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 infrastructure	First water-independent transportation infrastructure	First global public information infrastructure
Original purpose (not commerce)	Passenger traffic; military	Military and civil defense; research
Importance of standards	Width of tracks (gauge)	Network and communications protocols (TCP/IP)
New security challenges	Railway police hired to manage new crimes	Security protocols and standards
Source of innovation	Steel production, accounting, logistics	Software, networking, fiber optics
Accelerate fundamental economic trends	Industrial age (key enabler: steam engine)	Information age (key enabler: computer)