Copyright 2002 www.thisislondon.com

[ January 7th 2002 ]

The City is betting 180bn that 2002 will be the Year of the Gadget. That is the amount of shareholders' money at risk in technology companies for whom the next 12 months may be make or break. Their shares are largely held aloft by hopes that consumers will splash out on new gizmos and machines.

The mobile giants have bet their masts on strong demand for 'next generation' services. Handsets, starting at 100, are just hitting the shops. They run on a much faster network than ordinary mobiles, and let you download music, surf the web, send picture postcards, gamble online, check traffic conditions or play chess against someone in Hong Kong while sitting on a bus.

If the new technology flops, this will be ominous for the long-awaited subsequent wave - 3G. Vodafone, Orange and mmO2, worth 159bn between them, are dependent on next generation services. They are not the only ones. Filtronic (valued at 260m) makes technology for the handsets and broadcast aerials. Emblaze (270m) writes software to download data over mobile links. Psion (355m) is praying that consumers will access the new services using devices that run on its Symbian software.

Britain's once-thriving computer games industry is battling out of its two-year slump. The launch here in March of Microsoft's Xbox console may prove critical to the momentum that began with last year's launch of Sony's PlayStation 2, and companies such as Rage Software and Eidos are launching a host of new titles. Retailers such as Carphone Warehouse (1bn), Dixons (4.6bn) and games and software specialist Electronics Boutique (470m) are relying on gadget demand to boost sales.

This year may also prove decisive for the remaining dotcoms. Last year, online travel companies (including Britain's eBookers) began moving into profit, and lastminute.com promises to do so this year. But the wider viability of the internet business model may depend on online retailer Amazon breaking into profit this year. If it fails, the internet may remain a minor business niche and the cash will dry up for further ventures. If it succeeds, dotcom mania could return.

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