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The main reason the first-mover advantage is much less potent than is commonly claimed is that Internet time, the dominant theme of the dot-com bubble, is false. Yes, product development cycles have become noticeably shorter. This is true not just in software, but also in such old-economy products as cars. But consumers do not operate on Internet time. Novel technologies do not diffuse notably more rapidly than they did in the days before dot coms strode the earth.

The thesis of Internet time rests largely on a misreading of transient phenomena. One often-recited factoid, for example, has it that Internet traffic has been doubling every three months, which corresponds to an astronomically high annual growth rate of about 1,500 percent. In truth, however, Net traffic grew at that torrid pace for one brief period during 1995-96. Since then, annual growth in traffic has been in the neighborhood of 100 percent-still an impressive statistic, but not nearly as earth-shattering as the myth would have us believe.

Another principal piece of evidence for a speeded-up world is the rapid adoption by the masses of a strikingly new product: the Web browser. The first beta version of Mosaic was released in early 1993, and by the end of 1994 Web traffic dominated the Internet, as millions of people rushed online. However, that is looking very much like an extreme exception. It has taken about six years for a new browser standard (called HTTP/1.1) to finally creep toward dominance. And IPv6, an Internet protocol designed to solve nagging technical problems such as the limited number of available addresses, is still used on only a small scale. It, too, was introduced in the mid-1990s. And even though is the dominant online bookseller, after nearly six years in business the company accounts for less than 10 percent of U.S. book sales. While 10 percent would be an impressively high market share by conventional standards, it doesn’t match the predictions that online retailers would wipe out the low-tech competition.

These examples are not aberrations. In 1995, technology sages were predicting that Internet telephony meant imminent doom to the established phone companies. But today, while it is possible to place voice calls through the Net, only a small (though rapidly growing) number of people do it. Similarly, eBay, for all its successes as a Web auction site, has so far had little impact on the classified ads that sustain newspapers. Make no mistake, all these technologies and companies are transforming the economy. They’re just not doing it in Internet time.

As a general historical rule, it takes about a decade for even the most compelling new product or service to be widely accepted. That’s still true. Even such attractive technologies as music CDs and cell phones, which many of us now regard as indispensable, took more than 10 years to move from commercial introduction to widespread use. Today we are seeing similar rates of adoption for DVDs, as well as digital cable TV, personal digital assistants and other emerging technologies.

At this stage, some readers might ask about Napster, the popular (and controversial) service for swapping digitized music files over the Net. Isn’t this an example of a technology rivaling the Web browser in its rate of diffusion? The answer is: probably not. Yes, Napster did spread extremely rapidly among college students. Within a year and a half of its release, it accounted for about a quarter of Internet traffic at several universities. On a wider scale, however, Napster’s impact has been muted. It is a threat to the music industry, but it has not driven it into the ground. Indeed, sales of recorded music in 2000 set records.

The slow diffusion of novel technologies explains the ability of traditional businesses to resist the onslaught of the startups. Since their customers were not changing on Internet time, the brick-and-mortar enterprises had time to adapt. This is similar to what has happened in the past. When the telegraph and then the telephone arrived, we didn’t get “t-businesses.” When power generators first made electricity readily available, we didn’t get an early form of “e-businesses.” What we got were two types of businesses. There were those that reshaped themselves to use the telegraph, the telephone and electricity. And then there were the dead ones, which refused to adapt.

The Internet is a potent communication tool, offering unprecedented speed and reach. It does change everything, just as the telegraph, the telephone and electricity eventually did. It is just that people do not operate on Internet time-and therefore the truly large implications of this new technology are likely to take many decades to unfold.

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