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Web 2.0 Bubble May Be Worst Burst Yet

Zonk posted more than 6 years ago | from the not-the-bubble dept.

The Internet 417

athloi writes with a link to an editorial by John Dvorak over at the PC Magazine site. Rather than his usual tilting at windmills, Dvorak turns his attention to possibility of another big internet economy 'pop': "Every single person working in the media today who experienced the dot-com bubble in 1999 to 2000 believes that we are going through the exact same process and can expect the exact same results — a bust. It's déjà vu all over again. Each succeeding bubble has been worse than its predecessor. Thus nobody is actually able to spot the cycle, since it just looks like a continuum. I can assure you that after this next collapse, nobody will think of the dot-com bubble as anything other than a prelude." It certainly seems like another burst is imminent; will this one be worse than the original, or have less of an impact?

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417 comments

Phew! Thank [insert deity] for that! (5, Insightful)

Space cowboy (13680) | more than 6 years ago | (#20075899)

Dvorak is crying that the sky is falling; so, based on his track record, everything must be just peachy then.

Good.

Simon.

Re:Phew! Thank [insert deity] for that! (0)

Anonymous Coward | more than 6 years ago | (#20075921)

Yeah, I'm going to ride this supposed bubble just until Dvorak is convinced that it really is stable.

Does anyone listen to him any more? (4, Insightful)

khasim (1285) | more than 6 years ago | (#20076025)

He's a clueless idiot who just trolls for page hits.
From TFA:

We saw all sorts of bubbles before the dot-com one. For instance, there was the CD-ROM bubble. Remember all the CD-ROM companies? Bill Gates's "Information at Your Fingertips" was the watchword. Microsoft itself started a unique division called Microsoft Home. The whole scene collapsed almost overnight.

Yeah, I keep my music CD's and software CD's in the same box as my Pets.com stock.

He's an idiot, paid by the page hit.

Re:Does anyone listen to him any more? (4, Funny)

Anonymous Coward | more than 6 years ago | (#20076173)

He's an idiot, paid by the page hit.


Zonk?

I'm here all week, try the seafood platter (1)

Edie O'Teditor (805662) | more than 6 years ago | (#20076323)

He's a clueless idiot who just trolls for page hits.
But enough about Roland Piquepaille...

Re:Does anyone listen to him any more? (5, Funny)

Hijacked Public (999535) | more than 6 years ago | (#20076331)

He's an idiot, paid by the page hit
And yet people on Slashdot still quote his articles.

Re:Does anyone listen to him any more? (5, Informative)

wootest (694923) | more than 6 years ago | (#20076395)

By CD-ROM, I think he means the "interactive", "multimedia" "games"/apps/"experiences" of the mid-90s, hailed by certain powers-that-be as the things that would get us to run out and buy CD-ROM drives in droves. The full screen genre preludes to Flash (in fact, a great deal were made with Shockwave) that never were useful.

I can't say whether it was a bubble or not, but I know I'm glad no one, except for perhaps some cell phone/PDA software autorun presentations, still uphold that particular art form. With this in mind, he's not all full of crap.

As for the industry going towards more or fewer bubbles, I have no idea. On one hand, the industry is stabilizing and maturing (if by "maturing" you mean "big companies can upsell other big companies on ridiculous systems no one needs") so more and more jobs are guaranteed. On the other hand, there's still technical evolution and still wrong-headed venture capital, so there will always be costly software projects that fail (and software projects *do fail*, more than half of them, regularly). On the gripping hand, there are people who know way more about this industry than I do and even they can't say which way it'll go.

Re:Does anyone listen to him any more? (1)

0xdeadbeef (28836) | more than 6 years ago | (#20076453)

You bought pets.com stock, and you're calling Dvorak an idiot? Are you claiming there wasn't a CD-ROM bubble?

Companies come and companies go (4, Insightful)

KingSkippus (799657) | more than 6 years ago | (#20076099)

Companies come and companies go. It's a fact of life. It doesn't make them going out of business a bubble bursting.

Dvorak talks about a "CD-ROM bubble." Now, I've been around for a while, and I thought I would remember any major deflation of a market such as what happened in the dot-com bubble, but what the hell is he talking about? Ditto pad computing, I must have missed all the hype about that. I do remember word processor "wars," so to speak, but even that is questionable. As far as I recall, WordPerfect led the market for years and years, then Microsoft Word came along and cleaned its clock. Yes, there were some minor players, but seriously, when they went out of business over the years, was it really a bubble bursting? Was there really a PC clone bubble that burst? I remember two-inch thick Computer Shopper magazines with dozens and dozens of company, and over the course of time they all were either bought up or folded, but was it really a bubble bursting?

The thing that made the dot-com bubble unique was that it affected damn near every corner of the industry, even industries that had hardly anything to do with dot-coms, and seemingly all at the same time, around 2000 to 2002. Most of Dvorak's other examples were companies coming and going as they always have and always will.

As for the future, it's hard to say. There will undoubtedly be market normalization for companies that are overpriced right now, but I seriously doubt that so many people are going to be affected all at once like they were in that 2000 to 2002 timeframe.

In other words, companies will come, and companies will go. It's not major crisis, and no reason to panic.

Re:Companies come and companies go (4, Insightful)

Otter (3800) | more than 6 years ago | (#20076301)

The thing that made the dot-com bubble unique was that it affected damn near every corner of the industry...

Also, unprofitable CD-ROM startups never had their stocks traded heavily by greedy, clueless retail investors. Developers lost their jobs and institutional investors lost their money but it didn't affect the general public the way the collapse of pets.com or eToys did.

Since investors have (temporarily) learned their lesson, the eventual shakeout 2.0 isn't going to affect anyone outside the industry.

Re:Companies come and companies go (4, Insightful)

fistfullast33l (819270) | more than 6 years ago | (#20076407)

I agree with most of what you said. It seems as though Dvorak is mistaking the dot com bubble with the market trends that occurred around the same time. Take CDRoms and the WWW explosion - both resulted in rushes to put anything you could on that medium. Cookbooks, encyclopedias, maps - they all ended up rushing towards whatever medium was the hot topic of the moment. I seem to remember the movie Disclosure having some premise regarding a CDROM virtual world or whatever - it didn't make sense.

