Unless you’ve been on a desert island without TV or media, you’ve certainly heard a lot about the massive bailout for the financial and real-estate industry, which will enable companies to offload “toxic” assets to the federal government, but what does this mean to you in terms of technology services?

Although not discussed at length, one of the underlying concerns about the related effects to this crisis has been its possible wide-ranging impact on other, generally unrelated, industries – including the technology industry.  As the crisis rumbled slowly, squeezed banks in turn squeezed their customers and pushed to foreclose homes and take ownership of assets, while reducing new credits issues to buy new homes.  This had a direct impact in the new home sales across our economy.  By now, that scenario is well-known, so where does the technology industry come into play?

The impact of reduced home sales is thought to worry some technology executives, whose companies provide services to consumers like you and I.  As home growth softens and budgets tighten, the view is that it may have a direct impact on the bottom line of tech companies.  Traditionally, when markets soften, the industry starts cutting costs.  Research and Development (R&D) departments tend to take the initial brunt of those cuts, thereby slowing down the delivery of new technologies to the greater market.  Since R&D is a more risky activity for companies, they’ll minimize their exposure to risk in an uncertain financial market.  (“Risk” here meaning that R&D takes a lot of investment, without a large chance of recouping that investment.)

While we are certainly not here to comment on whether it was right or wrong to burden the American people with this bailout bill, it does contain some advantages to you as a technology services consumer.

First, the intended impact of the bailout is to stabilize the banking and real-estate markets, thereby reassuring the technology industry about the potential effect on their own interests.

The second is in the fine print of the bailout.  As with any bill passed by congress, there are many addenda included in the text which are generally (sometimes wholly!) unrelated to the immediate purpose of the law.  My personal favorite in this one is related to the tax credit bicycle commuters might get, but I digress…  A very small portion of the TROUBLED ASSETS RELIEF PROGRAM bill (warning: 451-page PDF!) extends the research tax credit which was due to expire shortly (Title III, Page 272). As such, even technology companies who might be considering a reduction of costs, would be less inclined to cut R&D activities.

Overall, I think that the bailout will have a two-fold positive impact on technology services delivered to your home.  The obvious first impact will be the stabilization of the market, reassuring information technology companies into continuing their existing growth strategies, or even starting new ones.  The second is the extension of the research tax credit which, as always, will likely result in bringing powerful new services and reduced costs to you, the personal consumer.

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