The Web is what it will be

By David Walker (Google profile)

Here's a trick question. How many Internet crashes happened in 2000?

The right answer is three.

The first Internet crash, in March and April of 2000, occurred when investors realised that Internet stocks were going down, not up. The effect was much like a fire in a theatre: everyone headed for the doors at once, as they always do when an investment bubble burst. Dot-com companies bought on the expectation that they would continue rising suddenly had no reason to do anything but fall. (This event is best described as a "Kindleberger collapse", in honour of the eminent US economic historian Charles P. Kindleberger, who detailed this time-honored process in a classic volume called "Manias, Panics and Crashes".)

The second crash was closely related, though it happened over several months: people decided as a group that many existing dot-com firms would never make money. To use our theatre metaphor, the audience just politely walked out at the end. For many such firms, still very unprofitable, dependent on new infusions of investor cash, this sudden scepticism meant slow death in the public eye, their layoffs, cash burn and eventual bankruptcy documented by the likes of downside.com and f****dcompany.com.

The third crash is still going on. It's a slow loss of faith in one of the orthodoxies of the late 1990s - the orthodoxy that the Internet medium will keep on transforming. The audience for this story is leaving the cinema one by one. Watch out, or you could be alone when the lights come up.

The idea that the Internet will keep on endlessly developing is a powerful notion indeed. "The Web is still in its early days", say techno-enthusiasts. "Wait 'til we have broadband. Wait 'til we have wireless. Wait' til all that cool stuff being developed now is out there in the market. Then things will be different."

Hold on a minute, though. Previous exclamations of "it will all be different soon" led to such life-transforming breakthroughs as client-side Java and Web TV.

And research from groups like Jupiter Media Metrix and Forrester Research says that the 'Net is used most for prosaic tasks such as email, tracking down general information and news, and learning about products and services. Though Internet use has risen dramatically since 1997, the same research says, the relative popularity of these activities has changed little.

The Internet is gradually transforming many pieces of our lives, to be sure, but it is rarely doing it through new technologies. It is doing it mostly through the continued application of the same technologies that existed in 1997 - email, HTML documents, database-backed web sites with transaction capabilities. The medium has already taken shape. It has already grown up. To a first approximation, it already is what it is going to be.

This is bad news for that slew of much-hyped technologies quite obviously going nowhere very fast. Some will find niches. But WAP Web browsing, Internet voice calls, streaming video ... none of these is likely to change the landscape. And more and more people are realising that most of the predictions for new Internet technologies are mere technology hype.

Now that events are demolishing the myth of the endlessly developing Internet, Web site builders will pay the price. Investors will be very sceptical about investment in Web sites and Web facilities during 2001. They won't buy claims that some new Web technology will transform people's lives. Nor should they. The 2001 Web environment obeys a simple rule: I'll believe that when you can prove it.

The real power of the Internet over the next five years will come from its gradual penetration into the everyday creation and delivery of ideas, goods and services. It won't come from exciting new technologies; that idea has crashed.