Is the Tech Market Oversaturated?

Technology is an essential part of life today. We use multiple, sometimes dozens, of gadgets daily, some for work and others for personal enjoyment, and new models for both are coming out seemingly every day. As more keep coming, it may leave you with the question: has the tech market become oversaturated?

There are more than 585,000 tech businesses in the U.S. alone. Companies like these account for more than a third of the world’s overall market. With so many companies pushing out so many devices, is there any room left for innovation? Is it possible to really do anything new anymore in the industry? Here’s a closer look.

What Does It Mean to Be Oversaturated?

You can define oversaturation in a few different ways. One is to look at the market in terms of jobs. If there are more workers than available jobs, it’s safe to say that the tech industry is indeed oversaturated.

Despite large, sweeping layoffs from some of the nation’s largest tech companies, technology job creation still outpaces people filling those roles. Available jobs in the industry grew by 207,000 in 2022 and have increased every month for the past two years. In light of these trends, you can’t safely say the job market is saturated, at least on an overall scale.

Another way to define oversaturation is to see if there’s any room left for new businesses to carve out a segment of the market. That’s trickier to quantify.

If you look at the startup failure rate, the picture is mixed. Information businesses, which many tech companies fall under, have a 20.8% failure rate within their first year, placing them above average and the third-highest industry for failure. Technical services, by contrast, fall comfortably below the average.

A more helpful way to look at oversaturation in tech is to consider the rate of innovation. Many new products emerge each year, but do these represent any significant steps forward? Are new industry players coming out with game-changing innovations, or is everything consolidated in tech’s Big Five? The answers will offer a more practical look at the market for both businesses and consumers. 

Gaining Perspective From the Past

When you take this definition of oversaturation, the picture may look bleak at first. If you compare the newest iPhone or TV to one a few generations ago, you’ll find some improvements but wouldn’t call the older one outdated by any stretch. However, looking at the pace of innovation in the past provides some needed context.

New tech generations came out far more slowly in the past, but even then, not every new model represented a great leap forward. Consider how the World Wide Web came out in 1989, but the first website didn’t appear until two years later.

On a historical scale, the tech sector is just as, if not more, innovative than ever. Industry-changing technologies don’t emerge frequently, nor have they ever, and when they do, it often takes time to see how game-changing they are. Think of how artificial intelligence (AI) has been around for years but only recently started to disrupt things.

An Oversaturation of Gadgets With Room for Innovation

Of course, slow innovation in the past didn’t come with quite so many new releases, either. Big, overall steps forward may be keeping the same pace or going a little quicker, but companies are pushing out new devices faster than ever. That can make innovation feel slower.

When you consider both these sides, you could say there’s an oversaturation of gadgets but not of technological innovation itself. There is still plenty of room for new, exciting technologies and upgrades, and these are still coming out. However, most releases hitting the market today don’t represent this innovation.

Where Does the Market Go From Here?

In light of this saturation, tech companies can look to areas that haven’t felt its full effects yet. While there’s an oversaturation of devices, many rural areas or other nations don’t have the internet accessibility or similar infrastructure to take advantage of these gadgets. Tech companies can use business mapping software to highlight the most promising markets, finding where there’s still room to grow.

Smaller firms and startups can focus on the areas where devices are currently limited. Virtual reality (VR) is one of the most promising. The technology has only recently started catching on, and experts predict roughly 65.9 million people will use VR headsets monthly by the end of the year. Focusing on more niche AI and IoT applications may help, too.

Consumers can react to this saturation by being patient. Consider that each new phone generation may not be a significant improvement over the other. By waiting and using your purchasing power to pay mostly for the biggest leaps forward in technology, you can encourage an emphasis on innovation over constant sales.

Tech Is Oversaturated in Some Areas but Not Everywhere

Overall, the tech market today is oversaturated in terms of the number of devices it puts out without substantial improvements. However, that doesn’t mean there isn’t room to grow.

There is still plenty of innovation happening if you know where to look. If companies and consumers can hone in on these areas and move away from the rapid release cycle, the tech industry can feel fresh and innovative again.