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The Digital Skeptic: Sandy Shows Where Web Is Weak

Stocks in this article: VZ T S AMZN GOOG

At times, this required -- no kidding -- a fully running back-up generator, which I'm lucky to own. But of course, gas is so dear these days it's simply nuts to run a 5,400-watt generator to power a 20-watt data line.

Sometimes that left the grim choice of accessing the Web via a cell modem or phone, which varied heavily by carrier and conditions. Overall, Verizon cell service was reasonable for making calls, but not for data access. AT&T provided reasonable data, but email was not reliable. Sprint offered solid data service, but the Web and phone calls struggled.

The only truly reliable digital communication solution? Low-tech text messaging.

The no-margin Internet
We were lucky. It all worked. Emails got sent. Stories got filed. And we are still in business. But it took far too much time, and I already feel the margin pinch this month. And with that pain, my contempt for managers at Web giants such as Google, Facebook or Amazon has softened.

I now understand exactly why margins do nothing but go south at these firms. The Internet is such challenging a place to function that of course it's tough to make money. Something is always falling apart. Strictly speaking, Jeff Bezos deserves a prize for wringing the few cents out of the dollar he does at Amazon.

Honestly, the Web makes Amtrak look reliable.

And I'm not alone on picking up on the Web's "just getting by" vibe. Manchester, N.H.-based Renesys, a global Web analytics firm, said that though in Manhattan just 10% of the network was taken offline, the effect on the Internet was profound.

"Silencing 10% of the networks in the New York area is like taking out an entire country the size of Austria in terms of impact on the global routing table," the company wrote in its blog. "The 90% that survive are in data centers, running on generator power supplied by engineers who do not sleep much."

Sandy showed me that the Internet is just like those lovely homes on the Jersey Shore: Great to hang out in, but far more expensive than they look to run.

And investors betting on these properties should understand that when the wind comes up, they will do only one thing: sink down in the sand.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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