Open source and Web 2.0 business models
A while ago, I blogged about “Open Source and Offshoring: Two Disruptive Forces Begin to Converge?” Extending the thinking, there was an interesting article “Social networking Joined-up thinking” in a recent issue of Economist magazine that talks about the trends in social networking and how it is impacting the corporate world. The author begins by examining “consumer adoption of social networking has grabbed most attention since then. But interest in the business uses of the technology is rising. . . .Many companies are attracted by the marketing opportunities offered by community sites.” This blog is an example of social networking that I attempt to participate in.
There is another example of a client’s business I came across that made me reflect on how Open Source, Offshoring and Web 2.0 are beginning to converge. A case-in-point:
The company, let's call it XYZ.com, was founded during the heyday of dot.com with the focus to be an online aggregator of hi-tech books and research data. The idea was to digitize content from multiple publishers to be served on its electronic publishing platform. The business model is ‘simple’ yet innovative: digitize books (with IP) and then ‘sell’ subscription to a collection of books to groups (research institutions, universities etc). And given that they are a hi-tech company, it is not surprising to see a proliferation of Open Source tools and technologies – ranging from the IDE to core content and search engines -- being adopted in the IT shop. A classic mashup of Open Source and Web 2.0! The interesting aspect of companies like XYZ is
- Changing the traditional paradigms: XYZ’s business model is challenging the traditional publishing model [I should know: I recall working with all the traditional publishing tools : printed notes, manuscripts etc while my book went through the different stages of publishing life cycle]
- While innovating and applying Web 2.0 techniques to their busisinesses, companies like XYZ are also embracing Open Source software, and in some cases partnering with Offshore service providers
- This is a good example of business that exists because of the Internet.. and will probably morph into 'Web 2.0' business in time, perhaps without much hoopla
And no, you will not really read about such ‘innovations’ in a whitepaper or textbook … until perhaps the Web 2.0 entrepreneurs shake up a few traditional goliaths. .... And who knows, John Hagel may have a slightly different perspective, next time he attends NASSCOM's Leadership Forum. [He blogs 'emerging from the discussions at the conference involved the increasing need for innovation in the offshoring business.']
Comments
I think there is a 2.0 bubble right now and many of these 2.0 companies are going to fail. Look for lots of fallout!
Posted by: science news | April 29, 2007 06:04 PM
I don't really have a crystal glass, so there is no debate if 2.0 is a "bubble" or not. This said, the trends are certainly here for us, technologists, to leverage.
Posted by: Mohan | April 30, 2007 02:04 PM
Is Web 2.0 another bubble, like the dot-com bubble, to burst?
Perhaps not. Web 2.0 has many inherent strengths, and can’t simply be ignored as a passing fade or hype.
Many enterprises have started using Web 2.0 successfully reaping significant benefits. In a recent global survey by McKinsey, How Businesses are using Web 2.0: A McKinsey Global Survey, 2007, - www.mckinseyquarterly.com/links/26068 - more than three fourths of senior executives participated in the study said: Web 2.0 technologies are strategic and they plan to increase their investments on Web 2.0 applications. Another survey by Forrester (G. Oliver Young, G., Efficiency Gains and Competitive Pressures Drive Enterprise Web 2.0 Adoption March 2007) - www.forrester.com/Research/Document/Excerpt/0,7211,41794,00.html
- revealed that efficiency gains and competitive pressures drive enterprise Web 2.0 adoption. Realising the importance and potential growth of Web 2.0, many IT vendors and service providers, are positioning their products and services as “Web 2.0 ready” and are bringing new Web 2.0 development tools to market.
Yes, many IT/Web 2.0 startups are popping up. A number of companies — both old and new — are offering innovative new services for free online, and these services are increasing in number day by day. And Web 2.0 and these new services are getting lots of attention in some media outlets. These trends make one wonder: Is Web 2.0 all hype? Like the dot-com bubble, will the Web 2.0 bubble burst sooner or later?
In response to this question, I wrote in a recent report, Business Uses of Web 2.0, https://cutter.com/cgi-bin/catalog/store.cgi?action=link&sku=RP62BD0701&uid= Cutter Consortium, 2007:
“Perhaps there is some amount of hype and overoptimism about those new startups and the services they provide. Maybe people who missed out on the dotcom bubble, or got burst along with the bubble, are trying to join the Web 2.0 bandwagon in large numbers expecting to cash in quickly. But the hype and overoptimism that surround Web 2.0 will vanish, and reality will set in, for good. A couple of Web 2.0 startups are facing problems already: FilmLoop laid off the majority of its workforce recently; Jobster cut its entire sales and support staff; and Kiko was on sale recently at eBay. Are these early signs of the death of Web 2.0? No, definitely not.
Sure, Web 2.0 companies that don’t have a sound, attractive business model and opportunity for good revenue, that are built on overoptimism, and/or that lack effective management will vanish sooner or later. But Web 2.0 won’t; it will live longer and healthier, like its predecessor (the original Web didn’t die following the dot-com bubble burst; in fact, worldwide use by enterprises and people has increased and done so in new ways). Once the prospects and value of Web 2.0 are realized, people and enterprises will see they cannot afford to live without it. We may even see the emergence of Web 3.0 built on the foundations of Web 2.0. Long live Web 2.0!”
Posted by: San Murugesan | May 2, 2007 06:55 AM