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Lasting Benefits of the Dot-Com Bubble

By Teri Robinson
Jul 15, 2002 6:27 PM PT

Now that the dot-com bubble has burst, sparking a recession that has spread through the U.S. economy and shining a spotlight on corporate business practices, the boom era is facing its share of harsh criticism. But for all the failures that dot-coms brought to the business world, they also were responsible for some truly astounding technological innovations and drastic changes in accepted business models.

Lasting Benefits of the Dot-Com Bubble

For example, AMR Research analyst Louis Columbus told the E-Commerce Times that dot-com mania brought integration to center stage.

"Integration is king. That was a huge lesson," he said. Enterprises found that to develop a comprehensive e-commerce strategy, their applications had to work together seamlessly.

Dot-coms also underscored the importance of adding depth to applications rather than simply offering cliche-ridden value propositions.

"All the dead dot-coms share a common trait: They all had value propositions that sounded like platitudes," Columbus said. "Every one had a degree of arrogance in them about changing the world, and none of them had real products aimed at real customers."

Permanent Pragmatism

A more indirect benefit is that distrust spawned by dot-coms' arrogance has deterred businesses from "investing purely on promises," according to Columbus. "There is a permanent level of pragmatism out in the market which will never go away."

For example, the software market now demands more solid proof that success is in the offing. Firms are looking for companies that can show guaranteed ROI (return on investment) and pilots that yield demonstrated results.

"The best benefit of all from the dot-com era was that business is now more focused on results than ever before," Columbus said.

The dot-com phenomenon also highlighted the importance of collaborative work environments. "The ecosystem [demanded that you] work with other people," Yankee Group analyst Rob Perry told the E-Commerce Times.

More Efficiency

Referring to the Internet as a once-in-a-generation technological innovation that truly changes how business is conducted, Giga Information Group analyst Andrew Bartels told the E-Commerce Times that the dot-com era not only spawned new technology, but also improved efficiency.

In addition, because the Internet is built on standards, it served as a common platform for communicating and building applications.

"It created an environment where XML could be the standard" for sharing data and applications, Perry noted, adding that this will have a profound and lasting impact on e-commerce.

According to Perry, while there had always been a lot of content online, ensuring access to that content was not a priority until the dot-com revolution was in full swing. "It really matured search engine technology," he said.

In addition, he credited dot-coms with "driving [users] to find a use for computers at home."

'Digestive Stage'

According to Bartels, now that the hoopla surrounding the dot-com boom has faded, the industry is in "'the digestive stage' for a whole new set of technologies that came along, figuring out ways to use it effectively."

But that process cannot be accomplished overnight, Bartels added. The ill effects of the dot-com implosion will linger for a long time, and the market is not likely to see another dot-com boom in the near future, although e-tailers are snapping up defunct companies' assets and relaunching once-dead sites to capitalize on existing brand names or e-tail foundations.

Then again, who knows what type of innovation might occur once the economy picks up again?


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