Wednesday, January 28, 2009

Internet Doesn’t Give a Damn About the Recession

In 2008 the stock market fell into shambles, the real estate market tumbled, big companies announced big layoffs, venture capital investors became more careful, and the entire world economy went downhill. It’s enough to put a sour face on the most optimistic person.

But now contrast this with what happened to the Internet in 2008:


  • The number of websites increased by 20%.

  • The number of domain names increased by 19%.

  • Not to mention that there were more than 1.4 billion people on the Internet, a number that will keep growing.
So, while everything else shrinks and decreases, the Internet just keeps growing. It probably isn’t growing as fast as it would if the overall world economy was blossoming, but it IS growing at a healthy rate. This would indicate that the Internet as a whole operates on a separate level from the general economy.

Link.

8 Comments:

At 1/28/2009 10:28 AM, Blogger 1 said...

Ahhh well, yet another lesson in how clever folks make use of available resources to make a profit...

 
At 1/28/2009 11:49 AM, Anonymous Good News Economist said...

Love this post... and there seem to be more companies out there that don't give a damn. Fortune has just compiled their list of 20 great companies that are hiring... and that list is even further augmented here.

As you say perhaps these companies would be hiring faster in more robust economic times, but nevertheless they are hiring... today!

GNE

 
At 1/28/2009 12:42 PM, Blogger MattYoung said...

Look at home radios in the 1920s, the same phenomena, that market kept on growing all the way through the crash until a majority of consumers had radio by early in the 1930s.

The two technologies had another similarity in their day, they changed the way we shop!

Imagine two scenarios. One, in 1923, listeners are pleasantly surprised when suddenly a local department store, for the first time ever, announced on the radio the goods in stock right now. The fast forward to 1998, network users were pleasantly surprised when most valuable goods they wanted could be delivered right to their door by UPS.

In both cases the result was transportation constraints that suddenly became obvious.

There is one difference, very important. In the 1930s commercial radio caused us to switch from street cars to automobile, and that required 15 years of road building.

In the 2000s the Internet simply requires that we automate cargo on our nations road using rubber, asphalt, and microprocessor.

Our restructuring should take about 5 years and yield 3 times the efficiency of oil usage, if government cooperates.

If government does not cooperate, then we live in the 1960s forever, Krugman's fearful contraction.

 
At 1/28/2009 6:46 PM, Anonymous poor boomer said...

For some reason I'm not finding this remarkable.

There are plenty of people now who can put SOME semblance of a website online, and there is even software that makes it so easy even a caveman could do it.

And domain names are CHEAP. Heck, even I registered a domain name last summer. (Think about THAT - even I could afford to register a domain name.)

A lot of domain names are being held for speculation - as discussed here previously - and are inactive.

 
At 1/29/2009 9:09 AM, Blogger MattYoung said...

Poor Boomer says:

"For some reason I'm not finding this remarkable [ the growth of domain names and web sites] ."

It is the fact that this is unremarkable that is causing the problem. A very low cost web site costing a mear $300 to build may reasonably generate five extra daily trips by UPS nationwide.

That is a powerful multiplier, and that is the problem in short.

 
At 1/29/2009 9:56 AM, Anonymous poor boomer said...

Yes, it is, if I had $300 maybe I'd appreciate it more.

 
At 1/29/2009 12:01 PM, Blogger David said...

Matt...the efficiency of transportation, in the form of door-to-door deliver, would seem *very* volume-dependent. If the UPS driver is dropping off 20 packages in the same neighborhood, instead of 2, there will only be a relatively small increase in his fuel consumption and time utilzation--thus, a lower average cost per package.

Also, the shift to intermodal rail for long-haul transportation has big efficiency implications--and I believe UPS is now the largest single RR cutomer. The railroads are now facing significant capacity constraints, but these will be alleviated to some degree by improved signaling & control technologies. I'm concerned, though, that the drum-beating for reregulation of RR freightprices may seriously impact RR capital investment.

 
At 1/29/2009 8:12 PM, Blogger MattYoung said...

Dave, thanks some brains on this deal.

I do follow UPS and watched them take off then recently cliff dive. They are (I think) the largest intermodal user of rail, and they have tried to work with rail companies for increased efficiency. All good points, and UPS does believe their future lies in web shopping. They carry over half of the domestic christmas deliveries.

But steel on steel in the freight yards does not quit cut it for UPS. They need to manage their own freight yards. And, steel on steel requires so much mass, UPS cargo wagons on rail cars on steel just makes matters worse. Microprocessor on rubber just re-purposes the road system, it needs only some green paint and a DMV rule change. UPS can acquire the technology that is available for autonomous vehicles.

Microprocessor on rubber on asphalt can match the straight lines as good, if not better then steel. Electric drive on the wagons with short quarter mile battery reserves automate the freight yards as the cargo wagons can move and re-arrange themselves. Electric drive "trains" of electric cargo wagons can move faster then trains and are safer in accidents and provide less wear on roads because they are electrically tethered, not mechanically tethered to the diesel electric tractor trailer.

There is one final point, goods follow information. Our information is now driven by microprocessors moving packets, so these microprocessors should eventually move autonomous cargo wagons.

 

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