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Tech Industry

Is clean tech a bubble?

Yes, says CNET News.com's Michael Kanellos--but the nutty excesses of the Internet bubble may not come around for this one.

With all the money and hype surrounding the growth of clean technology, you often hear comparisons to the Internet era, that glorious time when fringe companies were flooded with cash and even the tinniest of ideas were declared golden opportunities.

There are some apt points to that comparison. Many clean-tech companies are now run by executives who hit it , and a lot of entrepreneurs predict that humanity will be better off--as long as you buy their products.

Fortunately, the analogy only carries so far. For one thing, a significant number of the individuals in the clean-tech space are physicists from national laboratories. You get fewer recent college grads rambling on about new business paradigms in an effort to hit on chicks (and hence not as many launch parties with free-flowing liquor and '80s cover bands.)

But the difference goes deeper than that:

1. Customers pay up front.

Internet companies had it easy here. Most successful ones spread by word-of-mouth, and if that didn't work they resorted to clever TV ads and insulated coffee cup holders. Most of the services were free, so customer numbers could grow dramatically.

"The solar industry can look to companies like Google for learning how to accelerate technology adoption," wrote Jon Klein from Topline Strategy recently.

OK, but for someone to start using Google, the search giant doesn't have to send a contractor to your house whose every conversation begins with, "Well, we had the building inspector out here, and there's good news and bad news."

To get someone to go green, solar companies and automakers have to get consumers to crack open their wallets and fork over thousands of dollars. It's going to be a slow slog.

2. It's not fun

When you boil it down, most Internet services really aren't essential; they are luxuries. People bought books and records before Amazon.com, and movies like The Dukes of Hazzard don't get any better when delivered on peer-to-peer networks. Living like it's 1993 wouldn't be like a return to the Dark Ages. Instead of YouTube, you'd watch reruns of America's Funniest Home Videos. (E-mail was a big change, but e-mail predates the browser, so I don't include it.)

By contrast, society needs the products hawked by the alternative-energy crowd. Carbon dioxide and other greenhouse gases are . Clean water supplies are going to be in short supply. And even if you don't believe in the environmental hazards, it's pretty clear that depending on countries like Venezuela, Iraq and Russia for fuel isn't a lot of fun.

When products become essential, the public gets a little more flexible when it comes to price. That means that long-range-but-risky ideas have a better chance of survival.

3. The role of the government

The Internet crowd has always had a bipolar relationship with the government. Consumer advocates, privacy experts and others have always roundly condemned the encroaching power of the state. On the other hand, they love the money. The Internet grew out of a military project, after all, and Net neutrality is a government regulation scheme.

There's no ambivalence on the energy side. The alternative energy industry will require research grants, tech transfers from the national labs and subsidies for quite some time.

4. You won't be a millionaire

Back in 1999, nearly everyone was a millionaire for 6 and a half minutes, and, my god, was it aggravating. People you absolutely hated were landing outlandish jobs. "I can bring my pet ocelot to work, and did you see my egg chair?"

Money will be made in energy, but often not in ridiculous amounts. Why is that? Most of these companies, ultimately, are hardware suppliers or chemical companies. They need lots of venture capital to build plants and hire workers; that's why a relatively small outfit like Nanosolar got $100 million in funding. Investors are going to monitor returns closely, which will cut down on the outrageous payouts for many workers.

5. Fickleness is forgotten

Customer whimsy is the dark underside of the Internet business. One day they love Yahoo, and the next they're off to Google. Someday, you just might see a mass migration of teens from YouTube, and it will be a bigger mystery than what drives lemmings to their doom.

With alternative energy, forget it. You bought that electric car, and it's yours to keep. A lot of the demand for solar panels or solar-powered water heaters will also come from utilities, commercial property owners, and owners of vehicle fleets, so expect a lot more talk about statistics.

6. It's invisible

With Internet companies, you care about what's being delivered down at the end of the pipe. Do I like the Comcast news wheel or the traditional headline arrangement on a news site? The articles are pretty much the same ones you see in the paper; it's the experience that differs.

With energy, the lamps in your house will still function like they always have, regardless of whether they are powered by solar or coal. Plastic forks made of cellulose will still be good for stabbing melon bits but only so-so with grapes.

Hence, the experience is the same--the actual benefits of going green are difficult to experience directly. Frankly, I don't know what this means in the long run, but I bet it becomes important.