The Unfulfilled Promise of the Internet: A Retrospective

The Aftermath of WebVan's Demise

The collapse of WebVan has elicited two main reactions. The skeptics, who never bought into the hype of the internet revolution, see it as further proof of the internet's inherent weaknesses. They dismiss the grandiose claims about the transformative power of a fully connected world.

On the other hand, the optimists argue that WebVan's downfall was due to poor management rather than a flaw in the concept itself. They maintain that the internet has already revolutionized the world and that the failure of one company should not overshadow the overall success of the web.

The Unresolved Question

There is a third perspective that acknowledges the uncertainty surrounding the internet's impact on our lives. It posits that while the internet will undoubtedly bring about significant changes, it is still unclear what form these changes will take. The internet's potential is likened to hundreds of televisions, each with the potential to profoundly influence us, but it remains to be seen which of these will take root and flourish.

The Clear Winners

Two areas where the internet has had a significant impact are email and business-to-business ecommerce. Email has transformed communication, especially for families and friends living in different states. However, it still falls short of the telephone in terms of facilitating meaningful communication.

For businesses, email has replaced the typewriter, enabling efficient and cost-effective communication. Business correspondence, proposals, blueprints, and legal briefs are now sent over the internet, resulting in substantial savings for both senders and recipients. Email is arguably the internet's most successful application.

The Rise of Business-to-Business Ecommerce

Despite the dot com crash and the decline of tech companies, business-to-business ecommerce has thrived. Companies that were once considered giants, like Ariba, Ventro, and VerticalNet, have suffered the same fate as WebVan.

However, a significant shift is occurring within companies. A decade ago, companies allocated about 10% of their capital spending to information technology (IT), which is now virtually synonymous with internet technology. Today, IT spending accounts for over 50% of all corporate capital spending. Even as companies cut costs, a Gartner report reveals that 53% of Fortune 1000 companies have increased their IT budgets by more than 20% this year.

The Return on Investment in Internet Technology

Companies are investing heavily in internet technology because it offers a quick return on investment. The cost of the investment is often recouped within weeks. CEOs are increasingly asking their technology and information executives to speed up the process.

Large corporations are investing millions in creating private networks to connect with suppliers and customers. Cisco Systems, for example, has reportedly spent $300 million building its network. These investments are yielding significant efficiency savings, proving that the internet is far from a bust.

The Shift in Tech Spending

Despite the increased spending on technology, companies like Ariba, Ventro, and VerticalNet are struggling. This is because the tech dollars are now going to established companies like Oracle, Microsoft, and IBM, which have become ecommerce giants.