No question the dotcoms were a huge bubble. No question taking them public was a major mistake.
The fact is, though, they played very little role in the overall strength or health of the US economy. What they DID do is get companies like GE focussed on portions of their businesses where they can stand to benefit dramatically from the technological changes that have taken place.
One example is simply transaction costs. Prior to the internet, simply cashing a check (from the start of the process on my end to the point at which the money actually arrives in a client's pocket) had transaction costs that exceeded $7.00. Basically, writing a check for anything less than that was lost money. I had a friend at a major book retailer who had drawers full of checks for that much and less because it was too costly to cash. One of his jobs was to track how much revenue was lost from this.
Now, however, his job has been reduced because of internet technology which has reduced transaction costs to about .06. Suddenly, his drawers are now emptied and they are realizing huge revenues they couldn't before.
Take GE....as they activate more and more of this kind of software, their own INTERNAL transaction costs have been falling dramatically. When you consider that GE has been on the cutting edge of EDI since 1995 and earlier, Jack Welch isn't wrong in his analysis in saying that GE probably still has about $4 billion yet to be saved by incorporating the internet into GE's infrastructure.
So, for the consumer driven dotcoms, there was a bubble. For larger companies that have taken their time to get here....they haven't bubbled yet, probably won't and stand to gain the most.
One thing that is lost on EVERYONE is the number of SUCCESSFUL dotcoms. And there are quite a few. The problem is we all focussed on the stock market bombs. However, the number of successful mom and pop dotcoms that are growing organically is very dramatic. I know, because I service them day in and day out. |
