Premium Essay

The Internet Bubble Burst

In: Business and Management

Submitted By leoleitch906
Words 1463
Pages 6
The Internet Bubble Burst
Sandra D’Adamo
Intro to E-Commerce
March 27, 2014
Professor MacKenzie

Table of Contents
Introduction………………………………………………………………………………..3
How the World Wide Web Began………………………………………………………….4
Tim Berners Lee……………………………………………………………………………4
How the Bubble Inflated…………………………………………………………………..5
How the Bubble Popped…………………………………………………………………..6
What Lessons were Learned……………………………………………………………….7
Could it have been Stopped…………………………………………………………………

Introduction The internet bubble history started in 1993 with the public being able to access the World Wide Web. The WWW was inflated with the overpriced investment returns from 1994 through 2000. The bubble of the WWW busted wide open in 2001. At that time the Nasdaq was often quoted as a big indicator of the bubble. During that time the Nasdaq rose from around $750 dollars to approximately $5130 dollars. That was and incredible increase of about 682% from January 1995 continuing through March 2000. During this time the industry was focusing primarily on computer software. They focused on this due to the high profit margin for the software. In this paper I will explore the many avenues of how the WWW was created and the rise and fall of the internet creation.

Figure [ 1 ] flatworldbusiness.worldpr

How the World Wide Web Industry Began In the beginning ideas for the WWW go back as far as 1946. A gentleman named Murray Leinster wrote a story that talked about Logics also known as computers. Mr. Leinster said that its occupancy was in every home. The story does take several different avenues, but with the same story line he said that we all have a massive information network at the end of our fingertips in our homes.
Tim Berners Lee Mr. Lee made the internet come to life some 40 years later. He started the project with a database called Enquire. The database...

Similar Documents

Free Essay

History of the Internet: Dot Com Bubble

...dot-com bubble that occured in the 1990's through the early 2000's was said to have left some major negative impressions on the world of the internet and our economy, but that is not necessarily true. Because of the dot-com bubble, there have been many great outcomes that often goes unnoticed before looking past all of the businesses and internet companies that went under when this bubble finally burst in the early 2000's. In fact, many say that the dot-com bubble and burst was actually a needed cause and effect that has shaped the internet into what it now is today. Many people believe that a lot of the websites that existed during the dot-com bubble would have had some sort of success if it wasn't for the network infrastructure at the time. The thing is, not many people didn't have access to broadband and the websites weren't getting the exposure and full potential that it could have received. This is especially true for some websites, such as Broadcast.com (Altucher Confidential, 2011). This very same thought occurred during the dot-com bubble and computer scientists and engineers realized that there was a very much needed improvement to the infrastructure of the internet. In order to correct this, many businesses in the tech industry began using tax money to lay high-speed fiber optic cables so that the internet would be more accessible in certain cities and states. This is probably one of the most beneficial things that came about from the dot-com bubble......

Words: 917 - Pages: 4

Free Essay

The Dot.Combubble

...The Dot.com Bubble The mid-1990s marked the beginning of a new form of market environment that one could do business through the Internet. This was also the beginning of the so-called dot.com boom in the Spring of 1995 and it would later go bust in the fall of 2000. A year after the bubble burst, 327 companies remained but every one of them experienced the stock price slide beginning in September of 2000 (Becker, 2006, p.34). Amazon.com is the first major company that attempted to use the Internet to offer and sell products. In addition to the companies that sell online, companies that provided telecommunications and Internet support were also born such as Cisco Systems and Lucent Technologies (p.34). Other companies entered the market to provide web browsers such as Netscape. Another segment in this market is the service providers that provided users access to the Internet such as America Online and CompuServe (p.34). Finally, there are websites that offer web content and information for sale (p.35). These online companies, in order to raise capitalization either approached venture capitalists for financing or offer their stocks to the public. Becker (2006) cited that nature of these IPOs from online companies as “examples of speculative bubble” (p.41). A bubble or boom results from assets being over valued and they continue to rise for an extended period (p.41). In bubbles or booms, there is also the element that involves behavior – crowd or herd. Although many were......

