Om Malik: “[O]n this Web 2.0 highway, there are three exits: Microsoft, Yahoo and Google.”
That’s a clever soundbite, and perhaps it’s true from the venture capitalist’s point of view, but I think it misses something fundamental: That the real attraction of the new web platform is that components don’t have to be rolled up into one big monolith anymore to integrate well with each other.
We’re entering into a world where lots of little, independent component providers will be able to coexist and thrive alongside the platform vendors. Why? The platform vendors no longer have such a chokehold on distribution that the best the component providers can hope for are a few years of prosperity before the platform vendor notices there’s an interesting little market emerging around a particular component, integrates the component into the platform, and renders the independent component unnecessary. In the old world, a component provider’s prosperity was often its ultimate undoing.
I’ve always sympathized with the platform vendors’ (OK, Microsoft’s) argument that this kind of integration is done in the interest of customer convenience—I for one don’t want to buy an operating system only to have to go out and source my own, say, memory management and data compression components (something, if you remember, we had to do in the MS-DOS days). In the old world, that probably meant going out, buying more software, and dealing with the headache of getting it installed and integrated. It was simply more convenient for the customer for the popular components to find their way into the platform, integrated and ready to go with no assembly required.
In the new world, though, sourcing a component is no longer a heavyweight operation. By and large, the components themselves are free, and thanks to open APIs and data formats like RSS, it’s now possible to integrate those components into larger applications with comparative ease. Granted, the applications of today are largely ad hoc “mash ups” without an intermediating platform vendor in the traditional sense, but it won’t be long, in my view, before vendors step into that role and make writing such applications as systematized an operation as, say, writing an application for Windows or Linux is today.
Yes, Microsoft, Yahoo, and Google are probably those vendors. Yes, the component providers probably hook into their platforms as the primary vehicle for monetizing their wares. However, without the same level of control over distribution that the old world enjoyed (not to mention the proliferation of open APIs and data formats), the big guys will have to coexist with the little guys.
The platform vendors will compete by providing the most compelling incentive to the component providers. In old world terms, the platform with the most ISVs will win. This bodes very well indeed for innovation in the new “Web 2.0” world. Above all, the days of the platform vendors integrating all the components into the platform to the exclusion of independent providers have come and gone.
Thankfully.
It’s folly to think the “avenues” will remain open for long.
All three companies sole purpose is to generate profits. For now, they keep the tools to access their avenues open and can generate sufficient profits this way.
Later, when cosumers get used to having some free service and can’t live without it, they start charging for that service. When the company’s profits aren’t sufficient, they will charge for the tools that generate those profits. Rinse, Repeat.
There is zero incentive for the avenues to keep their developer tools free for long. In fact, there’s a DISincentive. There’s no profit in free.
Now, you may say, yeah but these are open standards. They may be, but just as Microsoft has done repeatedly, simply extend and extinguish.
There’s no assurance that profits will continue to come to the avenue owners with little-guy innovators in the market. So, using various legal methods to ensure a steady profit stream eliminating innovators will be another thing that the avenue owners actively pursue.
This is dark stuff, but ultimately will come true. History has shown us time and again, there is no such thing as a free market. Most tiny markets start out “free-ish” they don’t stay that way for long.
Michael,
Two or three years ago, I’d have agreed with you. However, the world has changed pretty fundamentally in the past few years. In this case, I don’t think the “big three” will have much choice but to keep their APIs open. If history is any indication, the leader at any given time will be the one with the greatest incentive to solidify and extend its leadership position with a traditional platform lock in play. However, the minute it moves in this direction, one or both of the other two will see open APIs as a competitive weapon. The fact that the distribution channels are wide open this time around is the big change. There can be no monopoly in the web world based on tightly controlling distribution. Furthermore, after finally freeing itself from the grip of the last monopoly, my sense is that the market is greatly attuned to the importance of open standards. Obviously, the big three will want to promote “stickiness”, but they’ll have to do it by actually competing on *value* and *continued innovation*. The big winners will be us, the users. That’s not to say there aren’t threats. The real threats are decommoditization at the lower levels of the software stack and data getting locked up in vendor specific silos. We have to keep our eyes on these things. But proprietary APIs at the top layer of the stack as a means to lock in users are a thing of the past, at least in my view.
-ian