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Recently in Salon Technology

Review
MP3: Here, there, everywhere
The latest digital music players let you play MP3s on your home stereo, in your car or on the run -- but are they any good?
By Janelle Brown
[12/14/99]

Technology: View from the top
High-speed Net access that's out of this world
John Koehler retired from a career at Hughes Electronics and the CIA to build fast Net connections on satellites already in orbit.
By Mark Compton
[12/13/99]

21st Challenge
The perfect e-gift
What should you order online for Bill Clinton or Bill Gates, George W. Bush or Jesse Ventura?
By Charlie Varon and Jim Rosenau
[12/11/99]

Dear Diary
Andrew Smales' astonishing Diaryland site provides the format. You supply the secrets.
By Todd Levin
[12/10/99]

Dot-com dogs
With Net-stock fever showing no signs of cooling, mediocre IPOs are growing as plentiful as fleas on a stray hound.
By Mark Gimein
[12/09/99]

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In 1999, free software -- software for which the underlying source code is by definition always publicly available and free -- became big business. Before Red Hat (the leading U.S. distributor of packages of Linux-based operating systems) went public in August, you could still dismiss the argument that there was money to be made in free software as so much hype. You would have been wrong, but at least you wouldn't have been laughed out of cyberspace.

But by mid-December, Red Hat's stock market valuation was hovering around $15 billion, and new free software-related IPOs from Andover.net, a publishing company, and VA Linux Systems, a hardware vendor, were rocking the market. VA Linux went so far as to set a new record for the best first-day performance, gaining 698 percent in its first day. Call it a herd mentality on the part of investors or call it day-trader hysteria, but you still can't ignore the reality. Based on stock valuations alone, companies like Red Hat and VA Linux now have the wherewithal to purchase established players in the technology marketplace. Could there be any better demonstration of how passion can affect the economy? These stock market valuations are fueled in part by the belief of thousands of small investors that Linux is well on its way to world domination. Their willingness to pony up their cash is making that belief come true, provided Red Hat and VA Linux use their market clout wisely.

How now, Mr. Dow?

The Dow Jones industrial average started the year at a shade over 9,000. Then for 58 seconds on Mar. 16 it broke 10,000. The euphoria was quickly stamped out by talk of a psychological barrier that was holding traders back from the five-figure mark. Whoever thought investors were afraid of a little bull couldn't have been more wrong. They rallied and the market now looks poised to end the year somewhere over 11,000. We used to think that what goes up must come down. But this year, to be really au courant you had to embrace the notion that what goes up will just keep going up forever. Or, at any rate, nearly forever: "Dow 36,000," one of the year's most influential business books, argued that the Dow will hit a plateau -- years from now, at 36,000. But remember this: Even the authors don't have all their money in stocks.

Day-trading tribulations

How to get rich, circa 1999: Quit your job; get an account with a cheap online brokerage like Datek; buy 500 shares of stock in a company that you know nothing about; sell them an hour later; repeat five times a day. It seems that thousands of America's best and brightest have given up on professional careers to turn their extra bedrooms into gambling parlors. The good news is that online trading and lower commissions have made speculating in stocks a lot cheaper and easier for individual investors. That's the bad news, too. When you're wheeling and dealing with tens if not hundreds of thousands of your own dollars, it doesn't take much to bring on your own private Black Monday.

The day-trading bogeyman has been blamed for everything from increasing volatility in the markets to (yes) mass murder. (In July, Mark Barton opened fire in the Atlanta day-trading office where he apparently had lost a good deal of money.) Day trading has also created its own gurus and celebrities, like New York's Tokyo Joe. Get past the hype, however, and you find that the real danger of the day-trading craze might be that, as study after study has shown, the more you trade, the less likely you are to make money.

Valley of the vanities

If Silicon Valley is like Florence in the Renaissance, shouldn't there be some art and literature to go with all those chips and stock options? Well, there is, sort of. In 1999 we saw the glimmerings of a new literature of the valley, with books like Po Bronson's "The Nudist on the Late Shift," David A. Kaplan's "Silicon Boys" and Michael Lewis' "The New New Thing" all struggling to illustrate the Silicon Valley state of mind. Bronson preaches that Silicon Valley isn't just about money, but found himself in the minority (alas, except for a brief reference in the introduction, we never did get to read anything about the "nudist"). Kaplan and Lewis, by contrast, think that money, in all its dirty glory, is exactly what Silicon Valley life is about, and took palpable pleasure in cataloguing all the permutations of unadulterated greed.

End speed limits

Here is one iron law of the Network Age: Content expands to fill the available bandwidth. No, scratch that. Content expands faster than the available bandwidth. Ever tried to look at some of the newest shopping sites on a pokey home connection? No wonder people are doing more and more of their Net surfing from work. But in 1999, high-bandwidth home connections blossomed. Excite@Home, the leading provider of high-speed access through cable lines, saw its subscriber numbers quadruple, while all the major telcos began offering high-speed access over phone lines. Some, like SBC, sharply cut prices at the beginning of the year, promising cable some serious competition. No one seems to know whether cable or DSL is better, but consumers with either are loving goodies like streaming video and always-on connections.

And there was more good news for consumers: AT&T, now the country's biggest cable service provider, went into 1999 saying that if consumers wanted to get high-speed access over their cable lines, they'd have to do it through Excite@Home, the Internet service provider partly owned by AT&T and other cable companies. Now AT&T -- faced with pressure from local governments around the country -- has decided that open access might not be such a bad idea after all, and has even signed a deal that will let one big ISP, Mindspring, start providing access over AT&T's high-speed lines in a couple of years' time.

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