“Maybe we should think of today as normal and yesterday as the bluebird,” Microsoft (s msft) 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 (s aapl) iPhone has spawned more than its share of inspired, even groundbreaking apps. Palm’s (s palm) WebOS may also become a contender. Google’s (s goog) 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 (s yhoo) interest in a deal with Microsoft for “boatloads of money” is a headline that belongs in 2008. eBay (s ebay) keeps trying to recapture the magic it had five years ago. And MySpace (s nws)is 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 (s twx) 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.