The dotcom bust was more about the money being invested - usually poorly. All this money was coming in and nothing was getting produced. Anyone with an idea was given cash. It was tightly linked to the WWW rush, but it wasn't exactly the same. We still have that WWW rush as we see more and more services move to the web and the first adopters start to mature - see Wikipedia and Google Maps as second generation web services versus movie rentals like Netflicks, which are a relatively new experiment. The money, on the other hand, is there but everyone is considerably more controlled about their investments. Pets.com wouldn't get investors today without a solid business model or more likely a working implementation first. This is why Google succeeded as an IPO - they were already dominating search and web advertising. Ditto MySpace being bought out and Facebook talking about going either way.

I don't see a bubble per se - I just see smarter investing and wiser hiring practices. That was the second symptom of the bubble in 2000-2002 - people with little or no experience were hired for jobs that required some level of training. There's no way you can land a job at a company now without the proper education. Even outsourcing has cooled down, outside of the politically advantaged hype that the press tend to give it. Does anyone really care that you can't have a career in a call center anymore?

Just my $0.02

Dvorak, DVORAK!! Bwahaha ha ha... (3, Funny)

crovira (10242) | more than 6 years ago | (#20076109)

If you believe anything that comes out of his cloaca, I've got a bridge to sell you...

Once again, Dvorak doesn't know what is happening or what people are doing with the Web.

I have never met anyone as consistently wrong as Dvorak.

How he hangs onto his job is beyond me.

Then again, I think anything he would actually write for is probably Rupert Murdoch style fish wrapper.

Yeah, John C. tell me again how Apple should be chopped up and sold off to enhance share-holder value.

You stupid cunt. Blinkered, Phillistine pig ignoramous.

Re:Dvorak, DVORAK!! Bwahaha ha ha... (1)

Bud Dickman (1131973) | more than 6 years ago | (#20076285)

He keeps his job because he gets coverage like this. Even if everyone who reads this story on Slashdot is in agreement that Dvorak doesn't know what he's talking about, he's still brought in readers. When Slashdot covers his next asinine statement, PC Magazine's website will get the same jump.

People need to start canceling subscriptions to PC Magazine and avoiding their website until they stop publishing this rubbish. After all, this is the same guy that complained that Windows System Idle Process was monopolizing his CPU.

sincerely,
Bud Dickman

Re:Dvorak, DVORAK!! Bwahaha ha ha... (1)

TheRaven64 (641858) | more than 6 years ago | (#20076427)

Wait... are you saying people actually click on links to Dvorak articles? Seems like a waste of time and bandwidth. It's quicker to just come here and laugh at his idiocy based on the summary; the end result is the same.

Re:Dvorak, DVORAK!! Bwahaha ha ha... (1)

charleste (537078) | more than 6 years ago | (#20076461)

But most of us saw the article was by Dvorak, and didn't RTFA - so we can both beatch *and* feel smug about not helping his paycheck along.

Re:Dvorak, DVORAK!! Bwahaha ha ha... (1)

Darth (29071) | more than 6 years ago | (#20076489)

Don't be silly. Being posted on Slashdot doesn't increase their hit count.

Given that nobody reads more than the summary for any of the other articles, what makes you think they clicked on the story on this one?

Re:Phew! Thank [insert deity] for that! (2, Informative)

jellomizer (103300) | more than 6 years ago | (#20076467)

Web 2.0 is a technology upgrade (Basicly assuming people have a modern web browser IE 6+,Firefox) that will give customers more tools on the web pages... It doesn't change the Business model. Wich the .COM boom tried to do. the "Web 2.0" Stuff is just the natural upgrade to websites that will add a bit more interface to them... Before that they did it with Java Applets, Active X controls, or just clumsy reloading of pages. Much like how some people thought Color TV was just a fad. Color TV was an improvement on TV. Depending on marketing at the time and content the TV during the 50s may have just stayed a fad and went away if the shows were produced very poorly. Technology improves improvement is not a Fad it is just progression. A new Technology could be considered a fad like HDDVD or Blueray but not High Defination Media.

Is... (1)

Creepy Crawler (680178) | more than 6 years ago | (#20075909)

Dvorak important and relevant? I think not.

Is there a way to put a -1 against a certain "Story writer"? I dont care if Bonk.. er Zonk or whoever puts it here...

zzz = Dvorak

Re:Is... (5, Funny)

Heftklammerdosierer! (846009) | more than 6 years ago | (#20075943)

Quick, someone mod TFA -1, Dvorak!

Re:Is... (1)

IgLou (732042) | more than 6 years ago | (#20076155)

Umm, given Zonk's track record of posting relevant stories wouldn't -1 Zonk be more appropriate? My life would be much easier if I could filter out those types of articles. :P

Re:Is... (2, Informative)

IWannaBeAnAC (653701) | more than 6 years ago | (#20076475)

What is stopping you then? Surely you have seen the 'Zonk' checkbox on the 'Customize Stories on the Homepage' section of the user preferences?

Really (4, Insightful)

MyLongNickName (822545) | more than 6 years ago | (#20075911)

"Every single person working in the media today who experienced the dot-com bubble in 1999 to 2000 believes that we are going through the exact same process and can expect the exact same results--a bust."

The first sentence of the article and the first blatantly incorrect statement. Is it worth reading on?

Re:Really (1)

*weasel (174362) | more than 6 years ago | (#20076165)

The by-line says 'no'.

It's a bit different (5, Insightful)

Aslan72 (647654) | more than 6 years ago | (#20075919)

People get giddy with their money and spend it foolishly, yes; however, this time around I think it's a bit different. People within the top tier of sites are actually making money, creating business plans, etc. Services that are offered are actually useful and when they aren't, they get eaten.

Re:It's a bit different (4, Insightful)

CdBee (742846) | more than 6 years ago | (#20076063)

It's also different in that probably half as many people again are "online" than 7 years ago, the technology is much better and the kind of interaction the original Web bubble required can be implemented without click-and-load HTML-only interfaces.... and more to the point, the business sector seems to have a far better insight into what business plans sell and what services are desirable

Re:It's a bit different (4, Interesting)

TodMinuit (1026042) | more than 6 years ago | (#20076227)

The people in the top-teir of the bubble 1.0 were making money also. That's why they're still around (Amazon, eBay, etc).

