2011's IPOs show the future is in consumer tech

Investors are once again pouring money into technology startups -- but just in consumer-oriented areas

It's not exactly raining money in Silicon Valley these days, but the market for technology IPOs is finally coming back to life. A look at new offerings in the first quarter of 2011 showed that seven tech companies went public, compared to just three in the same period in 2010, according to a survey by PwC (previously named PricewaterhouseCoopers).

Semiconductor companies accounted for four of the new tech IPOs, while another specializes in near-field communications (NFC), an enabling technology for mobile payments. And it's worth noting that there isn't a Pets.com in the bunch, which tells me that we're not seeing a repetition of the brainless feeding frenzy of the late 1990s that led to the dot-com implosion.

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You have to be careful about drawing conclusions from a relatively small number of data points. But a look at the type of companies attracting serious investor money does give us an idea of what the technology landscape will look like over the next few years.

It's no surprise, but there were exactly no companies on the list utterly dependent on the classic IT products, software, or services needed in a PC-centric world. Instead, we see technologies centered on consumer electronics, mobile communications, and medical services.

The surge in newly public technology companies came as the IPO market as a whole posted one of its strongest first quarters in years, with investors forking out more than $12.4 billion, a threefold increase over last year. Additionally, it appears that the pipeline for future IPOs is promising, meaning that the impressive first quarter is not a flash in the pan, said Howard Friedman, a partner in PwC's transaction services who works with fledgling companies.

Average deal size increased 166 percent to $387.8 million in the first quarter 2011 from $145.7 million in 2010, another sign of investor optimism.

None of that means we're out of a recession that has thrown hundreds of thousands of IT workers onto the unemployment lines. Joblessness in Santa Clara County, the heart of Silicon Valley, is still 10.3 percent, compared to 8.9 percent in the United States as a whole. And three of the tech companies going public are based in Asia, so they're not likely to hire many workers in our part of the world.

Nevertheless, a surge in IPOs means that investors are feeling more confident about the prospects for a recovery. Since tech was one of the sectors that performed best in the PwC survey, it's not unreasonable to expect better times in the IT industry in the not-so-distant future.

Here's a quick look at the tech companies that went public in January, February, and March:

  • Neophotonics, based in San Jose, Calif., is a developer and manufacturer of photonic integrated circuit (PIC)-based components, modules, and subsystems for use in telecommunications networks.
  • Magnachip Semiconductor of Seoul, South Korea, is a designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications, including power management and displays for flat panels and mobile devices.
  • BCD Semiconductor Manufacturing, based in China, provides analog ICs specializing in the design, manufacture, and sale of a broad range of power-management semiconductors used in PCs, flat-panel televisions and monitors, mobile phone chargers, and other portable electronic devices.
  • Fluidigm, based in San Francisco, makes integrated fluidic circuits used in biotech and genetic analysis.
  • Trunkbow International Holdings, based in China, develops platforms for mobile payments. According to CrunchBase, Trunkbow and its telecom partners expect to deploy about 125,000 mobile payment terminals integrated with Trunkbow's 2.4GHz NFC technology over the next three years.
  • Epocrates, based in San Mateo, Calif., provides medical reference software that runs on a variety of mobile platforms, including iOS, Android, BlackBerry, Palm, and Windows Mobile.
  • Velti, based in the U.K.'s Jersey, "offers a SaaS technology platform that allows agencies and brands to plan, manage, and optimize mobile advertising and marketing campaigns in real time," according to CrunchBase.

The bottom line: Yes, we're finally seeing signs of a recovery in tech. But the job market is still terribly weak, so ignore those overpaid pundits who say the recession is over.

I welcome your comments, tips, and suggestions. Post them here so that all our readers can share them, or reach me at bill.snyder@sbcglobal.net. Follow me on Twitter at BSnyderSF.

This article, "2011's IPOs show the future is in consumer tech," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

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