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The Myth Of The Tech Slump
The outside world has always viewed the Net in terms of its most simplistic extremes: First it was a hive of hackers, then the world headquarters of pornography, and more recently, the corporate pot of gold. The rise of the dotcom era gave birth to the notion of the Net as the locus of the new global economy. While there is some truth to that notion. the end of the dotcom era is spawning now the latest variety of hype: the Tech Slump.
If you define the purpose or utility of the Internet strictly in terms of business (which mainstream media do, when they're not obsessing on porn) -- new equipment orders, consumer spending on telephone data services, the exact state of the NASDAQ on any given day -- then there's inevitable bad news.
Nothing can mask the awful truth about tech spending, Business Week reported recently. "In recent days, networking-gear maker 3Com, PC maker Gateway, and chipmakers LSI Logic and Xilinx, and electronics retailer Circuit City all warned that earnings will fall shot of expectations, knocking their stocks down as much as 36 per cent. Then, on Dec. 5, Apple Computer Inc. dropped a bomb, saying that slower-than-expected PC sales will vaporize $600 million in fourth-quarter revenues from its original estimate of $1.6 billion." These unexpected turns, says Business Week, are certain to reverberate through techdom, forcing consolidations that will extend well beyond the already tottering dotcoms. "Unable to survive past the easy-money days," the magazine concluded, "a lot of companies, from niche e-tailers to the umpteenth optical-networking upstart, will simply vanish."
Corporate predators are buying up the stock of imploding dotcoms, selling them off at bargain rates. There are now no-frills "shut-down" parties in New York and San Francisco instead of lavish start-up fetes. The media is filled with reports of mounting tech layoffs and bankruptcies.
This is an era that won't be mourned by many. If ever there were an unholy marriage, it was the frenzied coupling of venture capitalists and dotcom entrepeneurs. It had to end sometime, and now is a good a time as any. The dotcom era distorted the purpose of technology and the promise of the Net, flooded the Net with intrusive scrutiny, legislation and information barriers, focusing some of the best tech minds on making useless junk and obscuring the beneficial possibilities of networked computing.
Bankers are finally demanding that the companies they lend to earn profits. That doesn't mean technology itself will collapse, or that the Net and Web are in for bleak or uninteresting times.
In fact, that's a foolish way to gauge the rise of fall of technology, the state of the Net, or the vitality of either. The network is growing by the day, all over the world. More than half of the U.S. population now has access to computers at home or work, making computing the fastest-growing technology in history, and companies like Ford, Delta and Intel are giving away computers as employee benefits. There is no significant social or cultural group, from blacks to Hispanics to the elderly, with the notable exception of the impoverished underclass, that isn't moving rapidly online. E-mail has become a universal personal and business communications tool. Hard pressed to function in the Corporate Republic, WalMart-driven world, hundreds of thousands of small retailers have moved online, re-creating mom and pop stores on the Web.
And search engines and ISPs have given many thousands of people free and customizable web pages, sparking a culture that is expressive and personalized, and which offers mind-boggling marketing opportunities.
Some of the most creative and significant evolutions in the recent life of the Net -- the early search engines, Napster, Linux, Gnutella, Freenet, instant messaging systems, the World Wide Web itself -- were developed far away from the cash or even the notice of the dotcommers and venture capitalists. The Net, in fact, was created in the first place mostly by non-profit researchers.
Its purpose, according to J.C.R. Licklider, the Defense Department official who commissioned the early research that led to the Net: "Creative, interactive communication ... a dynamic medium that can be contributed to and experimented with by all." Licklider hoped for an open, distributed, educational and intensely interactive medium, a vision shared by architects of the Net like Jonathan Postel and by millions of people online, including hackers, and many of the participants in the open source and free software movements. If the end of the dotcom era means getting back to work on those kinds of ideas, the the tech slump will be a boon.
One could argue that the last few years have actually been the least interesting, productive and satisfying period in the Net's brief history, as corporatists swarmed all over the network, spawning legions of lawsuits, curtailing the free flow of information as much as they could manage, lobbying for noxious new copyright laws, funding inefficient, ill-conceived companies and all kinds of technologies which skirt the line between useless and ubiquitous.
The real legacy of the dotcom era could be 800 numbers that are never answered, the help that's always promised but rarely comes. Plenty of the dotcoms seem of dubious value. Americans are in no particular rush to get their e-mail on the freeway rather than at work a half hour later, or to transform their TVs into personal programming networks. More than 95 per cent of all Americans don't even have broadband, and aren't likely to get it anytime soon. Is the Net era over because there is one place to buy dog food online, instead of two or three?
The history of technology is filled with periods of great adance and upheaval, followed by retrenchment and consolidation. We may be heading into one of the latter.