The startups still aren't making money, they still don't have business plans, they're exactly like they were in the bubble 1.0 days. Only now, instead of an IPO, you wait until Google buys you.

the stock charts are really different (4, Informative)

acidrain (35064) | more than 6 years ago | (#20076443)

People get giddy with their money and spend it foolishly, yes;

Sure Google's stock is way up there, and the price/earnings ratio is a little foolish on some of the brand name tech stocks, but go back and look at the stock charts. This time around, there is none of the obscene spiking that sends investors into a "buying panic." And without those heights to fall from we won't have a "selling panic." So the basic mechanics of a bubble in the investment sense are missing. Investors have mostly been thinking about commodities and uranium, and are generally wary of tech stocks after the dot bomb.

--
thegirlorthecar.com [thegirlorthecar.com] - a dating game for guys

I dont believe so. (5, Interesting)

jshriverWVU (810740) | more than 6 years ago | (#20075923)

It's not like the 90's where anyone with a basic idea and a BS/BA degree could get venture capital to start up "the next best thing". Most of those companies died out, and people are more cautious with their money. Most of the new companies and ones who survived are service related. Those can live on, and whether it's AJAX or the next big tech, it doesnt matter. If you fill a real niche and make a solid product you will survive. If you're a new company living in an AJAX web 2.0 dream thinking you're cool, and hiding behind some pretty effects but no real substance you're in for a long trip. This is true for any business.

Re:I dont believe so. (1)

morgan_greywolf (835522) | more than 6 years ago | (#20076259)

Absolutely. The .com bubble burst, but plenty of companies survived it. Amazon is a good example. Like him or hate him, Jeff Bezos had a solid business plan and idea. The one thing people would absolutely buy on the Web was books, and if you made it convenient, easy, and cost-effective, they'd continue to buy books from you. Focus on the customer service, give people some free shipping now and then, and you'll get the repeat business that it takes to sustain you.

Is Google going anywhere? Doubt it. Plenty of other startups with all sizzle and no steak will die. Others will survive and turn into thriving businesses. It's the same as the real world.

Which is something I don't get -- Why do people consistently think that the Web somehow changes the rules of life? Have solid business plan, with a solid business model, make money -- you live. Fail to profit and you die. Free market capitalism is the same on the Web as it is in real life.

Re:I dont believe so. (1)

Edie O'Teditor (805662) | more than 6 years ago | (#20076405)

Which is something I don't get -- Why do people consistently think that the Web somehow changes the rules of life?
But it does - on the web you can sell at a loss but make it up in volume.

Re:I dont believe so. (1)

smooth wombat (796938) | more than 6 years ago | (#20076497)

Why do people consistently think that the Web somehow changes the rules of life?


Because it's the intertubes! Everything is different. We don't need no stinkin rules!

Seriously, the first time Joe Average realized what they could do on the web, pretty much everything they had learned about how to interact with people went out the window. Think of all the stories that everyone, and I mean EVERYONE, has about one or more idiots who came into an IRC channel/AOL chatroom/whatever and acted liked they had lived in a jungle all their lives. Think about the people who still act that way.

I realize your comments were directed more at the business end but the same ideas still apply. People seem to think that their web site, regardless of how good/bad it is coded or what they are selling, will generate bazillions of dollars and make them multi-millioinaires overnight.

Why? Because it's the intertubes! The rules don't apply on that web thingy.

Re:I dont believe so. (1)

Cheirdal (776541) | more than 6 years ago | (#20076353)

This next bubble burst won't be nearly as bad as the first one. The venture capitalists pouring billions into anything with ".com" in the name are long gone. People are investing in real products and/or services now. Google is the bubble I expect to burst. Google is not worth $500+ a share. It's probably not worth $100 a share. Google's stock will eventually fall hard and I hope it doesn't cause a lot of ripples across the market when it does.

Venture Capital Firms' Spending (5, Insightful)

hansoloaf (668609) | more than 6 years ago | (#20075925)

I would look into this - is it as crazy as it was back then? I don't see many IPO's with paper millionairs appearing overnight and going bust just as fast. Nor I see many massive hiring of naive and unskilled workers with inflated salaries. I'm sure the latter is still happening but I don't see it on the scale we saw in the 90's. So if there's a bust - I don't think it'll have a big impact as it did back then. I could be wrong though.

Re:Venture Capital Firms' Spending (3, Insightful)

interstellar_donkey (200782) | more than 6 years ago | (#20076047)

No, you're not wrong. The writer of the article doesn't seem to understand what causes "bubbles" and what the real impact is when they burst. What made the 99-00 "bubble" burst so dramatic was due mostly in part that lots of people lost lots of money. If "the next big thing" pops, people will lose money but it won't be nearly as bad.

Re:Venture Capital Firms' Spending (1)

Jaysyn (203771) | more than 6 years ago | (#20076207)

Does the "writer" of the article even work any more?

Re:Venture Capital Firms' Spending (4, Insightful)

jshriverWVU (810740) | more than 6 years ago | (#20076289)

Something I've always wondered. It's common knowledge, the .com burst "lost a lot of people money". But money doesnt go away, it just shifts. I wonder who really profited from the bubble. If someone owns a bunch of overvalued stock and sells it, then it tanks and the owns "lost everything" the person originally selling it still made a lot of money. Same with businesses, I'm sure a lot of money was spend on buildings, hardware, whatever so the people selling those must have made a lot of money.

A real bubble exploding in my view is just a massive transfer of money from one market (or segment) to another. Am I wrong if so what is the reality of the situation?

Re:Venture Capital Firms' Spending (1)

Svartalf (2997) | more than 6 years ago | (#20076329)

That would depend solely on how much money would be lost if the bubble popped.

Web 2.0 doesn't seem to rate (yet) on the people snorting the green coke scale.
Dot-Com had all kinds of VC money being pissed into the breeze. Heh... I wish I
had some of that kind of cash right now. >:-)

FUD? (5, Insightful)

Kazrath (822492) | more than 6 years ago | (#20075949)

Shouldn't this article be linked under FUD in wikipedia?

