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AMAZON.COM IS NOT only the biggest e-tailer on the Internet, it's also the biggest economic mystery in the stock market. Start asking brokers about the company's actually worth and answers will range wildly, from five times its current value to 10 times less its current value. And most of them will say they are baffled by a company that posts loss after enormous loss on its quarterly statements, yet has a stock value that only seems to rise.

Dozens of stock market gurus think Amazon is a house of cards waiting to collapse, and dozens of frighteningly plausible reasons sustain their fears. But before we get into those, let us ponder this question: What would the implosion of that electronic retailer perched on Beacon Hill bring to our little throbbing tech neighborhood?

Maybe you don't think that Amazon has its tendrils wrapped around your legs. But listen to this story: An acquaintance who works at KCTS TV was selling his Wallingford bungalow earlier this year. He signed a purchase and sales agreement with a young guy who had worked for Amazon for the last couple of years. The buyer was going to use his stock options for the down payment; but on the eve of closing, the seller got a frantic phone call. Amazon's stock had dropped 20 percent since the buyer had made his offer on the house. He couldn't come up with the required down payment—could they postpone the closing for a week or two?

The would-be seller acquiesced, and the buyer was eventually able to produce the down payment. But it makes you wonder: Just how much of that wealth we see stacked up on the 520 bridge, chowing at Palomino or Wild Ginger, and toting bags out of Anthropologie is stock option wealth? And how much of it is teetering on the financial future of Amazon.com? Just what would happen if Amazon failed to live up to expectations? Could its stock drop to perhaps a tenth of its present value? Could the company fail entirely? And if so, what would the local economic consequences be?

Over the summer, local economists proclaimed that high tech makes a larger contribution to our regional economy than manufacturing. Of course, you can correctly argue that Microsoft is a much bigger contributor than Amazon: Microsoft has five times as many employees, its average wage is much higher than Amazon's, its role in the local economy is much larger.

But here's why Amazon's fortunes are as crucial to us as Microsoft's: While Microsoft is a mature player in an established business, Amazon is the Holy Grail of Internet retail commerce. Whatever happens to it bodes well or ill for all the other Internet peddlers. Jeff Bezos' ideas on how to run a consumer-based Internet company have become the business model for Internet retailing. Pretty much everyone who starts an Internet retailing company has Amazon in his or her head—from GreatFood.com to drugstore.com to N2H2. If Bezos's model fails, it won't just unravel the bankrolls of the 4,000 people who work for Amazon; it's going to shake every company, here and elsewhere, based on his vision.

IN A SENSE, Pugetopolis is like a medieval town where tears have been seen on the face of a Madonna. We're fervently placing our faith, along with a lot of cash, in the Internet's role as the business and consumer medium of the future. It is a wholly unproven wager, and Amazon is the biggest part of the gamble.

"Will the business model work?" asks Eric Von Der Porten, who runs Leeward Investments, a small stock fund in San Carlos, California. "That's the $21 billion question." ($21 billion was Amazon's market capitalization the day we spoke.) The question has gotten a bit more attention since Von Der Porten published a study in August showing that the amount people spend when they shop at Amazon's Web site has dropped by 18 percent over the past two years, from $35 per customer to $29. When Amazon spokesperson Bill Curry disputed Von Der Porten's conclusions, saying the way he calculated spending per person was inherently unfair, Von Der Porten defiantly answered, "Amazon loves to tout the number of customers and the amount of revenue, and they say, 'Don't worry about losses—they'll go away with time.' But if you say that's true, the revenues per customer don't look so good." His conclusion? "I continue to be mystified by Amazon's stock valuation, how anyone thinks that a low-margin retailer in a highly competitive market can be worth that much."

Jeff Bezos sold his company vision to investors on a few simple ideas: An Internet retailer has no need for a retail space, and there's no need to build up a distribution warehouse system. Amazon's costs would be minimal; manufacturers would store the products until Amazon had an order. The company would then act as the middleman, ordering the item from the manufacturer and shipping it to the customer. Profits would be small at first, and it would take a couple of years to actually see them.

It was a killer idea that would make Internet retailing much cheaper than "real-world" retailing. And it worked well when it was limited to books and the company was small. But Bezos turned out to have bigger ideas. He wanted Amazon to become a one-stop shop for virtually anything you could buy on the Net. This was the strategy all along, and even when the company was young he made it clear that books were just a good beginning. Bezos wanted to build an enormous customer base before other Internet entrepreneurs wised up.