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Summary:

In the same way that there is an economic gap between rich and poor, there has emerged in the Internet sector a creativity gap. Instead of an upper class and a lower class, however, the creativity gap consists of a leading class and a lagging class. One way to tell the leaders is by the number of developers flocking to them.

grandcanyon2 “Maybe we should think of today as normal and yesterday as the bluebird,” Microsoft CEO Steve Ballmer said at the All Things Digital conference this week. He was talking about the economy, and how it’s been “reset” to a lower level of performance than we’ve grown used to. True enough, but I couldn’t help but think how aptly his statement also applies to Microsoft itself these days, as well as many of its struggling peers.

In the same way that there is an economic gap between rich and poor, there has emerged in the Internet sector a creativity gap. Instead of an upper class and a lower class, however, the creativity gap consists of a leading class and a lagging class. This past week, it became clear that such a gap is already beginning to widen dramatically, perhaps decisively.

One way to tell the leaders is by the number of developers flocking to them. Apple’s iPhone has spawned more than its share of inspired, even groundbreaking apps. Palm’s WebOS may also become a contender. Google’s I/O developer conference reaffirmed its role in the leading class when it unveiled Wave, a collaboration tool that splices together the DNA of email, IM and social network features and offers an interesting response to the challenge posed by the real-time web.

Google’s ambitions extend beyond Wave. In the I/O keynote, it invited developers to also tinker with the HTML 5 format that, together with Apple, it’s played a key role in advancing. HTML 5 won’t be adopted for some time, but Google hinted at things that it can do in the cloud that aren’t easily done today, such as drawing pictures on the web, allowing rich 3D graphics, geolocating on a map and running complex formulas without crashing the browser.

Intentionally or not, Google’s I/O conference coincided with Microsoft’s unveiling of its latest search engine, Bing. Initial reviews of Bing are mixed but mostly positive, but Bing’s enhancements merely graft existing technologies like Farecast and Powerset onto its search engine, making it more portal than pure search. Less promising is a $100 million ad budget for the search engine, which smacks of a loud voice carrying a small stick. Bing’s strengths in travel and shopping searches could give Microsoft a few points in market share, but it doesn’t make Microsoft a leader on the web.

Other Internet names seem mired even further in the past. Yahoo’s interest in a deal with Microsoft for “boatloads of money” is a headline that belongs in 2008. eBay keeps trying to recapture the magic it had five years ago. And MySpaceis still trying to renew its lifeline to Google.

None of these laggards will see a quick end. They’ll be able to endure for years serving the people who haven’t taken to Facebook or maybe tried and then abandoned Twitter, people who are comfortable with a simpler, more familiar experience on the web. But it’s an ever-shrinking crowd. A decade ago, AOL chose a complacent path by maintaining its gated online community, shunning the migration of content and services to the web itself. And look where AOL is today.

There are some critical questions facing Google’s new ideas: Will Wave, for example, attract a critical mass of users, and can it make money? But if Google hasn’t created a game-changer with its HTML 5 experiments in general and with Wave in particular, it’s shown someone else how to create one. The list of Wave APIs underscores the challenge to the laggards: “Are You Coming” points to an easier Evite; “Bidder;” a real-time eBay; “Stocky,” a simpler Yahoo Finance. That isn’t to say Wave will conquer all of these areas, but it points to a more evolved model of what each laggard’s business model.

The web is entering a period of intense creativity. Companies like Google and Apple are positioned to ride, if not generate, the momentum driving that creativity. The laggards are at risk of being stuck in perpetual catch-up mode. If that happens, the bluebirds will have flown for good — and the landscape of Internet companies will soon look dramatically different.

  1. [...] He was talking about the economy, and how it’s been “reset” to a lower level of … Read Full Post: The Leading Class and the Lagging Class on the Web – Gigaom.com Related Info:Milberg LLP Announces the Filing of a Class Action Lawsuit Against … – PR Inside4th [...]

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  2. Yep, companies that sit on their laurels, stale for long periods of time, will die a slow death as AOL did. It’s the way of the world right now.

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  3. Kevin

    That is a poetic summation of the web/tech landscape of today. I have often wondered how this will evolve. you have done a good job of weaving it together.

    one thing to notice is that most of the companies driving the creativity are the ones who are thinking about their core competency and expanding from within using their core strengths. the laggards are a patch work of idea(s).

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    1. Thanks, Om.

      Agree on creativity. Too often the ideas patched together are borrowed ones.

