Look Who Gets It

 
 
By Rob Fixmer  |  Posted 2001-11-05
 
 
 

"Were no longer the dot in dot-com," a Sun Microsystems executive recently wisecracked. "Now were the O in Old Economy."

Beneath the sarcasm of that statement lies a sad truth: Sun, the indisputable engine of the World Wide Web, is fully engaged in one of the most remarkably ill-conceived retreats in the history of American business -- an advertising and marketing campaign designed to distance the company from its Internet legacy.

The most glaring example was a recent four-page advertisement that ran in [ital]The New York Times[end] and [ital]The Wall Street Journal[end], and did little more than bewilder readers and insult women. It opened with a photo of a jewel-bedecked middle-aged grande dame under the headline "High Maintenance?" Most readers who turned the page probably had no idea that the first page was associated with the pictures of servers on the following pages -- and even those of us who did had a hard time figuring out what the point was.

This is a company whose marketing strategy seems to be in a death spiral -- and all because Sun, like many Silicon Valley companies, has concluded that the dot-com crash has been such a debacle that the only viable strategy is a full retreat from the Internet.

Memo to Scott McNealy: Get a clue. The Internet is just fine, thank you, and growing at a clip other media can only dream about. The problem with Sun is Sun -- its all-consuming war with Microsoft while IBM was eating Suns lunch, its recent loss of leadership in state-of-the-art hardware, its schizophrenia over Linux and open source, its squandering of some of the best minds ever gathered in Silicon Valley.

Sun is by no means the only Valley legend rushing to flee its legacy, though it may well be the silliest. From San Francisco to Los Gatos, companies that were founded explicitly to ride the Internet to riches are now scrambling to disassociate themselves from all things Internet. God save us from fickle, frenzied Silicon Valley.

After years of arrogantly hyping even the most trivial Web technologies and the most implausible pure-play dot-coms, leading Valley denizens should be distancing themselves from those foibles. Instead, they are running from the entire Internet like lemmings over a cliff.

Meanwhile, players in other technology corridors -- from Seattle to Boston, Armonk to Atlanta, Chicago to Dallas -- are laying ambitious plans to weave the Internet through every aspect of American commerce, communications, entertainment, shipping, transportation and manufacturing in ways that soundly trump the dot-com fantasies of the past six years. So is Sun, oddly enough, but its message to American enterprises is 180 degrees from its message to developers.

In the rest of the world, Internet is not a dirty word. With the possible exception of Wall Street, which is riddled with know-nothing analysts, the bloated corpses of dead and dying dot-coms are not confused with the Web. As our Interactive 500 ranking clearly demonstrates (see page 24), some of the worlds largest, stablest corporations are reaping enormous rewards this year from the investments they have been quietly making in Internet solutions.

These are companies that were told for years by Valley wags that they just didnt "get it," that they werent investing fast enough in each fad that came rolling out of Northern California. New Economy gurus who insisted "profits are for suckers" are now drowning in red ink and zero market caps, while those who hewed to traditional business values -- whether seasoned old-timers like General Electric or relative upstarts like Cisco Systems -- are realizing record revenue and in some cases even (dare we utter the word?) profits from their online operations.

Who "gets it" now?

This years Interactive 500 reveals that almost all the Valley stalwarts dropped in the ranking -- even as their online revenue rose. But thats the ultimate measure of their success, because they have given ground to companies like the Burlington Northern Santa Fe railroad, Enron, FedEx, General Motors and United Parcel Service -- traditional corporations that were, or should have been, the target customers all along.

Silicon Valleys future never lay in goofy, pure-play dot-coms, but in click-and-mortar, bedrock "old" economy corporations. These are the companies that realized early on that the Web was not the future of all commerce, but rather one door to vastly increased productivity and higher profits.

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