New Beginnings, New Endings - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


New Beginnings, New Endings

*"Every new beginning comes from some other beginning's end."
--rock band Semisonic in
"Closing Time"

One of a technology journalist's key jobs is to point out the reality behind the fluff--to debunk wave after wave of marketing hype and bravado about the latest and greatest. So this feels a little strange to me. I'm going to come to the defense of a technology that, for all the wrong reasons, has been unfairly maligned of late.

It's been cursed, castigated, and written off. It's been held up as a symbol of the classic huckster's scam, and the mere mention of it in investment circles throws people into a panic. Dozens of companies have even changed their names to avoid the guilt by association. But unlike many technologies that came before it, it truly has changed the world forever and, I believe, for the better.

It's called the Internet.

Many say the Internet economy is dead. And if you go by traditional measures, you could have found great evidence for it last month at the E-Business Conference and Expo in San Jose. Attendance was sparse, the number of exhibitors was low, and the booth presenters prattled on with their buzzword-filled pitches, oblivious to the dead air and recession around them.

But in the conference presentations, a different story emerged. An Intel representative described the company's online system, which takes $24 billion in annual orders from Intel's biggest original equipment manufacturer and distributor customers. Jim Taylor, co-author of The Visionary's Handbook (HarperBusiness, 2000), pointed out that companies worldwide handled $4 trillion in transactions over the Web last year. In the latest report from InformationWeek Research on E-Business, U.S. companies in five key industries say they're bringing in an average of 17% of their total revenue via the Web--a figure that's gone up steadily over the past two years. In the IT industry, that figure is 30%. Yet some people seem to want to focus only on dismal dot-com stock prices.

I started covering the Internet for InformationWeek in 1994. In those days, the common refrain was, "The net is really cool, but no one's figured out how to make money [as in profits] on it." Nearly seven years and billions of dollars of near-worthless stock options later, that is still essentially true. Marc Andreessen says it himself: The Internet is not a business model, and it never was.

It's easy to say the Internet economy is dead. You have your pick of leading indicators headed south: the Nasdaq, new venture-capital investments, sales of trade show exhibitor booths, magazine advertising revenue (with the concomitant shrinkage of magazine size), or occupancy rates for commercial office space, especially "work lofts," in San Francisco. But when you think about it, aren't those old economy metrics?

Here's the catch: "Internet startups" are not synonymous with the Internet--not even with the Internet economy. The Net existed long before Amazon's Jeff Bezos or Morgan Stanley's Mary Meeker became magazine-cover subjects. In the early days of the Web, there was actually a legitimate debate over whether commerce was an "appropriate" use of the network. I bet you didn't see that one in any dot-com business plans.

If you want to see the real Internet economy, check out PartMiner's FreeTradeZone, where 200,000 registered users source hard-to-find electronic components. Or Intel. Or even Covisint, which has fallen short of its initial bold promises, but recently hosted an online auction where DaimlerChrysler purchased $3 billion worth of highly engineered parts for two future car models.

The Internet economy is not only not dead, it's barely out of its infancy. In most of the developed world and a rapidly increasing part of the developing one, the Net is a part of everyday life and a solid, trusted place to do more business every quarter--but not all business (as in the "business model" of virtual, 24-by-7, we-don't-need-no-stinkin'-buildings, sales force, or warehoused inventory). And let's not even talk about a business based on "aggregating eyeballs."

We now know that many Wall Street analysts had a direct financial interest in hyping a startup company's prospects. Top securities firms are finally ending that practice, which went a long way toward explaining the initial-public-offering mania and stock market bubble of 1998-2000. But that's over, leading some to conclude that the Net is "over" too.

That might be true if you believe the Internet economy was about companies like getting a 600% first-day "pop" on its IPO in 1998 (it was delisted by the Nasdaq in April of this year). I pay more attention to $4 trillion in business over the Internet last year--the same year the bubble supposedly burst.

Over? The Internet economy is just beginning.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Reflections on Tech in 2019
James M. Connolly, Editorial Director, InformationWeek and Network Computing,  12/9/2019
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
Register for InformationWeek Newsletters
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll