Radical achievements that bring substantial changes to the lives of every individual on the face of the Earth happen not very often. However, when they do, their impact is astonishing. One of such achievements is the establishment of the World Wide Web.
Nowadays, more and more people cannot imagine their lives without the possibilities of going online and surfing the Web for information, connecting with others, or even conducting a multi-million transaction. Companies involved in different spheres of business and situated in distant parts of the planet have the possibility to know about the existence of each other and the ability to work together only because of the opportunities that the WWW provides for them. By the way, World Wide Web is not even the Internet as many people think. The Web is a service that works through the Internet network, similar to e-mail. It is one of the basic and most important services, which sends information from one computer to another with the use of HTTP protocols, a language used to transmit data through the Internet (Beal, 2010).
The Web has been in the world for quite a long time, developing and influencing the lives of individuals day by day. Surely, it has changed since the very first time when Tim Berners-Lee, the famous initiator of the whole concept of managing information through the network of linked computers, thought about creating something that could help him in his everyday work. Its focus on being the tool for educational studies among scientists has shifted to a more basic but quite important idea of connecting people and providing them with information that they request. Such changes created a solid basis of a commercial use of the Web that nowadays attracts millions of entrepreneurs and thousands of businesses all around the world. Truly, the World Wide Web saw its great rise and falls starting from its early days of establishment due to many reasons discussed further in this paper.
Definition and History of the World Wide Web
The Web in general is a worldwide space in which users can read and write information by using computers that are linked to the Internet. Consequently, the WWW and the Internet are not the same even though many people use the notions interchangeably. Mostly, the term ‘Internet’ relates to the networking infrastructure through which millions of computers globally are connected to each other. The World Wide Web, on the other hand, is an information-sharing model that is associated with the way of accessing information over the medium of the Internet (Beal, 2010).
First ideas related to the concept of the Web link to the creation of the telegraph. However, real sufficient achievements can be traced back to the year 1980 when Tim Berners-Lee, annoyed by the fact that the data required for his work was scattered in different self-contained databases and was problematic to work with, created a program called Enquire, the first prototype of the modern World Wide Web (Mulzer, n.d.). In 1989, Berners-Lee wrote a paper known as “Information Management: A Proposal,” that described a possibility of managing information through the use of a “hypertext” that linked together different documents by means of a local network (Mulzer, n.d.). Since that time, the idea of the Web developed from what it was supposed to be in the beginning, i.e. a file-sharing tool for educational purposes and the US government contract investigations, to a radical global concept that annihilated previous boundaries and established the digital world.
During 1991, the first browser and web server software were created. At the end of the year, about 20 websites were available for web users. In 1993, the creators of the World Wide Web decided that such a technology should be accessible to everyone and free of fees. Therefore, due to such a decision, by the end of 1994, about a million of browser copies (Netscape Navigator) were in regular use (Mulzer, n.d.).
The Dotcom Bubble
The Web is a great achievement in the history of humankind, and as it is always exposed to innovations, it is indeed a great basis for doing business for both multinational companies and average individuals. During the period from 1994 to 2004, the world of the Internet experienced a rapid growth, which was not common to any other technology of that time. Truly, the well-known Yahoo, Amazon, and E-bay are only a few examples of the projects that achieved great results through the proper use of the Web possibilities. However, it is also crucial to mention that even though there are many successful Internet-based companies in the world, there are also hundreds of stories about bankruptcies and financial disasters related to the development of the World Wide Web.
The Beginning of the Dotcom Bubble
The ‘dotcom bubble’ is a nickname of the financial crisis in the technological world that appeared at the beginning of the 21st century and forced the closing of more than 200 high-tech companies in the US alone. Investopedia defines this term as the rapid rise in equity markets fueled by investments in Internet-based companies during the late 1990s that led to substantial financial loses of investments and bankruptcy of a number of Internet-oriented companies (“Dotcom Bubble”, n.d.).
