DEFINITION of 'Sunrise Industry'

Sunrise industry is a colloquial term for a burgeoning sector or business that is just in its infancy but shows promise of a rapid boom. A sunrise industry is typically characterized by high growth rates, numerous start-ups and an abundance of venture capital funding. Sunrise industries generally have plenty of "buzz" surrounding them as public awareness about the sector increases and investors get attracted to its long-term growth prospects.

BREAKING DOWN 'Sunrise Industry'

Examples of sunrise industries include alternative energy in the period from 2003 to 2007, as well as social media and cloud computing in 2011 and 2012.

A sunrise industry is often characterized by a high degree of innovation, and its rapid emergence may threaten to push into obsolescence a competing industry sector that is already in decline. Because of its dim long-term prospects, such an industry is referred to as a sunset industry.

The Life Cycle of a Sunrise Industry

Over a period of years or decades, as an industry grows and matures, it may pass from the sunrise phase to maturity and, finally, the sunset stage. The compact-disc industry is a typical example of such a transition. It was a sunrise industry in the 1990s as compact discs replaced vinyl records and cassette tapes, but the rapid adoption of digital, nonphysical media in the 21st century could mean that the compact-disc industry's days are numbered.

The transition from the sunrise to sunset stages is likely to be more rapid in dynamic sectors, such as technology.

Sunrise industries, despite the attention they attract in the beginning, must still prove they are viable, lasting markets. The buzz they generate at the onset may be based largely on speculation for the possibilities the industry represents, rather than any tangible business activity. The mobile industry, for instance, developed over a protracted period of time as the medium developed and became more stable. When the underlying wireless communications networks allowed for significant data to be transferred smoothly and securely, it created a medium for mobile apps to be developed. While different individual apps, or categories of apps, gain and lose traction with the public, the wireless data medium available through mobile devices continues to grow.

Other sectors can quickly lose momentum as they attempt to evolve from the sunrise phase. For example, daily deals websites and apps rapidly attracted attention, drawing in consumers who used such services to discover discounts on products or experiences they wanted. That popularity quickly shifted as the attention of consumers shifted to other means of receiving offers and discounts that no longer required those apps or websites to collect them into one place.

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