Web 2.0: A new dot-com bubble in the making?
Not this time, say experts, because of consumer demand and a mature Web infrastructure
The dot-com bubble burst -- numerically at least -- seven years ago this month when the NASDAQ Composite index peaked at 5,048, more than double its value just a year earlier.
What followed was a bloodbath of layoffs and consolidation caused in many cases by "dot bombs" -- companies launched with great exuberance to grab as much Internet real estate as they could without mounting a successful revenue model.
In 2007, new Internet technologies have prompted another rush by start-ups and industry stalwarts to tap the burgeoning energy associated with Web 2.0 wikis, blogs, podcasts, widgets and social networks to quickly extend their Internet real estate.
Cisco Systems Inc., for example, this year has acquired two firms that focus on social networking, while venture capital is flowing for newly established firms like Eons Inc., which is making a social network for the 50-plus crowd, and Geni Inc., which is building a social network for families.
But while the Web 2.0 phenomenon may have some things in common with the Internet bubble, experts note that there are also stark differences, including the low cost of entry for companies launching blog, wiki or social networking businesses, and the maturity of infrastructures like broadband that are needed to support many Web 2.0 technologies.
The main difference, however, is that this time around consumers are driving the adoption of the technologies rather than companies trying to force their Internet sites and wares onto users, according to industry observers.
Indeed, instead of parking on the Web 2.0 sidelines to wait out a possible bubble, companies should be embracing the new technologies or risk losing out to competitors, said Andrew McAfee, an associate professor at Harvard University who coined the term Enterprise 2.0.
"What if they decide to ignore this phenomenon and their competitors don't and are able to harness this energy we see on the Web with Web 2.0," he said. "If the competitor can harness that internally and with its community of customers and suppliers … how much trouble would that first company be in? How unpleasant a scenario would that be? That is a key question for managers."
McAfee, like others interviewed for this story, doesn't expect that a rush to create Web 2.0-based systems will lead to a new dot-com bubble that will burst under the stress of failing businesses. "The first go-around was so big, and there was so large a collapse that I have trouble believing either the up or the down will be as big this time around," he said.
In addition, he said, venture capital investments in the new firms are generally far lower than those made during the late 1990s, and the companies receiving funding "typically have more than a PowerPoint" business plan, he added. "Maybe sometimes they don't have revenue … but they have a product, some customers and adoption."



- Excel 2010 Cheat Sheet
- Register for this Computerworld Insider Cheat Sheet and gain access to hundreds of premium content articles, guides, product reviews and more.
- Digital Transformation: Creating New Business Models Where Digital Meets Physical
- Individuals and businesses alike are embracing the digital revolution. Social networks and digital devices are being used to engage government, businesses and civil...
- Make the Connection: Better Network Connectivity Drives Transformation
- Network connectivity is more than just plumbing. Leading organizations today see high-performance network connectivity as a critical enabler of competitive advantage, and not...
- Virtualizing Government Infrastructure
- All server virtualization solutions are not created equal. The more-with-less agenda for government agencies is tailor-made for server virtualization, which is evolving into...
- Moving Service Management to SaaS
- Today, organizations can enjoy similarly substantial benefi ts by migrating their IT service management functions to a software-as-a-service model. This paper shows how...
- Achieving 360 Degree Network Visibility with Nimsoft
- 360° network visibility is critical for ensuring continuous availability of networks, servers, and applications-anything less could
have costly bottom-line implications.
All Networking White Papers
- Optimizing Networks for the Cloud
- Join guest speaker, Rohit Mehra, IDC Director of Enterprise Communications Infrastructure, to explore current trends, discuss best practices for optimizing Data Center and...
- Unified Communications 101
- What's the best way to implement a unified communications solution for your organization?
- Try the OptiView® XG on your network - FREE
- The OptiView® XG is the first dedicated tablet with automated network and application analysis -- fastest way to root cause. XG raises the...
- Apps QuickStart Series Part 2: Designing and Deploying SQL Server on VMware vSphere
- Download this webcast to learn about the design considerations for virtualizing SQL workloads, performance and scalability information and high-availability options, as well as...
- Apps QuickStart Series Part 1: Designing and Deploying Exchange 2010 on VMware vSphere
- Download this webcast to learn the virtual hardware design considerations for Exchange 2010, deployment using the building block approach, options for high-availability and... All Networking Webcasts