There's no evidence that business or retailing has failed on the Web, or has no future there. One day, some of us may live long enough to see Amazon turn a profit. Catalogue companies like LL Bean and Lands End are successfully incorporating e-shopping into their business plans. E-trading sites have revolutionized consumer trading and are making money. Sites focused on the liberation of sexual information and imagery are among the busiest and most profitable sectors of the Net, anything but declining. Open media sites like Napster or like this one, sites devoted to open source distribution of textbooks and reference materials, are thriving. Peer-to-peer decentralized information models like Gnutella and Freenet, while still primitive and intensely geeky and difficult, represent revolutionary software and communications advances.
Must we mourn the loss of etailers peddling make-up and fashion accessories? Gaming has become one of the most profitable forms of culture in the world. A report by PC Data this month announced that 35 per cent of home Net users plan to purchase console or PC games during this holiday season, and that gaming is no longer a male-dominated domain. For the first time, women comprise a majority of online gamers -- 50.4 per cent.
Perhaps then we could funnel some of the creative energy and money of the dotcom era back into the original ambitions of people like Licklider? Maybe interactive communities will get the attention they deserve in terms of attention, conception, price, ease-of-use, design and architecture?
There's no shortage of unfinished tasks that could benefit from some attention. The virtual community, an inspiring early idea of the Net, needs redesign and reconception. Technology, from the sales and support of computing to the writing of code, needs simplification, to be easier and more accessible to non-techs.
Online politics is a ripe idea, especially after this year. Can digital technology help people register and vote more easily and efficiently? Can it democratize fund-raising, energize volunteers, generate new kinds of candidates, even provide more meaningful ways of considering issues and voting?
At the same time, a host of new tech issues like gene mapping and AI, looming social issues that have gotten little attention from the general population, could use some understanding and discussion.
The first generation Internet belonged to the engineers, dreamers and military researchers. The second belongs to the Geeks and the Dotcommers, who battled one another, sometimes directly, sometimes not, for attention and primacy. It was the Microsoft Era, and it's over.
It isn't clear what the next era will be about, or what, precisely, will define it.
My prediction: computing will spur the creation of Open Societies, digital technologies being applied to open government, different models for doing business, a revamping of intellectual property and a breaking down of hierarchies, barriers between citizens and government, even some national boundaries.
The Net is almost ferociously anti-hierarchical. Online authority reflects online architecture -- it is so de-centralized that the idea of a central information control seems almost impossible. Many-to-many-models of communication means open participation in decision-making, from media to entertainment to business, for better or worse. As computing spread through different sectors of society -- politics, government, education -- so will varying degrees of openness.
If the best minds online return to some basic topics, themes and dreams, the Tech Slump won't be the nightmare Business Week imagines, but might turn out to be a Tech Salvation.
The media are piling onto the tech slump story in the same way they piled on the boom story. It doesn't mean that either were particularly true.
The dotcom companies that arose in the last few years were bloated and often nonsensical, but you didn't read too many articles critical of them before the NASDAQ took a dive.
It just brings me back to the conclusion that very few members of the media have a real understanding about what's going on, which may be ironic if you consider that it's the Internet that will over time erode the power of the mass media. You'd think they'd be keenly interested.
Automatic Sites, LLC
(Dodges a few bricks)
What happened? A lot of business types had the same thought - here is a new communication channel, a whole new environment where money hasn't been made. It's like Sid Meyer's Civilization, round 1! We have to expand! expand! expand! Let's make some settlers!
They were able to convince the banks, and got the venture capital (based on "sucesses" like Yahoo!). Those "in the know" bought stock, then the media picked up on it, and everyone was buying stock - soon, you get dot-com billionares, which always makes a good story.
Those commericals made you laugh, but you couldn't say who they were for five minutes later. What you did notice, and you mon and grandma noticed, was that most had a web address, and they needed a com-pu-ter to look up those addresses. The media, wanting to jump on the trend that was making them lots of money in advertising, followed suit. Soon, you couldn't watch Wheel of Fortune or the local news without seeing a URL.
I've been into computers for over 15 years (about the time I had the skills to type on a keyboard), and I've been saying how good they are all that time - but it wasn't until the dotcoms came along that my mom, my aunt, and my grandma were all asking me how to use them, that my wife (the coordinator at the literacy office in Tulsa's library system) could say that computer literacy was an important component of literacy, and not be laughed down, but instead given more money to buy computers! She is now teaching folks who are just learning to read how to use a computer, and giving them the confidence they need to keep learning. (Please, no AOL jokes - these folks know the importance of spell check and editing).
If it wasn't for those dotcoms shoving the idea of the internet into every person's mind, I would still be looking at ISDN for broadband, and I'd be making a trip a week to the local bank rather than banking online. All that media hype made traditional business offer their services online, which made it possible to upgrade the infrastructure to take the load. Universities and rich computer types can only go so far - you really need the public behind it to make universal, reliable broadband possible.
