Magazine article Information Today

Tremors in Dot-Com Nation

Magazine article Information Today

Tremors in Dot-Com Nation

Article excerpt

A Web shakedown is inevitable, but when will it happen?

I happen to live in one of the epicenters of dot-com nation: Cambridge, Massachusetts--the home of Harvard and MIT. I have friends who work for dot-coms, neighbors who work for dot-coms, students who work for dot-coms, and colleagues who study dot-coms. Our vocabulary has been greatly enhanced by the scattering about of the "E's": e-commerce, e-books, e-food, e-stuff [ldots] well, you catch the drift. So when investors started chilling out on Internet stocks 2 months ago, there were a lot of dot-comers drowning their sorrows in the local coffeehouses.

How quickly things went from giddy to grim, from courted to condemned. In April, both Forrester Research and GartnerGroup predicted that most of the dot-com companies will fail over the next 2 years. GartnerGroup presented a particularly depressing 95-to-98-percent failure rate. Already auditors have announced that CDNOW will probably become "CDTHEN" come fall when the money runs out. Online grocer Peapod and online bank Wingspan look to face similar fates. Industry analysts have even turned rabid on the giant dot-coms, declaring that Web fixtures like eBay and Yahoo! may tumble. This insecurity has only been made worse now that even mighty Microsoft may no longer be invincible. Even if things should bounce back to the highflying ways (which seems unlikely), the dot-coms will not forget this storm.

These are somber days in dot-com nation. Disappointment, even grief, abounds as high-flying visions have suddenly turned into short-term survival plans. In some quarters, a sense of betrayal also emerges as the realization that being cute, being popular, even being damn brilliant is no longer enough. For some, a bright, shining future seems uncertain as the unforgiving reality of profitability suddenly looms on a very real horizon quickly heading straight for you at Internet-speeds.

Just Another Gold Rush

Long before the Internet, history provided us with clues on what was probably going to happen with our virtual version of a gold rush. I suppose that almost everyone has dreamed of being rich. As a native Northern Californian, I am well acquainted with the gold rush that transformed the state. The Internet reminds me of that gold rush. Many people gave up everything they had, ventured into unknown country, worked endlessly--sometimes to death. More people went broke than made their fortunes, because there was only so much gold to go around.

One of the great technology gold rushes was the automobile revolution. At one time there were hundreds of automobile manufacturers. Again, many people risked everything they had trying to create their vehicle of choice. Of course, Henry Ford and only a few others succeeded.

Now, the Internet isn't quite the same resource as gold, and while it is technology, it's more like a new form of media. And we haven't had a new medium since the invention of the television over 50 years ago. Television, like radio before it, created much speculation about how it would change the future. Television (and radio, too) was supposed to transform the manner in which education was delivered. Instead of a "sage on stage" we would have a "sage on the tube." Futurists of the time believed that television would displace newspapers and radio, yet both have persisted.

On the other hand, it has been very easy to make predictions about the Internet, but it has been more difficult to actually predict its course. I know of several dot-coms that concluded it was impossible to do predictor market research with their products because people simply wouldn't know what the dot-coms were talking about. …

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