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  4. Om’s last point is on the mark. On Microsoft in particular, it just doesn’t know who it is and does indeed have a patchwork of businesses, many of them copycats of innovators who have succeeded before them. It thinks it can be everything, but everyone on the outside knows it is, at heart, an enterprise software company.

    After the dotcom bust, Oracle did a brilliant thing: it dug deeper into it’s core enterprise expertise by buying up competitors that took it further into that space. Oracle knows who it is and what it is good at, and so the company just keeps flourishing. I never figured out why Microsoft didn’t do the same. It’s corporate mentality and model is that of an enterprise software company, but it keeps trying to be a consumer tech company.

    Worst of all, it just keeps doing what it has always done: chase after the innovators, copying their products. That worked in the enterprise markets of the 80′s. In today’s consumer driven technology markets, that mindset leads to failure.

    Microsoft’s core competence lies outside the stuff that Apple and Google do. They should stick to their knitting selling Exchange and Office to MIS managers in the Fortune 2000. It’s not too late.

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    1. Only I’m not sure how long Microsoft can keep profits growing by leaning mostly on Exchange and Office or even Sharepoint.

      You make a good point about Microsoft’s head versus its heart and enterprise vs. consumer markets. It’s acting like someone in a perfectly good marriage but always pining for someone he developed a crush on in 1994.

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  5. Lol, yet another valley area press circle jerking over the next great thing on the cloud and of course their precious iCorporation. Lamenting, snarking and sniding about Microsoft has gotten old in case you havent caught on.

    This bizzaro world where everyone uses unibody macbook pro’s, has 5mbps broadband, iPhones and communicates in 140character burts thankfully isn’t reality and never will be.

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  6. Although there is some good truth in the post, I’d like to make a different point. Innovation is very important and thank god however Apple and Google cannot be put in the same group for example. Google is an innovator and as such gets 90% of its products wrong, the 10% that make it are real hitters; this is a strategy. Apple uses mostly existing technologies and executes very well because it looks at the consumer; they are obsessed about the end user and that is why 90% of their products are a success. Microsoft is actually very similar to Apple. Its execution is not as good but it is playing on many more fronts than the other players. In my view, utilising Farecast and Powerset (existing technologies) to offer a better solution for the end user is a very clever startegy and one that more companies should look into. When you add the recent advancements with Zune HD, with Xbox integration, Sky on Xbox, Netflix through Media Player and how all this will be integrated with surface and connected through Windows 7, I think you cannot say they are not working hard to satisfy consumers’ needs. Of course it comes down to execution, but if they fix that they may actually come up on top in a couple of years.
    Won’t comment on FB vs MySpace as I think it’s too early to call a winner and I think actually both may survive and thrive.

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    1. I sort of agree with you on Apple. They take existing technologies but they improve on your experience of them, which is no small feat and requires a lot of creativity. Before the iPod, I had a Creative Zen mp3 player and when it broke I bought an iPod. The product was the same, but the experience of using both was like night and day. Very quickly, the iPod was the leader and the Zen the laggard.

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  7. Jacob Varghese Sunday, May 31, 2009

    “They’ll be able to endure for years serving the people who haven’t taken to Facebook or maybe tried and then abandoned Twitter, people who are comfortable with a simpler, more familiar experience on the web.”

    Kevin,

    To me this seems to be a contradiction. I see Facebook as the new new AOL. It’s a walled garden in which people interact. To me that seems short-sighted. These gardens come and go – aol, myspace, and facebook….
    What lives on are advances on how to share ideas and communicate – IM, Email, picture hosting/sharing, maybe Wave? While Flickr or Yahoo might not be around forever, those technologies will continue to exist.

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    1. I think the difference between AOL in the 90s and Facebook today is the difference between isolation and privacy. AOL was designed as more of a fortress – you didn’t need to roam out onto the Web because everything you’d want online was supposed to be there. Facebook can potentially be isolating, but in my experience it is more like a private conversation with people I know, who often help me discover other things on the Web. Facebook is less open, but the privacy element makes that work for now. Whether it helps or hurts in the long run remains to be seen.

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  8. [...] GigaOm writes today on the growing divide between the leading and lagging companies on the web: The web is entering a period of intense creativity. Companies like Google and Apple are positioned to ride, if not generate, the momentum driving that creativity. The laggards are at risk of being stuck in perpetual catch-up mode. If that happens, the bluebirds will have flown for good — and the landscape of Internet companies will soon look dramatically different. [...]

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  9. Our research indicates that the web is entering a period of consolidation. It confirms that the gap between the a leading class and a lagging class is already a reality.

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