Written by Ian Peter
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The dotcom bubble started without the world wide web, and indeed in the beginning it didn't even recognize the Internet as important. Once Al Gore began talking about the "information superhighway" in the early 1990s, however, the "big end of town" - Hollywood, Silicon Valley, telecommunications carriers, cable companies, and media conglomerates, all began investing.
Between April 1992 and July 1993 all of the major US business magazines had published major features on new communications and the "Information Superhighway". It's worth analyzing what these magazines and feature articles talked about. The first thing I noticed - not one of the feature articles I picked up mentioned the Internet. It wasn't on the business horizon of this brave new converged world of Silicon Valley and Hollywood. They were more interested in interactive television.
Business Week's July 12 1993 edition had a cover story "Media Mania… digital - interactive - multimedia - the rush is on". Time Warner's Gerard Levin talked of switching home televisions to "anything, anywhere". Electronic books and magazines were about to change the world. Interactive TV would get to 20% of US homes by the turn of the century.
Gerard Levin was also in Newsweek's edition of May 31 1993. The cover story was a zillion dollar industry. The dotcom indifference to the number of zeroes in monetary figures seems to have had its origins about this time. Levin was going to get his bank balances on TV. Couch potatoes would be able to individualise the endings of movies and select camera angles for sporting events. Intelligent agents in the refrigerator would tell the car to remember that it was out of milk. (Strangely, we are still talking about these things a decade later).
California Business in April 1992 had Silicon Valley meeting Hollywood in a 100 billion market as its cover story. And Forbes Magazine on April 13 1992 featured cable companies beating the phone companies to wire homes for the digital age. And touted the ultimate convergence device, where the television telephone and computer would merge in to a single intelligent box - a telecomputer.
Anyone reading all of this and missing the plot of the imminent arrival of the Internet could be completely forgiven. None of these articles gave the Internet a mention.
This helps us to realize that the Internet didn't catalyse the dotcom bubble. It was merely latched on to as a vehicle when other avenues for investment did not appear to be going anywhere. The bubble was the second California Gold Rush and digital convergence before it became dotcom. The Dotcom mania was really about something that didn't happen and didn't have a dot anyway. Because many of the original dreams didn't look like happening, the arrival of the World Wide Web and an attractive Internet caused all of the above parties to shift gear.
Prior to 1994, telecommunications companies were mainly interested in producing smarter phones, which would be like computers. It probably took another 10 years before we started to see the sort of developments they envisaged appearing in the mobile phone arena.
TV and cable companies were into interactive television with 500 channels plus, interactivity, and video on demand. Choose your own angles for sports, choose you own plots for movies. Even Microsoft thought this was likely to be the main game, and Microsoft turned up at cable shows touting new navigation screens for the about-to-be 500 channel television set. However TV has been the couch potato of the digital age. It looks the same, largely does the same, as 10 years ago.
If TV is the couch potato of the digital age, the non-networked computer is not far behind. It really is hard to argue that computers as stand alone devices have improved much since, despite the engineering evidence of increased power and functionality. Personal computers remain as lousy and confusing as they were a decade ago. The last great advances in standalone computing were the mouse and Windows. Reliability does not seem to have improved. Speed for common tasks (such as opening a word processor) does not appear to be any faster, although some added functionality is available.
The networked computer however stands as the phenomena which has most affected our lives and caused changes. The shift of the computer from a computational to a communicating device is perhaps the most significant change of the information technology age so far. The growth of the Internet as a medium for connecting these communicating devices is, I suggest, the major change that happened.
And so the net grew. For the next five years we were to be bombarded with sometimes realistic and often unrealistic visions of the future; we heard of information superhighways, internet refrigerators and cars, knowledge economies, internet time and internet years, which were vastly different to any time known before, and the dotcom frenzy.
Not since the South Sea Island bubble in the 1700s had western economies experienced anything like the dotcom economic bubble. Suddenly everyone wanted a piece of the action; normally astute investors went crazy, and mums and dads added to the frenzy. For some, the dotcom era saw an amassing of great wealth. But almost overnight it disappeared during 2000 and 2001. The information age prophets of great things to come disappeared along with the monetary profits, and we all began to adjust to a more normal life, albeit one greatly enhanced by the large scale adoption of the Internet in western countries.
It may take a few years before we know how much wealth was lost in the dotcom era; some companies are still adjusting to post dotcom reality. But the losses are certainly in the billions, and with a few more years distance might be seen to be the major factor in the recent decline in the US economy. However dotcom is still too close to us to be able to fully understand.
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