In my opinion, these companies are failing because their business models were dreamed up in the minds of business school graduates who generally have no understanding of the technology. The only reason they ever got funding was because of the mad IPO rush that happened. If you look at the companies that are doing well and succeeding, they were very often started by industry insiders and academics (computer scientists, that is). Companies like Yahoo, Lycos, Inktomi, Google were all founded by academics who understand the technology. It is always gratifying when genuine knowledge prevails, especially in this day and age of vanity and frivolity.
Another problem, as pointed out by the CEO of General Electric, is that these dot-coms really have no idea how to run a real business. So much of real business (what little I understand of it), or perhaps more specifically engineering-driven business, is the process. Companies who have solid processes and are able to execute effectively are in the long run the ones who survive. This is largely because the process is a way to maintain institutional intelligence and knowledge even when there is human turnover. Dot-coms very often have very poor processes because of their youngness. It's also becoming apparent that business on the internet isn't fundamentally different than business anywhere else. The business challenges that large corporations have perfected over the years are being encountered for the first time by dot-com upstarts and these business-school idiots^H^H^H^H^H^Hgraduates aren't able to cope.
Anyways, that's my take on it all. I really have little experience with real business. I'm an academic and a content person. Of course, the content business is much tougher than selling crap. There's no advertising money out there anymore, so a large number of content companies are having extreme trouble staying afloat. But then, do you really need a staff of hundreds to publish a few stories? (I could rant about my solution to the mindlessness of today's worker, but I'll spare you the pain).