The beginning of the “bubble” dates back to the year 1994 when the significant increase in the number of start-ups involved in the high-tech industry started to form and develop a new industry of digital business. Most of these digital companies added suffix ‘.com’ to their names. Interest in the “new economy” was greatly developed by some economists of that time who declared that the days of “brick-and-mortar” businesses, which included sectors such as natural resources and retail stores, were the notions of the past. The majority of companies that were established during these years worked directly with the Internet and the possibilities that it provided as the basic platform for doing business with potential customers. This means that, during that period, specialists believed that Internet was becoming the key platform where expenses of selling products to customers were more cost-effective then opening a store or dealing with distributers. This is the idea of a place for doing business (Colombo, 2012).
The Dotcom Bubble Inflates
Due to the positive expectations for future development in this industry, such start-ups received numerous individual investments, which led between 1995 and 2000 to exponential growth in value of equity markets where technology industry was the primal one. For instance, NASDAQ index rose from 600 to 5,000 during this period. This phase of the Internet development is also called the “golden age of the Web” (“WWW 1993 – 2001”, 2012). Even though many positive changes have been initiated in the rapidly developing industry, the dotcom companies lacked basic important things for businesses: a business plan, clear strategy, and even earnings from basic selling operations. For example, Pets.com, the online pet product retailer, was receiving losses from its operations, but after making the initial public offering, they started to raise millions from investments. Similar start-ups were launching IPOs even before establishing clear working business processes, and they managed to receive millions from investors that expected great profits from the newly-established tech industry (Colombo, 2012).
The Dotcom Bubble Bursts
In 2000, investors started to realize that the great growth of the market was going to transform in a speculative “bubble” that had to start a collapse in the tech industry. Within several months, the NASDAQ index fell from 5,000 to 2,000 and led to the decline of many dotcoms. During the next month, panic arose among investors, which led to the drastic fall of the stock market value. By 2002, NASDAQ was as low as 800. For example, the stock of Microstrategy, the former leader of the industry, changed from $3,500 to $4 per share (Colombo, 2012). Such well-known companies of that time as Boo.com, Startups.com, Freeinternet.com, Pets.com, and WorldCom became bankrupt. However, even during such times, some start-ups managed to survive and even establish a stronger trust among customers. These are such companies as Amazon, E-Bay, etc. (Peter, n.d.).
The initial cause of the dotcom bubble was mostly due to the false belief of investors that the new concept, the World Wide Web, could replace the ‘brick-and-mortar’ facilities necessary for the businesses to function properly. In addition, the blind trust of investors in the success of new high-tech start-ups, even without basic company annual reports required due to their status as IPOs, played a dominant role in the establishment of the dotcom bubble.
In conclusion, it can be stated that the World Wide Web has played a fundamental role in the development of modern society and has practically created the possibilities never known before. The incredible rise of technologies has also led to significant activities in the business sectors of the high-tech industry. The wonderful possibilities to gain great profits encouraged many companies and individuals to invest money in start-ups and small enterprises that based their business on the features of the Internet. Such arrangements have formed the disastrous financial collapse in the technology sector, better known as the dotcom bubble, which “burst” at the beginning of the 21st century. The main reasons of the stock crisis in the high-tech sector are obvious. The first one is the hurried actions of companies entering the market with the desire to open an IPO and gain money from investments. Such actions totally neglect the genuine essence of business that implies operating on the market according to a solid business strategy, developed business plan, cooperation of all of the company departments, and the clear focus on the goal of achieving constant profit from overall operations. The second reason of the crisis is the lack of focus on profits for investors. If investors were considering the overall financial reports of the companies to which they made their investments and relied not only on the stock speculations and a genuine belief that the Internet is pushing everything to a profitable “new economy,” then, perhaps, crisis and loses would not have occurred.
The results of this collapse influenced negatively the economy of the country. Hundreds of companies went bankrupt, while thousands of investors lost their money. However, some organizations managed to survive and develop soon thereafter into the well-known and respected enterprises. Such companies lead the development of the technology industry today.