Editor’s note: Eric Jackson, a technology consultant and developer, is a regular contributor to Local Tech Wire. His column appears on Tuesdays.

BLACK MOUNTAIN,In preparation for later columns on prospects for specific new technologies, we first take a general look at the commercialization of emerging technologies. This week, we consider the broader, “investment” perspective (where investment can mean starting a company, or funding one). Next week, we’ll take the narrower perspective of an individual company hoping to introduce products based on new technologies.

Predicting whether a given “hot” technology will find economically viable applications on a short timescale — years rather than decades — is difficult. No guaranteed method exists, of course. However, a simple framework of four categories — drivers, barriers, economics, and environment — combined with the discipline to work past hype and hope to solid answers, can do quite well.

Drivers

A great “wow!” factor in a technology can help a business get started, and can be an aid to marketing, but, in general, cannot sustain real commercial success.

The real drivers for any product are the needs of potential customers. In emerging technologies, these needs must drive them to accept a new product in spite of its unfamiliarity and in spite of the often significant costs of auxiliary changes that its introduction requires.

So the questions that must be asked are: How fundamental are the customer’s needs? How valuable economically is their solution? How painful are they? What are the alternative solutions and how far will they carry?

The simple existence of needs, even when recognized by the customer, is often not enough — there must be a tangible sense of urgency. New technologies are too often sold on the basis of their potential in the future (what is interesting to the technologists), rather than what they can do now (what is interesting to the customer). Successful products are successful because they address the tough, often dirty, issues on the ground, issues and problems that can quickly wreak havoc with elegant technical designs aimed at exciting, but still theoretical applications in the future.

The ideal, of course, is to stage a new technology through short-term, well-understood applications, with a clear roadmap into new or broader applications in the future.

Barriers

Barriers to entry are a good thing — after you have scaled them and before your competition has. Barriers can be of many kinds, from technical issues to regulatory hurdles to resource availability problems. From an investment perspective, any of these barriers may provide future protection, but in the shorter term they translate to higher costs for development.

Thus, the primary task is to determine a realistic estimate for these costs. This can be particularly difficult when technical hurdles are involved — it is inherently difficult to estimate how long it may take to solve a tough problem. It is worth remembering, too, that estimates by technologists tend to be somewhat rosier than later experience justifies.

A second question must be asked to determine how attractive an emerging technology really is for investment: how decomposable are the barriers to be overcome? A technology with barriers that can be broken down into several, smaller pieces may offer opportunities for interim commercial products that can help fund solution of the overall problem or at least begin to prove the company and technology in the marketplace.

Economics

This ought to be obvious, but investors and entrepreneurs regularly manage to skim over astounding holes in this area.

At the least, there must be an arguably reasonable business model able to achieve profit levels that can justify realistic estimates of investment required.

It is critical, however, to look beyond this to consider the actual stability of the economics. What happens if significant competition develops — are there high-value segments of the market available, or will competition quickly commoditize things? Is a monopoly possible? Are margins high enough to absorb the impact of unexpected changes or mistaken assumptions? The telecom boom is a good example of an area in which the economics that many entrants counted on turned out to be unstable in the face of significant competition and overcapacity.

Environment

The final area of importance is the environment within which a technology will be developed and commercialized. This is something of a catch-all category, covering everything from social attitudes to availability of information and qualified workers. Two are of particular importance in emerging technologies, namely, “buzz” and the potential for controversy.

As noted above, it can certainly be helpful for a technology to capture the imagination of the public. Truly innovative products generally have an uphill battle and the lift of excitement and buzz around them can help.

The same buzz can backfire, however, for two reasons. First, too much excitement too early tends to oversell a technology, raising expectations well beyond the level that the nascent industry can support — the inevitable backlash of disappointment can have a significant negative impact. In addition, excessive buzz can cause conservative customers to classify a product as “experimental,” making entry into the mainstream market more difficult.

Finally, the existence of controversy around a technology has the potential to dramatically change the economics of the field. Regulation may be introduced, leading to increased costs of compliance. Or a need to overcome negative publicity may dramatically increase the costs of marketing.

To repeat, there is no simple formula to determine the prospects for new technologies, but a careful consideration of all these four areas, how they balance with and impact one another, can provide good guidance.

Next week: turning to the individual company perspective, we offer some thoughts on successfully introducing products in emerging technology areas.

Eric Jackson is the founder of DeepWeave. He has built his career pioneering software solutions to particularly large and difficult problems. In 2000, Eric co-founded Ibrix, Inc. He is the inventor of the Ibrix distributed file system, a parallel file storage system able to scale in size and performance to millions of terabytes.

DeepWeave: www.deepweave.com