It could happen. It may even happen. But acting like a mother and predicting every possible failure or catastrophe that can happen and when one of them does saying "Look I was right" only works on kids.

Re:FUD? (1)

mastershake_phd (1050150) | more than 6 years ago | (#20076177)

It could happen. It may even happen. But acting like a mother and predicting every possible failure or catastrophe that can happen and when one of them does saying "Look I was right" only works on kids.

I don't know, it gets politicians elected.

don't think so (1)

DohnJoe (900898) | more than 6 years ago | (#20076255)

Since the wikipedia clearly says FUD is a markteting strategy the answer would be.... No.

People often seem to mistake FUD with 'nonsense' and although spreading nonsense is usually part of a FUD campaign it's the goal of spreading the nonsense that that makes it FUD.

Re:don't think so (1)

porcupine8 (816071) | more than 6 years ago | (#20076447)

Couldn't it be interpreted as self-marketing in this case? Dvorak wants readers and is paid for having readers, he knows that sensationalism (in the form of FUD) gets readers.

Re:don't think so (1)

heinousjay (683506) | more than 6 years ago | (#20076449)

There's a certain poetry to the fact that 90% of the people here have no idea what FUD really is.

Dvorak should be ignored.. (4, Insightful)

TechyImmigrant (175943) | more than 6 years ago | (#20075959)

He's taking a whole load of independent businesses that happen to use more modern web protocols and formats (because they can) and using the common element of the web protocols they use to label it a bubble.

Laughable.

NASDAQ is not bloated (2, Insightful)

boguslinks (1117203) | more than 6 years ago | (#20075963)

We may have a certain percentage of Web 2.0 companies tanking soon, but we have not had a stock market run-up like in 1999-2000. So no, the impact of a forthcoming "burst" won't be nearly as bad.

Dare I say it? (1)

UncleWilly (1128141) | more than 6 years ago | (#20075965)

War on Terror 2.0
Coming to a Mall near you!

.com 2.0 bubble (1)

ekimminau (775300) | more than 6 years ago | (#20075969)

Maybe its just from the perspective of being in Michigan, where we are still in the middle of a recession, but I am personally seeing the 2.0 bubble just starting to grow here. I sure as hell hope it isn't about to burst. My gut tells me its still leading edge of the growth curve.

Go figure when you let "free-traitors" take over. (0)

Anonymous Coward | more than 6 years ago | (#20076185)

When businesses have been given the final piece in acquiring Divine Right over their workers (as opposed to the opinion of some), it's not surprising to see a continued recession in the Rust Belt.

Something that would help would be to stop the attack on unions, close the various immigration related loopholes(H1B included), and allow universal - not competitive - access to higher education (that does not penalize citizens, but favors them over immigrants).

If we cannot take care of our own, why insist on penalizing those whom have citizenship and are not a protected class (such as a business)?

What goes up must come down. (1)

ryen (684684) | more than 6 years ago | (#20075985)

Any trained economist will tell you that markets that rise fast fall fast.
Its the same thing thats going on in China right now. The economy is exploding at a rate that investors feel is too risky and too volatile. Investors will begin to scale back their positions in the market and this will drive others to scale back as well.

Re:What goes up must come down. (1)

yoprst (944706) | more than 6 years ago | (#20076217)

Do we see any sillines getting investors' money in China?

Web 2.1? (1)

dmpyron (1069290) | more than 6 years ago | (#20075989)

If Web 2.0 is the great thing, I'm waiting for 2.1. Never buy a dot zero product. Huge housing boom, about to crater very big. Makes the collapse of the late 80s look like nothing. Huge internet boom, about to crater very big. Makes the collapse of 2001 look like nothing. But I learned my lesson. My HP stock is back to about where it was in 1999. My Agilent stock is about 60%. My firstbuy.com stock makes for pretty wallpaper (but at least it covered some capital gains). My Netrix stock is worthless, and I don't even have the paper to hang on the wall. And it was in my IRA. This time around we didn't buy into any of that crap.

Re:Web 2.1? (2, Funny)

Anonymous Coward | more than 6 years ago | (#20076257)

What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone here is now dumber for having listened to it. I award you no mod points, and may God have mercy on your soul.

Obviously the economy isn't doing too bad (4, Informative)

antifoidulus (807088) | more than 6 years ago | (#20075995)

Dvorak seems to have a job despite all logic.

Re:Obviously the economy isn't doing too bad (0)

Anonymous Coward | more than 6 years ago | (#20076275)

If as many of my articles got posted on slashdot's front page (not that I've written any in the last couple of years since I left K5 [google.com] ) as his, I'd have a job (writing articles instead of what I do now) too.

Despite all logic? No, he's tech's most sucessful troll.

-mcgrew [mcgrew.info]

Every Dvorak article is more moronic than the last (4, Insightful)

IGnatius T Foobar (4328) | more than 6 years ago | (#20076003)

There have been many lessons learned since the last bubble. This time around, investors want to see real business plans, and there's got to be a plausible way of actually making some money. Perhaps more importantly, they're putting actual business-savvy people in charge this time around.

This isn't 1999, where a twentysomething with a web site could land millions of dollars of funding for a web site whose biggest feature was that it was on the web, and then get put in charge of the company, spend the money on Aeron chairs and foozball tables, and run the company into the ground.

The burst of Web 2.0 (1)

wolfeharte (1059238) | more than 6 years ago | (#20076009)

is not the single economic system facing a crash on the horizon.

He's Confused Again (0)

Anonymous Coward | more than 6 years ago | (#20076011)

And don't forget the IBM PC clone wars in there somewhere.
No, I think you're confusing IBM PC with ILM CG and those Clone Wars were in 2002 [imdb.com] , after the first theatrical disaster.

Maybe but not as bad (3, Insightful)

Datasage (214357) | more than 6 years ago | (#20076015)

I think some companies in this current era of the web are a bit over valued. (Google in particular comes to mind) Its likely that at some point, the market will correct that. But in general, companies are much more stable and substantive than they were in the late 90's.

