Web 2.0 Tim O’Reilly O’Reilly Media, Inc. www.oreilly.com TTI/Vanguard December 1, 2005 Pattern Recognition • How many of you use Linux? • How many of you use Google? • What’s being missed here? 1 The "Killer Apps” of the New Millennium CraigsList Wikipedia 2 What do these apps have in common? CraigsList Wikipedia 3 Information Businesses 4 Software As a Service 5 Harnessing Collective Intelligence 6 Web 2.0 7 How Many of You Have O’Reilly Books? 8 What We Really Do At O'Reilly • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Our goal: “Changing the world by spreading the knowledge of innovators.” 9 Watch the Alpha Geeks! • New technologies first exploited by hackers, then entrepreneurs, then platform players • Two examples – Wireless community networks predict universal Wi-Fi – Screen scraping predicts web services Rob Flickenger and his potato chip can antenna 10 "The future is here. It's just not evenly distributed yet." --William Gibson 11 Desktop Application Stack Proprietary Software (Control by API) System Assembled from Standardized Commodity Components Hardware Lock In By a Single-Source Supplier 12 Free and Open Source Software Cheap Commodity PCs Intel Inside 13 Internet Application Stack Proprietary Software As a Service Integration of Commodity Components Apache Subsystem-Level Lock In 14 "The Law of Conservation of Attractive Profits" "When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage." -- Clayton Christensen Author of The Innovator's Solution In Harvard Business Review, February 2004 15 Six Rules for Successful Web 2.0 Applications 16 1. Users Add Value The key to competitive advantage in internet applications is the extent to which users add their own data to that which you provide. 17 Remember What I Said Earlier? Hackers are “lead users” who tell us where the future is going. Companies apply their insights in new contexts to build next-generation products. 18 Listening to Linux and Open Source • Architect your software in such a way that it can be used easily as a component of a larger system. (Architect for participation!) • Grant a license that does not hinder such a combination. • Let developers “scratch their own itch” by modifying or extending the software. • Release early and release often. • Set up mechanisms for users to submit bugs and patches. Promote your most active users into roles of greater responsibility. 19 Listening to eBay • Business Week: ”Upwards of 430,000 people in the U.S. alone -- more than are employed worldwide by General Electric Co. and Procter & Gamble combined -- earn a full- or part-time living on eBay” The users ARE the application! 20 Listening to Google • Google leverages millions of independent linkers via PageRank algorithm, AdSense • Business model monetizes “the long tail” of internet advertising 21 Source: Wired Magazine Amazon - JavaScript 22 BN - JavaScript 23 CraigsList 24 WikiPedia 25 MapQuest - the counterexample 26 MapQuest - The Counter-Example • Another killer app of Web 1.0 • Didn’t add user content • First Yahoo!, then MSN, then Google introduced competing properties using the same underlying data • No increasing returns or network effects 27 1. Users Add Value The key to competitive advantage in internet applications is the extent to which users add their own data to that which you provide. Therefore: Don’t restrict your “architecture of participation” to software development. Involve your users both implicitly and explicitly in adding value to your application. 28 2. Network Effects by Default Only a small percentage of users will go to the trouble of adding value to your application. 29 Listening to Napster • Building on top of open source, Yahoo! pays people to build their directory • Learning from open source, DMOZ/Open Directory and Wikipedia use volunteers • Implementing one of the deep trends behind open source, P2P file sharing users build song swapping network as a byproduct of their own self-interest 30 2. Network Effects by Default Only a small percentage of users will go to the trouble of adding value to your application. Therefore: Set inclusive defaults for aggregating user data as a side-effect of their use of the application. 31 3. The Perpetual Beta When devices and programs are connected to the internet, applications are no longer software artifacts, they are ongoing services. 32 3. The Perpetual Beta When devices and programs are connected to the internet, applications are no longer software artifacts, they are ongoing services. Therefore: Do not package up new features into monolithic releases, but instead add them on a regular basis as part of the normal user experience. Engage your users as real-time testers, and instrument the service so that you know how people use the new features. 33 4. Software Above the Level of a Single Device The PC is no longer the only access device for internet applications, and applications that are limited to a single device are less valuable than those that are connected. 34 Listening to ITunes iTunes • Software above the level of a single device • Database back end • Web servicesenabled (CDDB) • Rich client front ends • Mobile device support • Rendezvous-enabled • Not yet collaborative • No "architecture of participation" 35 4. Software Above the Level of a Single Device The PC is no longer the only access device for internet applications, and applications that are limited to a single device are less valuable than those that are connected. Therefore: Design your application from the get-go to integrate services across handheld devices, PCs, and internet servers. 36 5. Data is the Next “Intel Inside” Applications are increasingly data-driven. Therefore: Owning a unique, hard-torecreate source of data may lead to an Intelstyle single-source competitive advantage. 37 Google Maps/Navteq 38 Google Maps again 39 Own the Namespace Some data is a commodity and impossible for any one party to own, but access to the data can be controlled through legal means. Therefore: If you can’t own the data, own the namespace or registry for the data. 40 6. A Platform Beats an Application Every Time •Excel 1-2-3 •Lotus •WordPerfect •Word •Netscape •Internet Explorer Navigator 41 Two Types of Platform • One Ring to Rule Them All • Small Pieces Loosely Joined 42 Small Pieces Loosely Joined • An architecture of participation means that your users help to extend your platform • Low barriers to experimentation mean that the system is "hacker friendly" for maximum innovation • Interoperability means that one component or service can be swapped out if a better one comes along • "Lock-in" comes because others depend on the benefit from your services, not because you're completely in control 43 6. A Platform Beats an Application Every Time Web 2.0 applications are built of a network of cooperating data services. Therefore: Offer web services interfaces and content syndication, and re-use the data services of others. 44 Google Maps + Craig’s List 45 Google maps + flickr 46 “I’m an inventor. I became interested in long term trends because an invention has to make sense in the world in which it is finished, not the world in which it is started.” -Ray Kurzweil 47 For more information http://www.oreilly.com/go/web2 http://radar.oreilly.com 48
