The explosive growth of Maryland's high-technology sector should continue this year. However, a shortage of skilled technological workers could be a dark cloud on the industry's otherwise sunny horizon.
Vernon Thompson of the state Department of Business and Economic Development (DBED) described high-tech as "the major growth sector for the Maryland economy right now." That growth is fueled largely by information technology companies -- the Internet and software firms that have sprung up over the past decade.
To be sure, Maryland will hardly be the only state to see high-tech growth this year. Many observers, though, think the state is in a position to lead the nation's information-technology boom. Ron Blank, DBED's director of investment financing, said, "If Silicon Valley is number one and Route 128 [in Massachusetts] is struggling to hold on to number two, we're a very fast-growing number three and could be number two within a year or two."
Such enthusiasm is hardly limited to state business-development officials. John Dvorak is the vice president of Virtual Networks Inc., a Rockville Web-site development and software firm that has grown by at least 100 percent a year in earnings since its founding 2 1/2 years ago. "We've come to determine that this is the best place for us to be. I think we're going to rival Silicon Valley in the next few years," he said.
Much of Maryland's high-tech development has taken place along Interstate 270 between Frederick and Washington. One of the companies that populate the 270 technology corridor is INTERSOLV Inc., a Rockville-based software company. Gary Greenfield, the company's president and chief executive officer, said, "We're quite bullish on 1998. We've had a phenomenal year and see no reason for the trend not to continue.
"I see new companies every day," he said of the 270 region. "The companies that are here are doing quite well. I see all those things as indicative of robustness."
Other parts of the state are sharing in Maryland's information-technology boom. Baltimore County, especially the stretch north of Baltimore City near Interstate 83, is often cited as an up-and-comer. Among the high-tech firms that have set up in the Towson area is VIPS Inc., a health care information technology company. Jenny Morgan, the company's CEO, said, "We're expecting to have a really big year."
She said she was optimistic about the state's technology sector as a whole: "I see it continuing very strong in '98. There are a lot of good companies, and there's a lot of need."
Perhaps the most basic reason for Maryland's emergence as a high-tech hotbed is its proximity to the seat of the federal government, which Blank called "the world's biggest, richest and dumbest information-technology consumer."
The government's technological service needs will only grow in the year ahead, fueled in part by the need to make sure that federal computers don't mistake the year 2000 for 1900. Jack Suess, director of university computing for the University of Maryland Baltimore County, said 1998 is a key year for addressing the year 2000 issue: "I think the federal government will be outsourcing so many services to deal with the year 2000." Maryland businesses could profit handsomely from Uncle Sam's predicament.
Blank said the growth of private venture capital "will continue at least a few more years. You have an enormous amount of money that has been created by the appreciation of the stock and bond market."
The stock markets have dealt harshly with technology companies of late, but Maryland observers don't think the turbulence on Wall Street will seriously hamper the state's high-tech firms in 1998. Dyan Brasington, president of the High Technology Council of Maryland, Inc., a technology industry group based in Rockville, said, "There are too many wonderful and profitable things happening. It's not all puff. There's substance behind the technology."
She said, "It might be fairly bumpy, but I think we'll continue to see increases" in the value of technology companies.
According to Brasington, the technology sector may see an increase in mergers in 1998, as companies seek the money and know-how needed to stay ahead of competition. She said this could improve companies' ability to remain viable and attract investors: "As a company becomes more diverse and more capable it will be seen as less risky."
Dvorak said another trend to watch for 1998 is specialization. "A lot of Internet businesses have come to the realization that they have to develop a specialty or close down. You'll see a lot of specialization in '98 that wasn't around in the last couple of years."
What Internet businesses are going to do has become a topic of keen interest. Several experts said commercial uses of the Net will be an important area to watch this year. "The major driver in information technology today is the Internet," said Blank.