Re:Maybe but not as bad (1)

LWATCDR (28044) | more than 6 years ago | (#20076319)

Google is making good money. The question is when people get tired of MySpace will the ad bubble burst?
I don't really think so. Using the Internet is now totally ingrained in to our way of working.
Need to find out where something is? Go to Google maps.
What to find out about something Google it or use the Wikipedia.
Weather?
Sales?
Internet.
Now some of the "social" sites like MySpace, Facebook "they should have taken the billion", Flick'r, and maybe YouTube will go the way of the sock puppet but the Internet is going to be around forever.

Of course (1)

Billosaur (927319) | more than 6 years ago | (#20076017)

Because it's Dvorak saying it, it must be false, but then even a blind squirrel finds a nut now and then. I'm almost sure of this -- there's been such worship at the altar of Web 2.0 that people have not been noticing the river rising outside their windows. Web 2.0 has been touted as the next coming, but along with the positive gains there have been the inherent flaws and security problems. Pile on top of that the general low quality of programming nowadays and one has to ask how long before it does happen. Dvorak is not the sharpest tack in the box much of the time, but he has picked up on trends which would be apparent to anyone if they were looking. As to me, I'm going to start building my ark.

My use of simile (0)

Anonymous Coward | more than 6 years ago | (#20076119)

...sucks as bad as the river tide.

http://www.theonion.com/content/node/51376 [theonion.com]

Re:Of course (0)

Anonymous Coward | more than 6 years ago | (#20076205)

I'm almost sure of this -- there's been such worship at the altar of Web 2.0 that people have not been noticing the river rising outside their windows. Web 2.0 has been touted as the next coming, but along with the positive gains there have been the inherent flaws and security problems.
Yeah, I agree that Web 2.0 is somewhat over-hyped, and that the transition to Web 2.0 (whatever that means: dynamic content, AJAX UI, community-based sites, etc.) will generate problems as well as good things. However the central argument here is that there is some kind of "bubble" and that there will an associated "burst." This implies that lots of money is being spent, and that ultimately these ventures will fail.

Though I see increased effort being put into Web 2.0, I don't see this massive speculative spending of the last bubble. I don't see the cash injections, and so I don't see the corresponding over-inflated value of companies. Some will use Web 2.0 and make money, others will use Web 2.0 and go bankrupt. But that's pretty much par for the course in any economic domain. A bubble only occurs when you have a massive over-commitment of funds.

So, the technical worries you outline are not sufficient to convince me we have a bubble. Until someone shows irresponsible spending, I'm just not buying this theory.

NUMBER THREE DAMMIT! (0)

Anonymous Coward | more than 6 years ago | (#20076021)

NUMBER 3 DATA. CHOOSE THE THIRD OPTION...

Anyone who doesn't recognize this deserves to die!

Bubble Bobble (0)

Anonymous Coward | more than 6 years ago | (#20076023)

Huh? Has anyone ever taken the Web 2.0 "hype" seriously?

This is practically the definition of FUD (0)

Anonymous Coward | more than 6 years ago | (#20076031)

From the end of TFA: "You can come up with your own theories about the next collapse. Your guess as to the cause will be as good as mine. All I can tell you is that it's a sure thing."
 
If that isn't FUD, I don't know what is.

Re:This is practically the definition of FUD (1)

c00rdb (945666) | more than 6 years ago | (#20076151)

I agree, that's the stupidest sentence I've ever read.

Re:This is practically the definition of FUD (1)

Zheng Yi Quan (984645) | more than 6 years ago | (#20076343)

Why must Slashdot link to Dvorak every time he write something provocative? He is the tech journalism equivalent of a man who shouts "Fire!" in a crowded theater.

Where are all the vaporware companies? (3, Insightful)

Mr. Underbridge (666784) | more than 6 years ago | (#20076045)

In 1999, how many companies were there that were publicly traded, had market capitalizations in the billions, and had never made a dime? How many Supwer Bowl ads were there in 1999 for massively unprofitable companies?

Contrast that with the current situation. There is probably some degree of overspeculation, particularly in the housing market, and this will take some time to correct. But to see a massive crash of companies built up by VC pump-n-dump...no. That's not to say there can't be a crash, but it won't be for the same reason as 1999.

What's to worry? (2, Insightful)

taskiss (94652) | more than 6 years ago | (#20076055)

I'll worry when a sock puppet hawks pet food on a superbowl commercial or when some company tries to create a business model around delivering groceries to consumers from a van.

Except that we don't seem to have one (5, Insightful)

Sycraft-fu (314770) | more than 6 years ago | (#20076071)

The first .com thing was called a bubble by many economists and business people from the get go and it clearly was. I remember my roommate (who was a business major) joking about how we should start a business. We'd have no business plan and no way to make money, offering something worthless. We'd lose a ton of money first quarter and just cut costs every quarter after that. Stock prices shoot up on the "growth" (less loss was huge growth for .coms) and we get out like madmen, well, minus the whole securities fraud thing.

The problem was people were just throwing their money in to startups that had no fucking clue what they were doing. Many were offering something totally worthless (Cuecat), many had no plans for how they'd actually make any money since their whole business was giving shit away for free, many just pissed money away on parties and such.

Well I don't see that happening right now. Maybe it is and I've just missed it, but I do kind of keep an ear on these sort of things. If people have been unreasonably throwing money in to anything it has been housing, and at least that's a market where you are purchasing a real property with real value (though that doesn't mean you can't overpay). Sure there's still investment in online technology but that doesn't make it a bubble of any sort. There are plenty of successful online businesses. Google is a great example. While their stock is surely overvalued, there is no question that they are a profitable company and face no danger of going out of business should it drop. They are propped up by a solid positive cash flow, not a stock bubble.

I don't claim to be an economist or anything, but I really am missing the .com bubble if there is one. If I was to pick something to be concerned about it would be the real estate market as there as a good number of ARM mortgages that are going to be resetting in rate here soon and values in most areas are not rising much if at all.

