Domhnaill Hernon, global lead, EY Metaverse Lab, says understanding the hype cycle in technology could be the advantage a business needs when determining the right time to make certain strategic investments.
“Deciding which technology could transform your business and which ones give you little return on investment is critical to continued business success,” he says.
The hype cycle is attributed to Gartner, which is thought to have introduced the concept as far back as 1995 — pre-internet.
It is a maturation cycle all emerging technologies go through, incorporating ‘The Peak of Inflated Expectations’, ‘The Trough of Disillusionment’, the ‘Slope of Enlightenment’ and ‘The Plateau of Productivity’.
The Peak of Inflated Expectations (ie the hype) and the Trough of Disillusionment (ie death) are inevitable, but the time it takes to reach and pass through those phases is different for each technology.
In the late 1990s, when investment in internet technology was gaining pace, there was considerable hype about how it was going to revolutionise the world.
But, the technologists predicting the future weren’t believed.
For example, when Bill Gates, former chief executive of Microsoft, explained the internet to David Letterman in 1995, the talk-show host wasn’t convinced it could offer him more than the radio, tape recorders or magazine subscriptions.
“The difference is the internet will allow you to listen to a baseball game whenever you want. And you could find other people who have the same unusual interests you do,” said Gates.
Subsequently, markets and investors doubled down and invested considerably in the internet.
And at some point there was a realisation that the hype was not manifesting in real returns within the expected timeframe — causing many investors to exit and many businesses to fail.
This led to the Dot.com bubble in the early 2000s.
Newspaper headlines about the internet being a passing fad were common around that time.
Yet, here we are today more than 20 years later and there is no denying that the internet has changed society on a profound level and created trillions of dollars in returns.
“In relation to the internet, getting in too early could have been detrimental to your business but yet some of the biggest companies in the world got in early and look at their growth today.
“Understanding your core business and market is critical to understand when to invest and deploy,” says Hernon.
Around 2010 was the start of a profound shift in how society interacted with devices and the internet.
This shift was largely missed by the hype cycle predictions, he adds.
In 2010 smart phones became more mainstream, 4G networking enabled smart phones to connect to the internet while on the go, social networks were now accessible on smart phones while on the go and e-commerce started to take off.
“This intersection is an example where several different technologies came together but the hype was based on each of them individually in a much more limited way,” Hernon explains.
Domhnaill Hernon, global lead, EY Metaverse Lab
“Few would have predicted that profound shift at the intersection of all these hyped technologies and yet both small and large companies exploited these emerging trends early on to great benefit.
“If you based your investment decisions on the hype cycle predictions alone you would have missed out.”
3D printing is another example of an emerging technology that was at peak hype around 2010.
The predictions were that every home would have a 3D printer and that whole new economies would be created by individuals having access to relatively cheap “manufacturing” equipment in their homes.
“This prediction clearly didn’t take hold but what has happened is that some sectors have been undergoing a quiet revolution with 3D printing technology such as the automotive, aerospace and construction industries.
“If you had only read the hype that every home would have a 3D printer and you dismissed the technology based on that premise, your business might have missed out on a new technology that enables growth,” notes Hernon.
The metaverse is the most recent example of an emerging technology that has gone through peak hype and is now decreed “dead” and yet the biggest companies in the world are investing heavily in this space.
Hernon observes that the evolution is reminiscent of the early days of the internet yet today elements of the early metaverse are creating significant value and engaging younger generations.
“The metaverse by our definition is the evolution of the internet to become more 3D, more spatial and more immersive.
“Or in simpler terms, the internet will evolve to enable people to interact online more like how they interact in the physical world,” he says.
“Multiplayer games online today account for around one billion active monthly users and hundreds of billions of dollars in revenue generated where predominantly younger people (GenZ and Millennials) socialise and build communities in these gigantic online worlds.
“The gaming industry is the most mature example of the metaverse today.
“The metaverse holds great promise as it matures and gains adoption across all industries — as it emerges out of the Trough of Disillusionment and into the Slope of Enlightenment on the hype cycle.
“If you are an employer or brand looking to attract young talent or younger customers you should dismiss this evolution of the internet at your peril.”
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