Weekly Review: Dark Days of August

August is traditionally viewed as a slow month for news, but last week bucked the normal trend with several attention-grabbing stories. Each of them carried powerful messages for the future of the Web — some darkly negative, others strongly positive.

What If UUnet Went Under?
The news that failed telecoms giant WorldCom made even less money than it had previously admitted raises a chilling spectre. On top of the $3.8 billion in expenses that it originally misstated as capital investment, the company last week revealed that it had declared a further $3.3 billion of bad debt as income. The $7.1 billion in profits that it now admits it never made knocks out almost two thirds of the company's supposed operating margin, making it a much less lucrative business than anyone previously imagined.

Read and React

"The Internet was designed to carry on working even after a devastating nuclear attack. But no one was ever asked to calculate the potential effect of a series of multi-megaton financial implosions in the telecoms industry. It is, of course, unthinkable to suppose that anyone would be foolish enough to pull the plug on Uunet. But just because something is unthinkable, it doesn't mean it can't happen." Give us your feedback in the ASPnews Discussion Forum

Such a massive reduction in profitability, combined with a debt overhang of $41 billion at the time it filed for bankruptcy protection, may make it much more difficult than expected for WorldCom to raise the cash it needs to continue operating. That in turn creates the very real threat that Uunet, its Internet infrastructure division, could cease operations.

I've heard a lot of people over the past few weeks saying how unthinkable it is that Uunet, which claims to carry more than half the world's Internet traffic, could ever go dark (see WorldCom's Backbone Is Safe For Now). But we live in times when what was previously unthinkable now seems to occur with ever more sickening regularity. Last October, I discussed the effects of Exodus entering bankruptcy with a service provider executive. His company was unaffected, he told me, having made the wise decision to host its servers at the data center division of Enron. This was a company that couldn't go bust, he said, "because if it did the entire U.S. energy market would collapse." Within days, of course, the unimaginable had happened.

As every schoolboy knows, the Internet was designed to carry on working even after a devastating nuclear attack. But no one on that early design team was ever asked to calculate the potential effect of a series of multi-megaton financial implosions in the telecoms industry. It is, of course, unthinkable to suppose that anyone would be foolish enough to pull the plug on Uunet. But just because something is unthinkable, it doesn't mean it can't happen.

Dimming the lights at Interliant
Interliant has been struggling to survive for so long that it had almost earned a reputation as a survivor. But last week the U.S. operations of the one-time enterprise ASP finally succumbed to the combined weight of last year's restructuring, its continuing debt, and the current harsh business conditions (see Interliant Files for Bankruptcy Protection). I don't hold out much hope for a new resurgence in the company's fortunes. When both the CEO and the chief operating officer simultaneously hand over the reins to the chief financial officer, the best outcome one can hope for is an orderly asset sale.

As an ASP, Interliant has a venerable history. It was set up almost ten years ago, in 1993, to provide a hosted Lotus Notes community, the first such shared-server deployment of Notes. In 1997, it became one of the earliest companies to offer ASP-style per-user pricing for hosted Notes and email services, and it worked with Lotus to develop an early version of the vendor's current QuickPlace online collaboration platform. All of these early milestones are documented in a white paper on Interliant that I wrote in 1999, and which you can still download today from the ASPnews Web site (see Interliant: ASP Fusion for the Enterprise PDF format, 81k). That white paper also documents what in retrospect can be seen as the seeds of the company's downfall.

After a merger with Nasdaq-listed Web hosting roll-up Sage Networks, by the end of 1999 Interliant was reaching out in multiple directions, seeking (as it thought) to keep up with the equally fast pace being set by ASP rivals including FutureLink, USinternetworking, Qwest Cyber.Solutions and Corio. But that race to build out infrastructure and offerings turned out to be a race to see who would overextend themselves the fastest. Interliant's track record with customers was probably what enabled the company to keep going longer than many of its rivals, but in the end it wasn't enough to undo the damage incurred during its heady expansion.

Switching on to Blogging
Another Notes veteran was making waves last week, but for much more positive reasons. Ray Ozzie, the creator of the ground-breaking groupware platform, has started publishing a weblog. For those of you who haven't caught up with the Web's latest craze, a weblog — or blog, to use the fashionable short form — is a Web page where the author publishes passing thoughts, links to other sites, and observations. The difference from earlier forms of Web publishing is the immediacy — blog editing tools work in the browser and allow you add a new item in seconds. Sometimes others respond with an item in their own blog, setting up a loosely coupled, Web-based conversation that ripples out across the "blogosphere."

Ray Ozzie's weblog has excited a great deal of interest, since he is not only the creator of Notes, but also the founder and CEO of peer-to-peer collaboration software vendor Groove Networks. As such, his reflections and comments on participating in this new way of sharing information and ideas make compelling reading. The effect is a bit like having William Shakespeare writing an 18th century newspaper column about the rise of the novel. You can't help but want to know what this particular guy has to say on this topic.

What I didn't realize until I'd read his blog last week was that, before he joined Lotus, Ozzie worked at Software Arts, the company where Dan Bricklin created VisiCalc, the first PC spreadsheet. Dan is another blogger, and last week his current company, Trellix, added blogging capability to its Web site publishing platform, the first major vendor to integrate blogging "out of the box," as it were (see Trellix Adds Blogging to Publishing Platform).

This is all good news because it demonstrates that, despite the trauma of the past few years, the Web is still capable of nurturing grassroots innovation that can grow strong enough to cross over into the mainstream. Blogging is in the process of making that crossover, bringing with it a new approach to the sharing and linking of information that gives us some important clues to the future shape of the Web. Rather than the mass-market delivery of monolithic content and applications that drove the failed business plans of WorldCom and Interliant, the Web is evolving an active, participative style that is bringing unexpected new forms of content online today. With the continuing development of Web services, I think we'll soon start to see it giving birth to unexpected new types of applications, too.

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