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Over a short few decades
electronic commerce
history has evolved, and has gone through several
distinct stages since its beginnings in the 1970s.
The Birth
of the Internet: At first, and hardly noticed,
the Net was as a realm for techies only. Initially designed
in 1973, the Internet was a series of communication
protocols written by Vinton Cerf as part of a project
sponsored by the U.S. Department of Defense's Advanced
Research Projects Agency (ARPA). The first demonstration
of a three-network Internet took place in November 1977.
A few years later a somewhat refined Internet was rolled
out in 1983, primarily as a fail safe method of defense
communications and as a means for researchers at various
universities to communicate.
The WWW
is Created: The World Wide Web and the coding
language of HTML were conceived in 1989 and implemented
between 1990 and 1993 by Tim Berners-Lee, enabling hyperlinking
capability. It was this user-friendly navigation we
know so well today, that gave rise to the Internet's
popularity.
The Boom
Ensues: Starting in 1993, entrepreneurs and
financiers realized that hyperlinked, electronically
posted data could be commercialized.
An economic boom
ensued, the likes of which hadn't been seen since the
beginnings of earlier technological breakthroughs: electricity,
the railroad, the telephone, the automobile and the
passenger-carrying airliner. Thousands
of hopeful new businesses were launched. Approximately
6,000 new companies of significant size raised a total
of more than $100 billion in venture capital. About
450 of these companies sold their stock to the public
via IPOs.
The Stock markets
soared and instant billionaires were made. Individuals
and families from all walks of life bet their savings
on technology stocks and watched their wealth rise quickly.
Venture funds that cashed out early reaped phenomenal
gains, and financiers easily found additional investors
for new venture capital pools.
Companies with
little or no sales and profits, led by the success of
Netscape's IPO, found eager buyers for their newly-issued
stocks. The NASDAQ rose to 5,000 by early 2000, and
the Chairman of the Federal Reserve Bank warned of "exuberant
optimism." Some said this boom couldn't last-others
said it was the beginning of a "new economy"
that would last forever.
The Bubble
Burst: In March of 2000 the Internet industry
faced a steep downward slope after the NASDAQ collapsed,
bringing the entire tech sector to its knees.
Hundreds of thousands
of people lost their jobs. Stock portfolio values plummeted.
Thousands of firms closed their doors, filed bankruptcy,
downsized or were scooped up at bargain prices by competitors.
Sellers of hardware, software, consulting and telecommunications
services suffered mightily. Entrepreneurs found it nearly
impossible to raise funds to launch or sustain their
businesses. The dream of a "new economy" became
a nightmare for some-profits still matter; business
cycles still happen.
Reality
Takes Over: By early 2003, this dark clouds
were finally lifting, and a new phase was taking shape.
Well-conceived,
Internet-based businesses were proving their value.
Amazon.com's stock was one of the best-performing stocks
of 2002. Consumers had become devoted fans of buying
over the Internet, and online retail sales soared by
37% during 2002. Businesses of all types were finding
that the Internet creates true operating efficiencies
and drives profitability.
For example, while
most of the airline industry suffered terribly in 2001-2002,
value-based discount airlines Southwest and JetBlue
enjoyed enviable financial performance, in no small
part because of their use of e-commerce to efficiently
book reservations and sell tickets online. "Efficiency"
is the most important factor in the e-commerce and Internet
sector's new-found success.
Consumers find
the Internet to be a terrific way to efficiently expend
their shopping and banking efforts. Travelers find the
Internet to be an efficient way to book hotels rooms
and airplane seats. Corporate procurement managers find
the Internet to be the most efficient way to purchase
needed goods and inventory. Hundreds of millions of
people worldwide find e-mail to be the most efficient
way to communicate.
Future
Technology Convergence The Internet is about
saving time, and therefore saving money, and the potential
of the Internet has barely been tapped. New methods
of taking advantage of efficiencies will become widely
accepted as access to high-speed broadband Internet
connections become commonplace.
For users of the
Internet (both business and consumer), the best is yet
to come, and many companies will earn terrific profits
in the process of serving those users. The number of
American homes with broadband access capabilities will
soon top 20 million, and a plethora of new services,
entertainment options and time-saving solutions will
become widely available for the first time. The long
awaited phenomenon of "convergence" of entertainment,
computing and communications will finally arrive.
The next decade
should be extremely exciting, both for consumers and
for firms that provide Internet-based services.
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