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A Historical Analogy

Few innovations have the capability of changing the entire competitive business environment. During our lifetimes, only the Internet has the potential to affect commerce as much as the nineteenth-century railroad did. “The impact of the rail network was like nothing the United States had ever seen before or indeed has seen since.”[2] To understand the long-term business potential of the Internet, it is first helpful to understand the railroad.

[2] Alfred D. Chandler and Richard S. Tedlow, The Coming of Managerial Capitalism: A Casebook on the History of American Economic Institutions (Richard D. Irwin, 1985).

Table 3-2. Comparison of Railroad and Internet Infrastructures
 Railroad (1825–1890)Internet (1969–Present)
New infrastructureFirst water-independent transportation infrastructureFirst global public information infrastructure
Original purpose (not commerce)Passenger traffic; militaryMilitary and civil defense; research
Importance of standardsWidth of tracks (gauge)Network and communications protocols (TCP/IP)
New security challengesRailway police hired to manage new crimesSecurity protocols and standards
Source of innovationSteel production, accounting, logisticsSoftware, networking, fiber optics
Accelerate fundamental economic trendsIndustrial age (key enabler: steam engine)Information age (key enabler: computer)



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