Technology: an enabler not a sector

It’s seared on my memory. A birthday gift that was a passport to coolness, freedom and a taste of the future. The Sony Walkman was launched in July 1979. I got mine the following year.

The ability to stroll around listening privately to my music was a big deal. It may not seem that way for kids born in subsequent decades but believe me, I felt I was part of the zeitgeist; we were embracing the glamour of Japan.


Sony in the early 1980s was the centre of my technology universe – I saved up money from a Saturday job to buy a Sony hi-fi (younger readers may need to Google this) with its graphics equaliser and LED displays. Sony’s products were sleeker and better designed – I aspired to have one of its futuristic TVs but couldn’t persuade my Luddite parents.


I no longer own a Sony device. The ghetto-blaster I had through my seven years as a student was starting to look chunky and dated by the mid-1990s, and my love was slowly atrophying. I was disloyal – I bought a Bang & Olufsen stereo after my first year at Baillie Gifford because it was better-designed and had better sound quality.


Then iTunes came along and claimed the hours of labour it took to put my CDs onto my PC before the arrival of streaming. My TVs are now Korean, my listening dominated by Sonos and Spotify through Alexa, and my affinity with Sony reduced to fond memories.


So what? Well, I’m asked about exposure to the technology sector more than I’m asked anything else about the portfolios I manage. To many people, my love affair with Sony and its subsequent demise is the classic parable for technology investing. Over the years, wise heads have nodded and muttered about nothing lasting forever and the innovators becoming the hunted.


Companies live and die according to how much utility and delight they provide.

But I beg to differ. This view of technology as something to be treated by distinct rules and norms is entirely wrong. In the 1980s I bought my vinyl records in HMV and Woolworths; I shopped in M&S and C&A and worked part-time in a bookshop; I queued for concert and train tickets; I carried guidebooks and maps whenever I travelled. My relationship with all of these has fundamentally changed in the same way as my connection with Sony.


Companies live and die according to how much utility and delight they provide. Sony’s problem was nothing to do with technology – it just didn’t execute on its opportunities when it had me (and many others) as a potential customer for life. It left a door wide open for rivals to delight my love of music.


Baillie Gifford used to have a technology sector group. I was given responsibility for it when it was set up in 2003. I was pleased with this accolade – I had seven years’ experience and was being asked to curate our approach to this huge sector. We have come a long way since then. That group no longer exists. And, for me, neither does technology as a sector.


I see technology businesses as companies that change the way we live and work. From the printing press to the mobile phone, mankind has sought to improve communication. And there’s nothing new in investment terms in great hopes being placed on ‘technology’ shares – railroads, automobiles, radio, analogue photography, video recorders, wearable devices have all seen explosive growth, capital chasing returns, boom and busts with spectacular winners and bankrupt losers.


The point here is that we should not view ‘technology’ shares as anything particularly new. Indeed, I feel strongly that we should also not view them as different – they are subject to the same inexorable rules of economics and competition as any other segment.


It’s what I term the internet paradox – by being an enabling technology, it has created the confusing situation in which everything and nothing is ‘tech’. Technology is what powers companies. Our job is to pick the winners.


Want to share your views on this post? Email [email protected].

Mark Urquhart


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