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The millennium
and the bubble

February 2001

disponibile anche in italiano

  Giancarlo Livraghi
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That was so easy to “forecast”. The new millennium started with little noise and hardly any news. There were modest celebrations, no great events, no prophecies of glory or doom. The prophets had run out of options – and it’s quite risky to predict anything that can be easily verified at short notice.

Remember the millennium bug? At midday on December 31, 1999 many worried people in this part of the world were relieved when they heard from the other side of the planet, where the time line had been crossed, that there was no general breakdown, no catastrophe. But, on the other hand, the problem is still unsolved and could re-surface thirty years from now – though after all the big noise nobody is talking about it.

At the end of year 2000 there was an attempt to renew the scare. Press reports, allegedly inspired by the FBI, said that thousands of time-set viruses would hit simultaneously at midnight on December 31. Nothing happened.

The end of the year (or century, or millennium, or whatever) was a time of reckoning for the so-called “new economy”. Summing up showed a dramatic fall in stocks. Some investors are holding equity that they paid a hundred dollars and now is worth one – with very slim chances of recovery. All of a sudden everyone discovered what has been obvious from the beginning. There was no lottery in which all are winners. Even the basic venture capital approach (invest in ten, nine will fail but one will pay for the rest) didn’t work out. Now everyone is blaming everyone else for not understanding what every careful and uncommited ovserver had known for over a year.

It would be nice if the bubble had really exploded and the days of mindless gambling were really over. There would be money, time and resources for some real business. Unfortunately we are not there – or not yet.

On this side of the ocean – specifically in my country – the grapevine is full of murmurs about large “portals” going out of business. In a few cases, it’s true, But most of the large online businesses are not closing. But they are cutting costs, reducing investments, dismissing staff – as noiselessly as they can. Why? The answer is extremely simple. They expected much larger and faster returns than were possible. Their business plans were based on thin ice – or on the “miracle” promises of expensive self-appoited wizards. Now they are trying to tidy up the mess, but they still have no clue on how to base their strategies on more solid ground. They are trying,(rather clumsily) to make it look like “ business as usual”. CEOs are not resigning, management is not being replaced. There are no clear indications, so far, that anyone in those companies has learnt a lesson or discovered how to build a business on sounder foundations. Or has simply realized that there has never been an “internet time” and the clock of development is set by human behavior, not by the (often false or useless) “innovations” of technology.

But there was some news at the end of the year, that escaped general attention. The worldwide internet hostcount was, for the first tome, over 100 million. That’s not just a “statistical curiosity”. An analysis of the growth pattern leads to some interesting evaluations of how the internet is expanding. (See the data section of this site.)

In the case of Italy, thi picture is quite different from what it used to be. Over a million inernet hosts is not just a “round figure”. It’s a dramatic change. Italy is now one of the top ten countries worldwide in internet activity. It was in no such position one or two years earlier. The basic (and unanswered) question is: now that we have quantity, what are we going to do about quality? That’s the challenge for the new year – and for several years to come.

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