1 February 2006

Web as platform - Business strategies

BeyondVC: Web as platform

I have long promoted the web as a platform, and the use of lightweight technologies to create low cost loosely coupled solutions. Of course I was merely absorbing and reflecting a general understanding of how this developed from the mid 1990s until now. Recently the term "Web 2.0" has been used to cover a wide range of next generation Internet technologies, that could give rise to a new impetus to the development and deployment of innovative new web-based services.

This article from Ed Sim's blog, actually posted September 2005, is an interesting contribution to the debate. It is focused on the business models for new companies launching into the "Web 2.0" space. Food for thought.

"So as you can see, there are more sophisticated users, it costs significantly less to launch a new service/product, and many of the business models are proven to reach profitability. In other words, these business models are quite capital efficient. It is no wonder why VCs are quite excited about next generation web companies. All that being said, I, like others, worry about believing all of our own hype, and moving ourselves to another bubble. As you see from Tim's map and my table above, if it costs less to build and launch a company, then the barriers to entry must be lower as well. What this really means is that building a sustainable competitive advantage in this new open world means leveraging network effects to foster loyalty, community, and collaboration. In most cases this will be enough to create lots of value. In other cases like Friendster vs.MySpace it shows that this network effect can also be fleeting."
Posted by mofoghlu at February 1, 2006 10:38 AM
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