The Hype Cycle

by adam

A hype cycle is a graphic representation of the maturity, adoption and business application of specific technologies. The term was coined by Gartner, an analyst/research house, based in the United States, that provides opinions, advice and data on the global information technology industry.

Notice that the adjusted expectations during the plateau never quite live up to the initial inflated expectations of the peak.

Source:Wikipedia

  1. “Technology Trigger” — The first phase of a hype cycle is the “technology trigger” or breakthrough, product launch or other event that generates significant press and interest.
  2. “Peak of Inflated Expectations” — In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.
  3. “Trough of Disillusionment” — Technologies enter the “trough of disillusionment” because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.
  4. “Slope of Enlightenment” — Although the press may have stopped covering the technology, some businesses continue through the “slope of enlightenment” and experiment to understand the benefits and practical application of the technology.
  5. “Plateau of Productivity” — A technology reaches the “plateau of productivity” as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market.

The initial hype behind clean tech hit it’s peak early last year and seems to be in the middle of a rebound or the “slope of enlightenment”. The following chart tracks the price of the clean tech etf PZD.

The mother of all hype cycles below, as evidenced by the peak and trough of the NASDAQ composite from the last 10 years. According to this chart, we have been in the “Plateau of Productivity for some six years now.