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The Internet Bubble Has Not Yet Burst

Posted On - 14/11/2014 10:24:26

Tomorrow's Internet Will Not be The Same As Today's
March 10, 2000. The start of the bust.

Just 2½ years later, the NASDAQ had lost 78% - $5 Trillion – of its value.

Whether triggered by Microsoft being declared a monopoly, automated ‘sell orders' on major stocks, the after-math of Y2K, or the dismal performance of on-line retailers over Christmas '99 is moot.

The result stands: a complete reboot of the tech sector and the birth of the internet we know today.

And while the internet has been hugely successful, it's built on flawed foundations. So much so it's genuinely hard to see how it can endure operating the way it does.

Tomorrow's internet will not be the same as it is today.

Join us in the third and final part of "Is The Internet Broken?" from our 2014 Open Day. Find out why everything you thought you knew about the internet is wrong.

eCommerce: not a game of chance

Making money online is harder work for smaller businessesIn the ‘90's the Internet was billed the cool and easy way to have your own business.

And not just any old business: for practically no start-up cost, you could sell to anyone on the planet.

So a $1M+ business run from a laptop on the beach was a dream many followed then and remains something people still pursue today.

So, the promise of vast sums of easy money drives legions of start-ups. And huge numbers of commercially naive 'wannabe's' take a punt. The result is fierce price competition.

But more, large well-known brands - the 'few' - easily draw sales using their reputations. For the remaining 'many' it's a very different story. Drawing traffic is hard work and even then its tough persuading visitors to buy.

Trading online does not guarantee success. Witness average turnovers for micro-business: at a mere £1,000/annum or just 0.6% turnover it's hard for them to justify the investment of time and effort.

Start small, think big, scale fast

The early days of the internet saw traditional business thinking eschewed: kick-starting the New Economy necessitated operating at a loss in order to capture market share and build brand.

The thinking was the first to do this would steal unassailable lead – so justifying their initial risk.

Amongst those cited for practicing this is Amazon. Having started back in '95, Amazon traded almost 6 years before reporting a profit. And while growth remains impressive at 23% in 2014, regular profits are anything but. To date the cumulative total amounts to a mere 0.6% of turnover. Given the scale of the business, this is as good as zero.

Twenty years on how can Amazon still expect shareholders to believe it's capturing market share and building brand? While the going may be tough for micro-business it's no picnic for Big.

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Also in this series
  1. The Internet Bubble Has Not Yet Burst
  2. eCommerce Growth is Crashing
  3. Internet Growth Is Not Materialising
February 2018 (1)
January 2018 (2)
December 2017 (2)
November 2017 (4)
Earlier (301)
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