible due to the seasickness effect.

At the same time, augmented reality has become more widely used, and doesn’t require headsets and other devices. VR will become widespread only if it has a technological breakthrough or the cost of related devices gets cheaper. But until this is expected, we should bet on AR services. This trend is constantly evolving, and most importantly, it’s becoming a part of the mass market of products.

This technology has opened up a new way to record information that’s both decentralized and secure. However, the hype exaggerated blockchain’s real potential to transform existing services. In many cases, it turned out that blockchain made processes more expensive and complicated, without bringing significant advantages. Only a few application scenarios are left, such as decentralized financial services – DeFi, NFT – and blockchain applications in supply chains.

These blockchain technologies are at different stages of the Garner curve. But in general, the blockchain as a technology is already considered mature. Companies need to experiment as much as possible, focus on the commercialization of the technology, and fulfill blockchain’s expectations in the Gartner hype cycle. For the final development and practical application of blockchain, established combinations of technologies and interactions between networks and new business models are essential.

It’s always hard to predict what the tech boom will result in and what expectations will be met. Hype leads to the emergence of numerous projects and forms new scenarios for applying technology and ushers in unique specialties and qualifications. The end of the overheating period balances the market, eliminates overabundance, and leaves only the most promising participants.

Blockchain, AR/VR, and AI/ML technological trends have brought many advances year after year but have not become game-changers. Often, overrated applications of technology overshadow other, more beneficial scenarios. For example, agriculture tech remains underrated in the shadow of disappointment from the Industrial Internet of Things and drones.

Now we have no wholly overvalued technologies. Instead, some technologies are ahead of their time and place. Blockchain, AR/VR, and AI/ML should not create huge expectations – right now. These technologies will work in a few years once the market and the environment adapt to them. Over time, the market will find the boundaries of the applicability of these technologies and re-evaluate them.