Words: 1667 - Pages: 7

Premium Essay

House of Cards Crisis

...such as, the burst of the Dot Com Bubble, which lead to a market crash that put the American economy in a recession; and the controversy that surrounded Government Sponsored Enterprises, which lead the American people to lose trust in it’s government’s financial institutes. However, people such as, Ben Bernanke and Alan Greenspan have helped the United States recover from this crisis by implementing new guidelines for the financial market. According to Cashzilla.com, the Internet bubble described in summary was “a rapid rise in equity markets fueled by investments in Internet-based companies. During the dot com bubble of the late 1990s, the value of equity markets grew exponentially, with the technology-dominated Nasdaq index rising from under 1,000 to 5,000 between 1995 and 2000.” Basically, investors started inserting a vast amount of their money into these internet-based companies, which in turn caused the stock market to rise dramatically. “The approach of rapidly growing customer bases before making any real profit was the first mistake”(Dot-Com Bubble: Explained). These Internet companies were running their businesses off of investor’s money and not from real profit, consequently this in turn caused those companies to fail and claim bankruptcy. There are main factors that are said to have lead to the burst of the bubble such as, stock market regulation and bad business practices by these companies, however, many believe that the burst of the Dot COM Bubble was......

Words: 1000 - Pages: 4

Free Essay

Internet Bubble

...The Internet Bubble Fundamentals of E-Commerce Instructor: Scott Howell Student: Lisa Mercer May 27, 2012 Introduction Within the past decades of the internet first being established the lives of everyday Americans and the world have changed greatly. Businesses have changed and evolved greatly with the access to the internet, as many are able to purse dreams of starting a business and possibly making millions. The internet has opened the doors for many to communicate with each other, receive daily news, and to do shopping. The upcoming of possibilities through the internet also led to irrational decisions brought on by greed from investors that made way for the Dot Com Bubble. History of Internet A pioneer of the creation the internet was Tim Berners-Lee. Though the internet didn’t become wide spread until the early 1990s the making of the World Wide Web can be traced back into the 1980s. Berners-Lee tried to sell his creation to the company that he was working for in Switzerland, but they were slow to acknowledge his efforts.(Griffin, 2000) With that Berners-Lee turned to the internet community in 1991 making his World Wide Web browser and web server software available. (Griffin, 2000) Many enthusiasts began setting up their own web servers around the world. Many scientists were already using the internet to share information found it easier to post their information on the web and wait for a reply. With some government agencies having the......

Words: 1606 - Pages: 7

Free Essay

The Dot.Com Financial Scandal

...1- The term dot.com The term Dot COM (English .com) appeared before the explosion of bubble Internet to indicate, the madness which seized the “entreprenautes” to the evocation of three sesames of the E-trade: market, customers and Internet. A synonym of E-business. 2- The Internet Bubble The "dot-com bubble" sometimes referred to as the "I.T. bubble" was a speculative bubble covering roughly 1995–2001 with its peak on March 10, 2000 with the NASDAQ peaking at 5132.52 during which stock markets in Western countries saw their value increase rapidly from growth in the new Internet sector and related fields. The period was marked by the founding and, in many cases, spectacular failure of a group of new Internet-based companies commonly referred to as dot-coms. A combination of rapidly increasing stock prices, individual speculation in stocks, and widely available venture capital created an exuberant environment in which many of these businesses dismissed standard business models, focusing on increasing market share at the expense of the bottom line. 3- The growth of the dot.com bubble The venture capitalists saw record-setting rises in stock valuations of dot-com companies, and therefore moved faster and with less caution than usual, choosing to mitigate the risk by starting many contenders and letting the market decide which would succeed. The low interest rates in 1998–99 helped increase the start-up capital amounts. A canonical "dot-com" company's business......

