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Where Common Sense Failed The Economy Prevailed

October 22nd, 2008

The gas bag that was “Web 2.0″ is running out of hot air. Surprisingly it wasn’t that people finally saw the emperor’s couture as gaseous, instead the VC funded helium feed is being removed (thanks to the economic realities). The lack of any real Revenues 2.0 and the subsequent affect of gravity are causing a less than graceful return to earth. There will be a lot of causalities. The good news is that because there were almost no IPO’s for these train wrecks, the only losing investors were the VC’s and anybody who wasted any time visiting these sites.

The message for the time is to return to the financial basics. This applies equally well to the web as it does to housing, trade and any other financial transaction. There must be an equitable exchange of value between both parties for a transaction to be fair. If I use a web site/service like Twitter, there has to be compensation to the provider for the service I am consuming. If that compensation is advertising revenue, then fine. It has worked well for the rest of the entertainment industry for years. However, if the on-line advertising is NOT driving real revenues, as has become evident, then the provider’s only recourse is to charge me. If I am unwilling to pay for the service (read “I care, but not that much”) then they don’t have a real business but rather an interesting hobby or charity. Unfortunately that scenario describes the vast majority of Web 2.0.

Some of the recent technological advances on the web such as AJAX (which the Web 2.0 drum bangers have disingenuously claimed for their own) have enhanced the usability of the web as a real development platform and one would hope the Enterprise will take advantage of that. The steady advancement of plug-in platform technology like Flex, SilverLight and Javafx push the envelope further in the Rich Internet Application space but they are all trying to catch-up to the native abilities of any of the mature programming languages for providing robust user interfaces.

The new stimulus is the smart phone platforms like the iPhone, Google Android and the new Blackberry Storm. These devices offer real computing power in a compact device, robust user interfaces and in two cases fairly open development/deployment environments. RIM’s position of trust in the Enterprise market, their server technology and their mature and well supported development tools positions them uniquely to deliver value to businesses who have the where with all to actually pay for products and services that deliver value. This combined with the emergence of the MoNo’s bodes well for a growing market that real businesses can be built around. RIM is a trusted entity in this space and could benefit from a strong partner with deep cash reserves. I think IBM would be an excellent candidate to purchase RIM (or at least buy a big stake in them). Their synergies with development, unified communications and enterprise platforms as well as IBM’s support within the open source community would provide opportunities for both companies.

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