Re:Except that we don't seem to have one (0)

Anonymous Coward | more than 6 years ago | (#20076465)

I'm not an economist either, but I'm related to one, and we've talked about the state of real estate and the impact of subprime mortgages on the economy as a whole. He told me that most of the people who are having problems with these sorts of mortgages are generally lower-income families who are going to be spending all their income one way or another, so as far as the economy as a whole is concerned, the risk isn't quite so spectacular: things will get a little rough, but it will hardly be a debacle. Now, if high-end housing starts taking massive hits, things will get dicier.

is this a joke? (5, Insightful)

Lord Ender (156273) | more than 6 years ago | (#20076073)

Stock bubbles are the result of speculation. Speculation is when people buy companies with incredibly high SharePrice/EarningsPerShare (P/E) ratios. For a mature company, this number is typically around 15, meaning if earnings stay the same, and all earnings are paid as dividends, over a 15 year period, you would not lose money even if the share price went to 0. For expanding companies, P/Es can typically be as high as 40.

In the bubble, investors were buying shares with very high prices despite very little earnings. The Nasdaq currently has an average P/E 24.01, which is reasonable if some companies are mature and some are in a high-growth state.

And... since when was Dvorak a market analyst? I thought he was just a troll who posted absurd comments in order to draw readers...

Cringely disagrees (1)

Manuscript Replica (307437) | more than 6 years ago | (#20076075)

That's funny, I just read an interview with Cringely where he said we are decidedly not in a bubble because all the big web companies are actually making profits. If you're turning a profit, it's not a bubble, he says. Hmmm, who to believe, Dvorak or Cringely...

Re:Cringely disagrees (1)

Volante3192 (953645) | more than 6 years ago | (#20076377)

Gee...do I want death by electroshock or death by lethal injection.

I get better market advice from my email spam folder.

Problem (2, Insightful)

Senjutsu (614542) | more than 6 years ago | (#20076089)

In order for the bubble to burst, you have to have a price bubble in the first place. Whither the inflated Web 2.0 company stock values? Most of them haven't even IPO'd because of SarBox. Venture capitalists pissing their money away on craptacular Web 2.0 companies isn't the same thing as the inflated stock pricing on Internet companies and the resulting massive correction afterwards.

Re:Problem (1)

popo (107611) | more than 6 years ago | (#20076161)

So it's only a "bubble" if mom and pop retail investors are involved? But if venture capitalists are inflating a sector well beyond its revenue potential, then there's no correction up ahead?

Re:Problem (1)

EastCoastSurfer (310758) | more than 6 years ago | (#20076361)

Well yes and no. If VC money is tied up in bubble type companies then presumably they won't be investing in other companies that could lead to better investments for others down the road. But, VCs losing money isn't generally considered a bubble bursting and usually considered part of the risk of being a VC.

I think a bubble by it's definition must be rampant speculation by lots of people. When your barber or waitress starts talking about how they are going to make millions on a youtube copy then you can start to worry. Case and point the last stock market bubble and now the RE bubble.

Re:Problem (1)

jonfr (888673) | more than 6 years ago | (#20076233)

There is a stock market bubble going on. Haven't you noticed the ridicules prices the shares are on at the moment. The bubble problay is going to burst in the next few days or weeks, or months (I really don't have a clue when it is going to burst), but when it goes, it is going to be bad for many countries and companies.

I am expecting to see a lot of fiber going dark when that happens.

Nothing to see, move along. (2, Insightful)

CyberGarp (242942) | more than 6 years ago | (#20076101)

His evidence list is a joke. First off if the social networking sites collapse, how bad will that be for the industry? Secondly, if the you-tube clones fail, how bad will that be? The rest of the evidence is really not much about collapse, just a bunch of bitches about likely project failures. The quote "the iPhone mania may be a bad sign of something" is priceless.

Summary:

John vents his spleen in a rambling manner, inflates the headline to something about industry collapse and slashdot reports it as news.

Re:Nothing to see, move along. (1)

neonmonk (467567) | more than 6 years ago | (#20076287)

Seriously.. Why hasn't someone put this guy out of our misery.

Re:Nothing to see, move along. (1)

Xybre (527810) | more than 6 years ago | (#20076451)

He seems to completely miss the way things work. As stated in some other comments, the dotcom bubble was because everyone had crazy investor backing, but no product and no income. Todays web is all about income, very few investors, it's very DIY, if someone's site goes under, that just means Bob Web keeps working IT at Farstuck's corporate office or whatever, and no one is really the wiser.

I will say that "Web 2.0" is more of a design thing than a business model, I mean, more and more concepts are being tied into it, and yes, the look is silly, and I hope it blows over soon, but thats no reason to assume we're going to see a major IT collapse. The reason the dotcom bust affected IT s because so many people and so much money was thrown into it. Few remember or care about the word processor wars or the CD-ROM manufacturers, it didn't involve everyone. Businesses in all fields have spurts of competition and failures. Most of those companies were bought up or gave up because of poor businesses practices or management, we don't see it the same way right now.

Hey, maybe tomorrow everyone will go "Eh, screw this 'internet' crap, I'm going to burn my computer and become Amish."

But I doubt it.

Thank you (1, Flamebait)

popo (107611) | more than 6 years ago | (#20076107)

I can't tell you the number of times I've stared in amazement at this latest crop of Web 2.0 startups that look, smell and sound exactly like their Web 1.0 counterparts. The basic underlying problems of generating critical mass, ad revenue, and basic business model stupidity haven't changed. The insane multiples that go into valuations haven't changed either: Consider that most brick and mortar businesses are valued at a small multiple (if any) of annual revenues, but web companies are still valued at a ridiculous 15x - 20x multiple despite their hilariously grim prognosis for survival. And the revenue strategy still seems to be "Selling the whole shebang" rather than "Earnings" (remember "earnings"?), and the vast majority of ideas don't seem to be new, or remotely defensible against competition (Barring of course absurd claims of intellectual property and patents).

If this isn't a bubble I don't know what is.

But then again, there's a sucker born every minute.

I have a killer dot-com business plan (Web 2.0, of course) if any venture capitalists want to give me a call.

What bubble? (4, Insightful)

Dan East (318230) | more than 6 years ago | (#20076149)

IMO, Web 1.0 was about what was on the internet (grocery shopping online, etc), Web 2.0 is about how things are on the internet (ie AJAX). Web 2.0 is primarily a maturing of what we already have. It's the result of bandwidth for the masses, new browser features due to the rejuvenation (thanks to Mozilla) of a stale market (thanks to Microsoft), PCs with lots of CPU cycles and RAM to spare, high resolution displays, and the fact that such a large percentage of society is online.

