Internet companies are taking on water, but no lifeboats yet

There are more than a few cliches to describe the current state of technology and the New Economy": Investors suddenly noticed that the emperor didn't have any new clothes (or profits); what goes up must come down; it was all smoke and mirrors.

In the past few weeks alone, at least two-dozen online firms and consulting agencies have either closed or laid off significant numbers of staff. Meanwhile, computer manufacturers have severely downgraded their sales projections, sending their stocks on what can be euphemistically termed a downward slope.

But before anyone heads for the technology lifeboats and Luddites raise victory flags, it's important to step back and take a hard look at what's really happening.

* As bad as computer sales might be, the need for computers is not going to go away.

A slight cooling off of interest by consumers combined with larger-than-normal inventories have computer companies running a little scared. But that doesn't mean the end of computers. It does mean computer manufacturers need to diversify into new technologies like wireless, and pay more attention to factors like better support for new users.

* "Wireless" is the real thing.

Wireless technology has the potential to reinvigorate much of the New Economy, and firms that work in this arena will do well in the next few months. But the importance of this sector is much greater in terms of how it will allow the Internet to leap off our desktops and find its way into our toasters, refrigerators, cars, etc.

* As bad as e-commerce prospects look for many businesses, the need for the Internet is not going to go away.

We always knew it was silly that online companies that had only been around for a few months, and had no profits, would have greater market valuation than Ford or General Electric. Now, most of them have gone the way of the dino-saurs.

Most of the companies that have survived this tidal wave have been in existence for a few years or were never taken in by the desire to be all things to all people in order to make as much money as possible.

A great example is Webex, a company that allows businesses to use the Web to hold real-time meetings. Webex managers look for venture capital until they had a really good feel for their business. Thus, they avoided the fate of many other online companies, whose stocks (as IPOs, or initial public offerings) were rushed to the market before they were ready in order to make as much money as possible.

Meanwhile, the Internet is quietly continuing to grow, and become even more a part of our everyday lives.

Recently, the ran a piece on how many states are now looking at using the Internet as a way to create a better voting system. Automobile manufacturers recently announced that many new cars will come equipped with wireless Internet connections. More companies are using the Internet as a way to cut costs, particularly in the case of business-to-business transactions - just three examples of how the Internet will be used in ways that once seemed like science fiction, but now make sense.

Tom Regan is associate editor of The Christian Science Monitor's Electronic Edition. You can e-mail him at

(c) Copyright 2000. The Christian Science Publishing Society

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