Goodbye to 2000: Bursting bubbles, mega mergers and teetering telecoms

If 1999 felt like one long Friday night for the high-tech industry - and dot-com glory hunters in particular - 2000 has been nothing short of a perpetual Monday morning.

Yes, we escaped the worst the millennium bug could throw at us. Twice - on 1 January and again on 29 February - we breathed a collective sigh of relief when the Doomsday scenarios forecast failed to materialise. But just as we were all becoming a little too complacent, the internet bubble went pop. It was not as if we weren't prepared for it. (silicon.com regular David Taylor, for one, fell just short of predicting the exact week of disaster during the last Behind the Headlines of 1999 - http://www.silicon.com/a34733 ). Unsurprising, maybe, but the fallout was still painful. Dot-com failures are running at one a day, job losses stand near the 10,000 mark and venture funding is as scarce today as it was plentiful 12 months ago. Bad management, poor execution and non-sensical business plans were all cited as reasons for the demise of boo.com (temporarily), Clickmango, Boxman and Breathe, among others. Contributing factors also include industry commentators all too willing to take the promises of e-tailers and B2Bs on face value, and venture capitalists who have proved themselves to be fashion victims - just like the rest of us. Perhaps the most telling quote of the year came from Angela Dean of Morgan Stanley Witter when she admitted: "We didn't know how to value these [dot-com] shares when they were going up other than relative to each other. It's the same thing when they are going down." To appreciate fully how things have changed in 12 months, consider the merger of AOL and Time Warner. Proposed in January, still unconsummated in December, this remains the biggest corporate takeover in history. Yet due to a decline in share prices, its overall value has fallen by two-thirds. Would the deal ever have been proposed at the end of 2000 rather than the beginning? Probably. Would the new media company have been the senior party? Probably not. Dot-coms are not the only ones who will be glad to see the back of the year. For telecommunications, 2000 has been characterised by declining value (telco shares have fallen an average of 30 per cent since April) and escalating debt (£22bn for 3G licences in the UK alone). Meanwhile, Bill Gates goes into 2001 knowing if the Supreme Court and George 'WWW' Bush fail him, his beloved company will be split in two. And thanks to Napster, Gnutella et al the music industry has some hard choices to make if it is not to lose its fortune to something as innocent sounding as "one-to-one non-commercial file sharing". Despite the doom and gloom, most of us are still here making a living in an industry that remains vibrant and stimulating. Anyone who believes the internet revolution is over before it has really begun has misread the runes of the last year's events. What we have seen are the symptons of an immature market making mistakes, undergoing consolidation and beginning to learn some painful lessons. **You can hear a review of the high-tech year, hosted by silicon.com's editor-in-chief, Jon Bernstein, at http://www.guardianunlimited.co.uk/radio . The panel features Jack Schofield, Victor Keegan, Amy Vickers and Jim McClellan**