Words: 754 - Pages: 4

Free Essay

Internet Bubble

...The Internet Bubble (1998-1999) The internet bubble that burst during the year of 1998-1999 was similar to the housing market affect we saw happen no more than four years ago. In the case of the housing market, you had large market firms offering different types of loans to individuals that really couldn’t afford them (Balloon rate loans, Adjustable rate loans just to name a few). The main objective of these larger companies (Freddie Mac, Fannie Mae included) were to gain a significant profit while the “getting was going good”. In other words, they wanted to cash in on the loans they were lending to people that they knew eventually they wouldn’t be able to afford the loan. Whether the customer could afford the loan or not, wasn’t the main concern of the few that were running this ridiculous scheme. Once they saw that overall situation was going to eventually fall back on the customers who trust them with the loans they were signing up for, the quickly slid out the back door and left the customers in a world of trouble. Regardless if their companies went down, a few of people at the top of the food chain actually got rich off of the downfall of the housing market. Again, this is similar to what happen to the internet bubble before it bust to pieces. There was some research that was done in 2003 that showed how there was a radical transformation in the profile of IPO investors (Entrepreneurs Exploiting the Internet Bubble 1998 to 2001: Do Insiders Abandon Ship at the......

Words: 589 - Pages: 3

Free Essay

Dot Com Bubble Burst

...dit NMIMS | The World .com fall - IT Bubble burst | | Poleswar Rao V | | INTRODUCTION The dot-com industry began in the early 1990s as a collection of startup companies using the Internet as their primary means to conduct business. These companies typically used the “.com” suffix in their company names, such as Amazon.com, and proliferated in the late 90’s with the massive investments in Internet-related stocks and enterprises. But with the failure and consolidation of many of these companies their numbers have since dwindled. The catastrophic collapse of the dot-coms that shook the U.S. economy started in May 2000. More than 210 dotcom companies failed in 2000 and a total of 762 dot-coms closed for the period January 2000 to December 2001. Since many of these dot-coms began to lay off their staff, the unemployment rate also increased from 3.9% to 6% by 2002. The dot-com bubble burst because the boom was based on the false premise that new technology would eliminate the need for brick-and-mortar stores as this new business model would supplant the old one, thereby converting the “Old Economy,” which is based on the production of physical goods into a “New Economy,” which is based on heavy use of information and communication technology. Although a great deal can be learned from examining the dot-com successes, it is equally important to study reasons for the failures. Examining the mistakes made by the dot-coms can provide insight into the evolution of......

Words: 2349 - Pages: 10

Premium Essay

Macroecomomics

...years where the real GDP has dropped but only by an insginificant amount. However, there was one year where the GDP dropped by $126 billion in the year 1982. During this year, the United States experienced a recession. However, the following year, the GDP was able to grow more than the amount it decreased the previous year; it increased $300 billion, thus, offsetting the loss of the prior year. After this minor recession, there was little to no decrease in GDP in the subsequent years. From 1997-2000, GDP experienced a huge amount of growth each year for four consecuvtive years. This growth was during the internet stock bubble. There were many new internet startups during these years and many people investing into them. Also, because of such high GDP these years, there was a government surplus, but only for this four year period. However, when the internet stock bubble burst in 2001, the GDP did not increase nearly as much as it had the four prior years. However, throughout the rest of the early 2000s, the GDP continued to increase without any major hazards. Nonetheless, this growth in GDP was only...

Words: 2578 - Pages: 11

Free Essay

Dot Com Bubble

...Dot.com Bubble Christopher Smirnes Professor: Dr. D The Dot.com bubble, otherwise known as the Dot.com boom was one of the most significant events in the Internets history. It brought upon millions upon millions of dollars in losses and many of these start up companies never even made a profit. The business world was flipped upside down, and a whole new world was opening up to entrepreneurs. However, since this was such a new technology, as with anything new, there are always risks. The dot.com bubble can be broken down into three different stages, the investment stage, the failure stage, and the recover stage. It all started in the early 1990’s when the Internet truly got its start. During this time period, everything was very slow and many people did not buy computers due to the extremely high cost. By the mid 90’s everything changed, and the world was going nuts over the possibilities of the Internet. Businesses and investors were part of that group that jumped right on in. With the ability to reach millions of customers with click of a button, the Internet certainly has a huge draw. Everyone was trying to get into the game and investors were dumping tons of money into all of these companies that had to essentially start from scratch. It was during this influx of cash pouring in that everything seemed perfect and profits would just go through the roof. It seemed as if everyone had a domain name and being able to......