Even SlashDot would be in trouble if it was two kids in their dorm room. The popularity of the site would be limited by their resources, instead of getting constant hardware upgrades funded by ad dollars.
I think without the dotcoms, we would be about 5 years behind, surfing at 56K from home, because the guys at work can't justify internet connections. Of course, now that we're here, we can afford to eject some of the booster rockets. It will be an interesting future.
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Look, I'm a democrat. But I think you're forgetting the '78-'79 recession, coupled with double digit inflation and double digit unemployment. That recession made the other ones look mild by comparison.
As for the others claiming the economy is cyclical, do they honestly believe Clinton had nothing to do with the longest sustained period of growth the US economy has ever seen? What about the delta in the budget deficit? I happen to believe this is a result of centrist fiscal policy (Clinton was anything but a liberal democrat). Reagan, Ford, Carter, and "w" are all towards the extreme (at list vis-a-vis the US political system). I wholly expect the economy to enter into a recession under "w".
And now? 2% growth is not a recession. A recession is, by economists' definition, two successive quarters of negative growth. Hell, the '91 recession barely counted as a recession....
--Be human.
What is the DotCom era? Isn't an era something that consists of several decades if not hundreds or thousands of years?
Personally I think that Jon has bought into the the media hype that he so vigorously complains about... the media believes this is an era so does Jon. The media believes there is a recession, so does Jon. The media believes that the Internet has somehow transformed us into super humans or something... so does Jon.
I'm sorry but judging from the people I go to school with, lots of people have the internet but it just isn't that important in daily life. Some of my friends (God forbid) only check their email once a week! They couldn't care less if the internet dried up and blew away. Our culture simply isn't defined by it, and I have to agree with an above post that the idea that a hive of family photos and quasi-porn such as Geocities does not a community make.
People are entitled to their opinions but Jon use something besides your dizzying intellect to back it up!
Never knock on Death's door:
The Anti-Blog
Now we see the bricks and mortar companies moving into this space. They've seen it can work from some of the examples, they've learnt as their dot-com competitors implode, and now they are ready.
Xmas 1999 - the biggest on-line toy retailer in the UK was e-toys. Xmas 2000 - it was Toys'R'Us.
At heart - if a dotcom thinks it can use the net to undercut the big boys - well the big boys can do it too. And they can sunbsides ther adventures in the web, and they don't ned adverts in the superbowl beause their brand is already there.
Question for the slashdot readers - one aspect of dotcommery was the way 'Net companies became powerful enough to merge on near-equal terms with trad companies. e.g. Time Warner AOL merger. Will the dot-com collapses affect these companies?
~~~~~ BigLig2? You mean there's another one of me?
IBMs Q4 results made 2000 a growth year for them apparently, also services in general are growing, the PDA market is heating up etc etc.
All thats really happened is that PC have saturated the market, and its finally getting to the point were a 2 year old PC is still quite fast, especially if the bottleneck is a 56k modem.....
Also GSM phones must be nearing saturation, in europe at least, and people are waiting for 3G to upgrade etc etc.
My point is that IT spending is still high, is just that equipment has become commoditised and that the markets for traditional ststems are saturated. New items, PDAs, Ultra Portables with wireless comms, Portable digital TVs etc etc are still to expensive to be widespread, basically...
we're in a transitional phase
"For the first time, women comprise a majority of online gamers -- 50.4 per cent."
Statistic based on the ratio of amazon/sorceress players to barbarian/paladin/necromancer players on the battle.net servers.
Slashdot: Proof that a million monkeys at a million typewriters can create a masterpiece
As for the others claiming the economy is cyclical, do they honestly believe Clinton had nothing to do with the longest sustained period of growth the US economy has ever seen?
It had much more to do with:
-The ending of the cold war allowing a vast reduction in military spending.
-The vast amounts of investment wealth available from working baby boomers who will soon begin retiring.
-A fiscal policy of low interest rates by Alan Greenspan that decreased static savings accounts and increased stock market investments.
-Low energy cost spurred by high production in OPEC nations.
I honestly believe that Clinton had very little to do with the longest sustained period of growth the US economy has ever seen. Since you obviously consider his impact substantial, could you please list which of his policies had any direct or indirect effect on the economy?
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
'74 recession was under Ford(R) ... hmm well ... maybe the Republicans are just unlucky ...
'82 recession was under Reagan(R)
'90 recession was under Bush Sr.(R)
'01 recession
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Isn't it amazing that now the bubble has burst, the same pundits who predicted the "Long Boom" are just falling over themselves to declare that the past few years were an anomoly? Check out CNBC sometimes. You'll be amazed at all the analysts who "saw this one coming" and "knew that the bubble would burst." Like most talking heads, Katz has an amazing ability to leap from one speeding bandwagon to another.