The Year in Review 

Punctuated equalibrium defines techno-evolution in '97

Nineteen ninety-seven was a huge year for all things Internet. Business and individuals alike got online in hordes. Nearly 20 percent of Americans are online, up from a scant 13 percent at the end of 1996. Electronic commerce, despite the obstacles presented by the federal government, began to realize its potential.

In this issue of the Net Page, I'll touch on this and a few other highlights from 1997, concluding with a few predictions for the year ahead.

The biggest story of the year was the defeat of the Communications Decency Act in the Supreme Court. Originally endorsed by the Clinton administration, the act would have attempted to reduce all online content to that which is appropriate for children.

This infringement of American adults' right to exchange more mature content was first struck down by a panel of federal judges in June. The government appealed, but the Supremes affirmed the lower court's decision, saying of the law's absurd over breadth, "it's like burning the house to roast the pig."

It is a landmark decision, no doubt, and sets a powerful precedent for protection of online speech, but don't think for a minute this is the end of attempts to censor the Net. I'll be keeping an eye out for more carefully-crafted censorship bills to creep into state and national legislatures in the coming year.

In other arenas, as I mentioned, electronic commerce has caught fire, weighing in a hefty $5 billion in '97 transactions, including direct business-to-business activity over the Internet. And as the demographics of the web broaden, the mass market potential should really come alive for advertisers. According to Dataquest, advertising revenue on the web approached $700 million in 1997, more then double the previous year's figure.

Look for online commerce to continue to grow by leaps and bounds as transaction technologies improve, more businesses put up quality web-based storefronts, and more of mainstream America gets online.

Speaking of mainstream America, America Online made big headlines in 1997 after unveiling their unlimited-time-for-20-bucks-a-month package. Usage of the online service jumped so dramatically that the AOL modem banks were overwhelmed, resulting in endless busy signals for millions of users. Some sued, and many predicted that the online giant would crumble. But it didn't happen. AOL has actually improved its service. Though this provider remains stiflingly commercialized, I expect them to prosper well into the future.

The so-called "browser wars" meanwhile continued to rage between Netscape Communications and Microsoft. Some industry analysts claim that Microsoft doubled its browser market share in 1997, from 20 to 40 percent. By bundling its Internet Explorer browser with the Windows 95 operating system, it brought many new computer buyers into the Microsoft fold -- but Bill Gates didn't just include the browser to be nice.

Microsoft required computer makers to include their browser on computer desktops, a policy which eventually alerted the U.S. Department of Justice. Microsoft complied with federal demands, offering computer makers either an outdated version of Windows 95 or one which simply does not work. This is a battle that will continue throughout this year; stay tuned.

A few computer makers wisely altered their business model to offer built-to-order computers in 1997, as opposed to trying to predict demand. Dell did a million dollars a day of business through their website alone, making them the number one manufacturer of corporate PCs. Gateway 2000 has a similar system; they also sold me my little Pentium 133, with which I'm quite happy.

Though the hype outweighed the content in 1997, the Java programming language made significant inroads in the software development and corporate intranet markets.

The write-once-run-anywhere development language promises much more than just animation on web pages. Some say it offers freedom from operating system incompatibility issues, allowing a programmer to create a single application to run on Windows, Mac, Unix, and any other system. Unfortunately, squabbling between Sun Microsystems (who invented Java), Netscape, and, most significantly, Microsoft, threatens to slow Java's development to a crawl, a fact which caused PC Week to observe that Java has entered a "troubled adolescence."

As for the year ahead, I suspect that the Net will continue to explode in popularity -- and profitability -- as it has done in the past. Here's a few specifics:

  • Websites will become even more interactive as the technologies for recognition of user preferences and repeat visitors improve and get easier for developers to use.

  • Despite Microsoft's apparent legal troubles, I don't expect them to take much of a hit. When the story first broke, their stock dropped a bit, but they're rapidly gaining it all back.

  • By the end of 1998, I expect a large number of American communities to have very high speed access, be it through cable modems or satellite modems. These technologies are already available in such places as Baltimore, Northern California and Jacksonville, Fla. The next generation of phone-line modem technologies, XDSL and ADSL, won't be available for several years, so I expect cable modems to snatch up a significant market share.

Regardless of what happens this year, though, the whirlwind turbulence with which the industry spins assures it'll be at the very least interesting.

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