Words: 899 - Pages: 4

Free Essay

The Dot Com Boom

...Dot com boom/bust An economic bubble exists whenever the price of an asset that may be freely exchanged in a well-established market first soars to levels that cannot be justified (Ironman, 2010). ‘Investors’ push the price of the asset up by irrationally purchasing it. Eventually, the market realizes that the asset price is unjustified and the bubble bursts. More often than not, the bust happens in an all-of-a-sudden manner resulting in people losing huge sums of money. At the same time, these boom/ bust cycle has its beneficiaries, institutions and individuals who make huge amounts of money by ‘surfing’ the bubble or by fuelling it. In the case of the dot com boom, the culprits were the investment banks and some venture capital firms. Events leading up to failure One of the issues that I believe to be partly responsible for the dot com boom happened when the Taxpayer Relief act of 1997 lowered the maximum tax rate on capital gains for individual investors from 28 percent to 20 percent for assets held for more than 18 months. This perspective, proposed by Zhonglan Dai, Douglas A. Shackelford and Harold H. Zhang. In “Capital Gains Taxes and Stock Return Volatility: Evidence from the Taxpayer Relief Act of 1997“highlighted the fact that non- and lower dividend paying stocks experienced a larger volatility than high dividend-paying stocks. Stock volatility was substantially higher after 1997 and this may have contributed to the inflation of the bubble. It was not the main cause......

Words: 1428 - Pages: 6

Premium Essay

History/142

...The Intern yep April 9, 2012 yep The Internet The internet has changed the world as we knew it. The world no longer communicates, does business, or perches commodities in the same a traditional way. E-mail, instant massager and chat rooms were the first innovations to be used by the public. As time went on more and more people depended on the internet to communicate with each other. It did not take long for the U.S. Postal service to see the decline in mailed letters. With the internet being so easy to access and email being so easy to use it quickly became the preferred way to communicate with family and friends over long distances. Companies soon followed suit to better serve their clients. Over time the internet began to take over almost all aspects of personal and social norms. Personal records are now stored online. A person can look at bank statements, order checks and even look at medical records that are now available on the internet. It is no longer looked down apon when using internet dating sites. Now one in every three people meet a partner on the internet, if it be on a dating site or a social network online. The ability to share information and easily find information has changed almost every aspect of politics. From the way we communicate with the government and each other about the things the government is doing. it became simple and easy to do. A person no longer had to wait for the six O’clock news to hear about what was happening in local and......

Words: 656 - Pages: 3

Premium Essay

The Perils Of Excess In The 1920's

...implications, was so common during the 1920s. Even in modern times, many people have been lured in by the idea of making easy money and speculation, despite the lessons learned about these risky investments during the 1920s. The now-infamous Dotcom Bubble burst of the late 1990s shared many characteristics with the causes of the stock market crash of 1929. Investopedia defines the Dotcom Bubble as “A rapid rise in equity markets fueled by investments in internet-based companies.” Investopedia then goes onto describe the Dotcom Bubble as a result of “a combination of the presence of speculative or fad-based investing, the abundance of venture capital funding for startups and the failure of dotcoms to turn a profit.” As seen in the 1920s, many Americans were tempted by the idea of a booming industry that seemed to be rising with no end. As a result, they invested in any startup Internet company that seemed eventually profitable, and did not worry over the risk of these companies folding over due to a desire to stake a claim in the expanding market of the Internet. Both the Dotcom Bubble and the crash of 1929 were caused by people not making safe investment choices, and the never-ending desire for wealth without work. And as expected, the Dotcom Bubble caused an economic slump that was recoverable, but still could have easily been prevented with a history lesson on the Great Depression. The Jazz Age was a time that was marked with bountiful wealth coming with illegitimate......

