Revenge of the dot-coms

Starting a few years ago, we were all supposed to laugh at the dot-coms. How could anyone ever have believed, let alone invested in, their pie-in-the-sky theories and imaginary business plans? Surely, after the collapse of the Internet bubble, we would all come back to our senses, and normal patterns of business leadership would resume.

Of course, no one is laughing anymore. The reality is that in an expanding range of sectors, the dot-coms are getting the better of their pre-Web rivals. Companies whose very survival was recently questioned have turned the tables and are now threatening the survival of others. It’s been an impressive recovery.

Consider just a few of the most prominent examples. Inc. has crushed Barnes & Noble and has successfully expanded into many forms of retail. Google Inc. and Yahoo Inc./Overture Services Inc. dominate the online advertising business. Expedia Inc. maintains a healthy lead over the airline industry joint venture Orbitz LLC. and Apple Computer Inc.’s iTunes have all but eliminated the offerings of the music industry giants. PayPal Inc. and eBay Inc. control the Internet funds-transfer business. WebMD remains the leading health care site.

Of course, there are other industries — such as news, banking and investing — where established pre-Internet firms are also online leaders, as well as individual online successes from other industries, such as Dell Inc. (computers) and Wal-Mart Stores Inc. (retail). But when it comes to creating major new services and important new forms of value, the start-up companies continue to have the edge. While this is especially true in consumer markets, the same pattern has generally emerged even in business-to-business markets.

Perhaps even more noteworthy, the strategic impact of the dot-coms is now starting to live up to some of the most visionary bubble-time hype. Whereas many people once dismissed Amazon as a mere bookseller and Google as just the latest search-engine market leader, we can now see that they are positioning themselves as powerful e-commerce platforms and important providers of general-purpose technology services.

Both Amazon and Google have made great progress toward becoming broad-based Internetwide resources that, like operating systems and databases before them, can be used to create new forms of value in an ever-expanding set of ways. They are even managing to give tangible meaning to the idea of Web services, something that Microsoft Corp., IBM Corp. and other pure IT players have struggled to do.

Why haven’t established pre-Internet market leaders responded more effectively? The answer should be clear to anyone familiar with IT industry history. Today’s dot-com survivors are outperforming their established rivals for the same reasons that many venture-capital-backed IT start-ups have surpassed established IT suppliers. The younger companies tend to be faster, more focused and more motivated, resulting in more responsive organizations not bogged down by history. In other words, established pre-Internet businesses are having the same problems dealing with newcomers that mainframe, minicomputer and workstation vendors once did.

The bottom line is that there was always a lot more substance to the dot-com boom than many of us now seem to remember. While the many financial excesses of the late 1990s certainly needed a major correction, the ideas that created the bubble have lived on.

A decade from now, much of the promise of the dot-com revolution will be fulfilled.

David Moschella’s latest book is “Customer-Driven IT: How Users Are Shaping Technology Industry Growth.” Contact him at [email protected].

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

ADaPT connects employers with highly skilled young workers

Help wanted. That’s what many tech companies across Canada are saying, and research shows...

Unlocking Transformation: IoT and Generative AI Powered by Cloud

Amidst economic fluctuations and disruptive forces, Canadian businesses are steering through uncharted waters. To...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now