A lot of what he talks about in the article is copy-catting. Youtube is extremely popular, thus a lot of other copy-cat video sites are popping up, often targeting more specific markets that are less social in nature. Social networking and user-generated content is pretty much the same thing. When people get tired of it they will stop doing it. Big deal.

I really don't understand what bubble he's talking about that is going to burst. The sites that comprise the internet will come and go and change according to traffic. Just as fads, hair length and clothing styles come and go, so will various movements on the internet as it matures.

Dan East

Dvorak Says... (4, Funny)

MadMacSkillz (648319) | more than 6 years ago | (#20076153)

Once I saw it was Dvorak, all I read was "blah blah blah." I guess John got tired of writing articles to piss off Mac users and decided to try a bigger crowd...

Follow the money (1)

Cee (22717) | more than 6 years ago | (#20076159)

The dot com bubble bursted because many companies were simply backed by investment money but failed to generate any significant revenue. As soon as the investors backed out, the companies worth were exposed to be close to zilch.

Since IANAE (economist) I can't really tell how it is this time, but just because a financial sector is growing doesn't mean that it is a bubble. (A bubble implies that the marked is just filled with air instead of real money.)

However, as we've seen through all modern history, stock markets will crash time and time again.

Is Dvorak Delirious? (3, Informative)

imstanny (722685) | more than 6 years ago | (#20076189)

By 'Bubble' I assumed he was referring to the Nasdaq's collapse back in early 2000. (At its current level, it needs 100% return to get back to those levels).

His article has nothign to do with the traditional understanding of what a "bubble" is, espeically when referring to the tech 'bubble' of the late 90's.

If somehow he is referring to the tech bubble in the financial sense, there is no 'Tech Bubble 2.0'. Why? Well, Yahoo, like most other tech stocks at the time, was trading at over 1700 P/E at one point in the late 90's. In other words, based on its earnings at the time, it would have taken 1,700 years for it to make the amount of money its stock was worth. Yahoo is currently trading at a P/E of 46. In fact, most stocks now are trading at fairly conservative P/E ratios as compared to historical ratios.

You wanna see a tech stock with a high P/E in modern day society? Check out ticker symbol: CRM. Luckily, in the grand scheme of things, this is just an outlier.

prognostication (1)

JeffSh (71237) | more than 6 years ago | (#20076193)

the act of prognostication, or calling it out, will almost certainly ensure that it doesn't happen (burst) as it will raise awareness and limit investment.

Absurd (1)

uncreativ (793402) | more than 6 years ago | (#20076239)

There is an absurd amount of doom and gloom in the markets surrounding the sub prime fallout and it's impact on the housing and financial sectors.

When everyone shouts "the sky is falling", it's time to step back and look for bargains. The opposite is true--when everyone cries out in victory over the awesome performance of their stocks, it's time to look at your best performers and see whether their price is still justified. Many stocks are declining for no good reason since they have little or nothing to do with sub prime loans or housing. We are nowhere near the speculation levels that occurred during the last bubble.

Tech always seemed a bit pricey of a place to put your money to me. Wouldn't be surprised at a correction--but a collapse? I doubt it.

Re:Absurd (1)

tehdaemon (753808) | more than 6 years ago | (#20076409)

We are nowhere near the speculation levels that occurred during the last bubble.


Actually, we are well beyond those speculation levels. It is just that the speculations are in bonds, asset-backed securities and other financial thingies, where last time it was mostly tech stocks.

T

Dvorak Editorial = Waste of Your Time (2, Funny)

Wingsy (761354) | more than 6 years ago | (#20076263)

When I saw that it was an editorial by Dvorak I just moved on and did not RTFA. I did, however, waste a few minutes of my time to come here just to say that. :)

I'm not seeing a bubble (1)

brokeninside (34168) | more than 6 years ago | (#20076307)

In the late nineties, people could get a decent tech job just by knowing how to edit files in vi. This was because large numbers of people with actual experience were getting hired by the dot coms soon to be dot bombs.

Today, I know of experienced people working crappy first level support jobs simply because there isn't much else out there. While things are far better than they were in the early 00's, they still aren't all that great and are far short of the bubble in the nineties.

Oh, believe it - the bubble *will* burst... (1)

blindd0t (855876) | more than 6 years ago | (#20076337)

...when the tubes are clogged.

Show me the money (3, Informative)

zapatero (68511) | more than 6 years ago | (#20076345)


During The Great Bubble the numbers predicting the pop were glaringly obvious. I recall many financial articles predicting the demise of EToys, Pets.com, Webvan, etc. And the believers dismissed the analysis as "old economy" and people who "didn't get it". The new economy was based on "eyeballs", "stickyness", etc. Not profit vs. loss. It was a whacked time. It was The Great Bubble.

Show me the numbers now. What bubble? Sure there's web 2.0 hype. Google, the leader of web2.0 is profitable. Maybe overvalued, who knows. And yahoo too. Also protifable. And amazon. And myspace and linkedin and facebook, all the posterchildren of web 2.0, are all financially sound even if they aren't all profitable.

So show me the numbers that indicate a bubble on the scale of The Great Bubble.

Dvorak really is a wind bag. Too bad Slashdot with its human editors can't at least compete with Digg and prevent this kind of drivel making it to the front page.
 

like the holocaust... (0)

Anonymous Coward | more than 6 years ago | (#20076355)

...it never happened

When will John Dvorak's bubble burst? (1)

Picass0 (147474) | more than 6 years ago | (#20076373)

Why does this guy even have a job predicting tech trends? If I could fill one bucket with everything Dvorak gets right and the other bucket with shit, I can guarantee you I know which bucket will fill up first.

What bubble? (4, Insightful)

Mike1024 (184871) | more than 6 years ago | (#20076397)

It was always my understanding that for a 'bubble' to 'burst' there has to be a market full of overvalued assets. For example, people valuing pet food delivery companies at millions of dollars. I'm not sure what particular overvalued assets this bubble is made of.

So what does Dvorak say?