Words: 1118 - Pages: 5

Premium Essay

House Market Summary Report

...house price changes in states. Many young adults today are deemed to be “successful” by their peers when they can afford to buy house because of how strong the house market is in terms of investment. However, many potential investors fear the housing market bubble has formed and will burst. What is a property bubble? According to Fowles (n.d.), it refers to a situation where house prices climbs rapidly instead of rising gradually with rise in average income or inflation rate. When it does burst, house prices will take a hit and a recession often comes together. House prices will depreciate because people can no longer afford to buy a house and property owners would take desperate measures like cutting the house price to sell it fast to save their investment loss as they may not afford to pay back the housing loan. So is property bubble forming in Malaysia? According to The Star (2013), Standard & Poor's Ratings Services (a well-known American financial firm) denied that a bubble is forming in Malaysia as few factors supports borrower repayment ability which is: resilient economy, low unemployment and low interest rate in Malaysia. Founder and Developer of Sunway Group, Tan Sri Dr. Jeffrey Cheah stated that property bubble is not forming but rather just a market perception (The Star, 2013). There are several factors that cause the house price to appreciate in Malaysia nowadays. Firstly, labor force. The house price depends on the amount of the labor force; if the amount......

Words: 754 - Pages: 4

Premium Essay

Internet Bubble

...Internet Bubble Table of Contents 1. The Beginning 2. World Wide Web and Internet-Not The Same Thing 3. Rise of the World Wide Web 4. Fall of The World Wide Web 5. Conclusion The Beginning The World Wide Web was officially introduced to the world on August 6, 1991 by Sir Tim Berners-Lee. The World Wide Web refers to a system of resources that will facilitate individuals using computer to view and interact with different type of information. The concept of the World Wide Web is to combine the methods of computer networking into a dominant and easy to utilize worldwide information system. Tim Berners-Lee formally introduced his project to the world on the hypertext newsgroup. In his own words from a post he said “aims to allow links to be made to any information anywhere”. It linked between different documents using the hypertext method. He made available all of the files necessary for people to replicate his invention. Although invented many years earlier Mr. Berners-Lee’s invention married hypertext with the internet. World Wide Web and Internet-Not The Same Thing The World Wide Web and the Internet are terms that to most people mean the same thing. While they’re related, their definitions are different. The Internet is the structure on which the World Wide Web is based which is at its most basic definition an electronic communications network. The World Wide Web is a part of the Internet “designed to allow easier navigation through the...

Words: 956 - Pages: 4

Premium Essay

Aol-Time Warner Merger: Pestel Framework Analysis

...The PESTEL framework provides a broad analysis of six major organizational factors; Political, economic, social, technological, environmental, legal. The origin of the PESTEL diagnostic model is fairly ambiguous, as it has only recently become a staple in corporate human resource environments within the last ten to fifteen years. The model itself is a broad snapshot of an organization’s big picture. In other words, the PESTEL diagnostic model can be used to help identify strengths, weaknesses, opportunities, and threats. According to Evans and Richardson, “organizations will need to examine competitors (current and potential), in order to determine their capabilities and strategies before evaluating their likely actions or responses” (Evans and Richardson 2007). This suggests further analysis is required after the production of a PESTEL analysis. The PESTEL framework was chosen for a few reasons. First, the analysis creates a general map of the external environments of each organization. Second, a fairly significant portion of mergers and acquisitions occur because of external forces. The PESTEL analysis determines the external forces at play for each organization. Third, the PASTEL analysis external forces only qualify if they are defined as a change in the environment. In regards to the America Online and Time Warner merger, a PESTEL diagnostic analysis can be applied to both organizations. First is an overview of the political external environment. Due to......

Words: 1210 - Pages: 5