Will Internet Companies Thrive in the Future?

By Terry Wohlers

Internet Editorial

An edited version was published in Rapid Prototyping Journal, Vol. 7, No. 4, 2001, MCB University Press. Copyright 2001 by Terry T. Wohlers

The burst of the dot-com balloon has many wondering what the future holds for Internet-related companies. According to the Boston Consulting Group, more than 117 dot-coms shut down their operations between September 1999 and October 2000. In October and November of last year, more than 200 Internet-related companies were trading 80% off their 52-week highs, and nearly 40 dot-coms had closed down, according to David Prawel of Janet Inc. in the section titled “The Internet Phenomenon,” published in Wohlers Report 2001.

Phil LoPiccolo, editor-in-chief of Computer Graphics World, wrote in his June 2001 editorial, “The same thing happened in the early 1900s with the arrival of motorized transportation. Between 1915 and 1930, a large number of companies included “engine” or “motor” in their names, he explained. Most of the companies failed, but the ones that succeeded, such as General Motors and Ford Motor, has produced an enormous percentage of Gross National Product in the U.S. over the past century. LoPiccolo believes—and I agree—that most Internet companies will go out of business. However, the few that succeed will drive the world economy over the next 50 to 100 years.

Today, a small percentage (some estimate 5%) of all sales transactions are done over the Internet. Within as few as three years, more than half of all transactions will occur on the web, LoPiccolo reports. If this happens, it will account for an staggering $1.5 to $2.5 trillion in purchases. Amtrak has put all of it suppliers and distributors on-line and now performs transactions in 30-60 minutes—jobs that before took 3-4 days, according to an article published in the April 2001 issue of Smart Business Magazine. The article goes on to say that Lockheed Martin uses e-procurement to do 36% more work with 20% fewer people.

The day when nearly all business is conducted on-line is not far off. However, a lot needs to happen between now and then. Some believe that almost everyone is connected to the Internet and uses it regularly. Not true. A recent study by Goldman Sachs discovered that only 26% of Americans are regular users. The usage drops to 15% in England and 8% in Germany. These numbers are growing constantly, but until the majority of people are on-line, Internet companies will not realize their potential and most will disappear. However, a few will secure the capital, customer base, and winning formula that will carry them for years, possibly decades, into future.