The Digital Skeptic: RIP, Internet Research Report, 1995-2012

NEW YORK (MainStreet) -- If ever a there was a soldier in the digital Civil War that deserved a musket ball in the chest, it's the so-called Internet research report. These ongoing, several-time-a-year compendiums of estimates, forecasts and flat-out guesses drive much of what is wrong with the Web.

To me, the Internet report has a birth month: December 1995. That's when investment shop Morgan Stanley(MS) fanned the digital flames by publishing its first aptly titled The Internet Report to never-before-seen investor delirium.

"Whether you are an investor, user, creator or observer," Marc Andreessen, the co-founder of Netscape said at the time, "The Internet Report offers critical insight into both the Internet and the markets it will affect."

The 322-some-odd pages -- which still fetch $50 in printed form on Amazon(AMZN) -- were penned by (then) young analysts Mary Meeker and Chris DePuy. The Internet Report became the bible of the Internet era, beatified the two as angels of the information age and laid down the thinking behind much of the digital descent we fight through to this day.

Morgan -- rather eerily -- makes it almost too easy to see just how nutty it all was. Just go to its research page and find this report from the many it has published. And click away -- if you can stand it.

The introductory chapter recommends such flameouts as Ascend and Cascade Communications. There is the breathless language about the hundreds of millions of new Web users, the "powerful secular growth cycle" here, and how email will be the "killer app of tomorrow."

What got killed of course, were investors.

What Meeker and DePuy left out was the pesky profit thing. Since any idiot can sell and share online, survival turned out to be about being cheapest. So the net margin end-game for Internet companies is bleak indeed: That's something like Amazon's 1.1%.