Digital bubble could burst, KPMG warns

Businesses are being warned to avoid a digital bubble that could burst.

With the current climate of media and communications mergers, there is a pressure to take chances on the numerous opportunities that have sprung up resulting from the shifts in the digital world, KPMG has found.

According to a report by the organisation, such limitless opportunities could collapse under their own weight and create a bursting bubble similar to the dotcom crash of the late 90s.

Tudor Aw, a convergence partner and author of the report, commented: "When technology revolutions developed before, management [failed when they] over focused on top line growth and increasing market share."

Rash investment decisions based on speculation as opposed to economic facts combined with investment demand that exceeds opportunity, are factors affecting the market, Mr Aw noted. Excess capital is also adding to worrying business conditions.

Online commerce in Europe is expected to triple in size, eMarketer reported yesterday, naming the UK as one of the three major countries in the continent responsible for contributing to these circumstances. It is thought the sector will grow by 25 per cent each year, reaching $407 billion (£201 billion) in 2011.

© Adfero Ltd

31 Jul 2007 15:04:17 (Source: Adfero)