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RailWeb

The first big Internet bubble is now in the process of popping (it still has more deflating to do than most pundits believe) ... and already the grandiose comments of the past few years are starting to look singularly silly. "The Web is as important a discovery as Fire," comes to mind. (I'll be merciful and not identify the formerly-rich-and-famous speaker of that line.)

But another metaphor for the Internet may actually have legs: the Web boom is like the Railroad construction mania of the 19th Century. Rail transport cut the cost of moving goods and people dramatically, while speed and reliability shot up. A great thing, yes. But follow the analogy further: are railroads mega-money-makers today? No, and they haven't been for decades.

An infrastructure, once it has been built, is no cash cow. During the initial construction phase a few companies can be big winners, and we tend to remember them --- rather than the less-lucky also-rans. But real profits are made elsewhere, by overcoming new economic bottlenecks in a constantly-changing landscape. Not even monopoly-style predatory behavior can garner exorbitant returns on capital in the long run; it either attracts competition or regulation.

So, once the dust settles, whither the Web? Like the rail system, it will fade into the background ... carry the bits cheaply and quickly ... and only come to consciousness when there's a catastrophic failure: a "train wreck", so to speak. Good infrastructure is like that.

Wednesday, January 03, 2001 at 05:43:59 (EST) = Datetag20010103

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