The current bubble, already called Bubble 2.0 to mock the Web 2.0 moniker, is harder to pin down insofar as a primary destructive theme is concerned. A number of unique initiatives, however, are in play here. Let's look at a few of the top ideas floating the new bubble.

Neo-social networking. Today everything from YouTube to the local church has a social-networking angle. And this doesn't even consider the actual social-networking sites, from MySpace to LinkedIn to Facebook to even Second Life. This scene is totally out of control and will contribute to the collapse for sure.
MySpace was purchased by fox for a somewhat excessive sum, but that's already happened. Facebook's owners reportedly want two billion dollars for the company, but no-one has paid them that. So from this category I see one company, facebook, and it isn't even publicly traded.

Video mania. With dozens and dozens of YouTube clones cropping up to get on the "throw money away" bandwagon, you must sense that the eventual shakeout in this space will have a negative impact.
Youtube was a rather expensive purchase for Google and it's hard to see where the payback is, but that's already happened. I can't really think of any competitors anyone is likely to invest in... google video, perhaps, but that's owned by Google anyway.

User-generated content. This idea has been around since Usenet and just keeps improving. It will make no contribution to the overall collapse except for users reporting the collapse.
"This part of the bubble is not part of the bubble"??

Mobile everything. Here is another concept that has been in play since the mid-1990s. It cannot trigger a collapse since it will never fully get off the ground, although the iPhone mania may be a bad sign of something.
Mobile what? Are mobile phones a bubble? Or is there a bubble of iPhones and iPhone-like-devices that I'm not aware of?

Ad-leveraged search. Most search engines will fail as a matter of course. This segment of the industry is mundane. It would be affected by a crash but not trigger one.
You mean Google?

Widgets and toolbars. I cannot see the widget scene going crazy, and the jury is still out on toolbars. But there is the potential for nuttiness, I think. The problem here is that these things tend to be dependent on the stability of operating systems and browsers. One bad operating-system patch and suddenly nothing works.
There's a "widget and toolbar" bubble? I don't know of any company built around selling "widgets and toolbars".

So, here's Dvorak's bubble of over-valued assets:

MySpace = fox
Facebook - privately owned
Youtube = google
Google
iPhone = apple

Or in other words, the best examples Dvorak has of the bubble of the late 90s repeating itself are:

Fox
Google
Apple
Facebook

Personally I don't agree with Dvorak's assessment that these companies are about to collapse (although it seems unlikely anyone would pay $2 billion for facebook).

Just my $0.02.

Why, oh why (2, Funny)

RedShoeRider (658314) | more than 6 years ago | (#20076411)

Does Dvorak keep ending up on the main page?

Every time I see Dvorak, I think "Finally! Another article on the Dvorak keyboard layout! Perhaps we'll gain a few more converts!". Alas, woe is me, for it's just another article from that talking garden gnome.

Confidental to editors: let him sink to the bottom with the rest of the slag.

Why does Dvorak EVER get onto slashdot? (1)

BytePusher (209961) | more than 6 years ago | (#20076431)

Somehow I thought it was long ago established Dvorak's articles were better left unread. Why do they keep getting onto ./?
Why do people submit them? Anyway, here's my response to Dvorak's worthless article:

Dvorak makes an assumption that popular = thin membraned air filled structures. I submit this is not true. For example, automobiles, cell-phones, computers, internet access, coffee, potatoes, wheels and even including advertising... the list goes on. Some products have real human, social and economic value. So, let's look at Dvorak's criticism of 6 key areas of the current web-economy:

Neo-social networking: Facebook, myspace, youtube are perhaps the biggest three and they all generate revenue and are connected to stable companies. Theses are likely to fail when hotmail and gmail fail... i.e. never. People like them too much.

Video mania: As long as the MPAA and RIAA don't crush this, it will be around for at least as long as television. On demand video is every couch potatoes dream and with the addition of the social(personal) element, the hope that you might talk to that girl humiliating herself with her "sexy dance" makes it even more attractive. Video mania is here to stay.

User-generated content: I'm not quite sure how this is different than video mania, but I think he just wanted a bigger list.

Mobile everything: Again, this has been a constant success since the first Palm or laptop through every bubble he has mentioned. Mobility sells.

Ad-leveraged search: If this weren't a valid business model then television studios would have failed long ago. Advertising based revenue works, period.

Widgets and toolbars: The one thing that I truly hope users grow to hate! Either way, his FUD about bad patches extends beyond the web. If nothing works there are bigger problems than a dot-com bubble bursting. If one bad patch can take down the majority(51%) of users computers it would be an unprecedented patch/disaster. Nothing like this has ever happened and I doubt it will happen.

The question I have here is, why did Dvorak write a FUD article about the dot-com bubble? Perhaps he knew no one would heed it and if it doesn't happen the article fades into obscurity and Dvorak comes out unscathed for his stupidity. If he is right, he is labeled a prophet in our own time and maybe he'll get the obeisance he feels he is due.

"Oh no, not again!" (1)

flajann (658201) | more than 6 years ago | (#20076439)

Oh no, not again!

That does not refer to the so-call Web 2.0 "bubble", but to the usual doomsday prognosticating crap that has been the bane of human existence.

Dvorak certainly benefits from all the attention he gets from his FUD, but he has no basis to declare this "Web 2.0 bubble."

Efforts to capitalize on the newest technology will always see an eventual shakeout, but to say this one will be worst than the last is blowing smoke, to say the least.

The last dot.com crash was pontificated by crazy boosts from Wall Street, where merely claiming you were "dot.com" attracted crazed investors. I was a day trader in those days, and have seen many shoot for the stars and drop into oblivion, sometimes in the space of a week or less.

That is truly NOT going on today.

So Dvorak wishes to be an alarmist. Fine. I think we can safely ignore his antics.

Why oh why did i read this article? (0)

Anonymous Coward | more than 6 years ago | (#20076477)

Why oh why did i read this article?

A Small Misunderstanding (1)

JohnDeHope3 (612500) | more than 6 years ago | (#20076499)

I read TFA. I don't think Dvorak appreciates the difference between the technology fads known as "bubbles" and the "bubbles" resulting from fiat money inflation and fractional reserve banking.
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