Many times the question comes up, what exactly is Web 2.0? Although we are not great supporters of buzzwords that have little real meaning, we are - just this time - tempted to put our big-thinking in the mix.

We believe it describes a set of technologies to support the immense popularity and growth characteristics of free-markets.

Free markets have been in existence at least since 1637, when dutch growers imported Tulips from Turkey and engaged in heavy bidding wars with buyers at the onset of the flower markets. [In the interest of "full-disclosure"; I grew up in Holland].

The Dutch auction (also referred to as "The Essence of Fairness" with respect to IPO markets) was created when ample supply was met with equally impressive demand, and a unique trading mechanism was developed. Apart from the details of the trading options (which eBay has adopted), we want to focus here on the dynamics of the market that are so different from the technology industry in its current incarnation.

The technology industry (still in an immature state) has built success around companies that identify and carve out a one-to-many relationship with customers. Successful companies like Microsoft, Oracle, Cisco etc. staved off early competition and now act as the single asset owner of the technology they sell to many customers, fearing little organic competition. We call them what they are; demi-cartels. A great position to be in and very profitable, but the technology market is about to get a shakeup, not dissimilar to what happened in the flower markets.

The creation and composition of technology assets, whether those assets are applications, databases, code or new media content, is emerging from the hands of specialists into the realm of a much broader set of providers.

Suddenly, the technology industry faces competition it has never seen before. And it is responding by changing its tactics [ technology taxonomy in motion], it has to. Oracle loses a big customer because it refuses to put up with fat margins, exorbitant pricing and 20% support fees and makes the switch to a little vendor called MySQL. New online capabilities enable Craigslist, where posting classified ads is free of charge, to hasten the demise of traditional newspaper classified advertising. MySpace takes the need for people to express themselves out of the hands of the specialists.

New many-to-many market models arise and dramatically impact the old rules of the game. New content establishes micro-celebrities that drive the popularity of a free-market technology platform. The Pareto principle is dead (well, not really - its amplitude will change).

So, Web 2.0 is a platform strategy (rather than a proprietary stack) that enables many-to-many relationships between buyers and sellers of electronic assets. When transparency and integrity are key objectives in the creation of these marketplaces, Web2.0, with whatever technologies that represents, actually has a chance of becoming a buzzword we can speak fondly about.

Tags: Blackberry, EBay, PDA, Motorola, Cingular, AT&T, CNN, Design

Recently I was asked to think about how to improve the phone features and functionality in an ever commoditizing "Terminal market" (an Ericsson acronym). There is a lot at stake here; lots of people buying phones, 2.2B of them to be exact, not enough of them buying the associated internet service.

Improve the specs and make it look good is the easy answer to that question. That is, if you are building a phone not a PDA. In a PDA you can pull technology, services and memory into a bulky enclosure and rely on nerdocrats to buy them; not a large market. So how do you build a phone that is just as smart and fits in the enclosure of a RAZR? Or smaller? Research shows that people buy cool looking phones, rather than bulky ones stuffed with functionality.

The answer in my view is services. Just as the power of the iPod stems from the iTunes library on your desktop connected to the iTunes store, phones should become re-play devices to services provided on the backend. The phone should be an iPod geared towards managing and replaying service data; contacts, calendar items, music, news are pushed out to it automatically, pictures are taken, stored and uploaded automatically to your section of the "store", ready to be shared and, yes, sold. Enabling free market principles to the content distributed by these services, completes the value chain and drives growth of the platform, regardless of phone.

Phone manufacturers need to learn how to build a value chain, not just a phone. Business innovation is just getting started.

Tags: Blackberry, Design, Microsoft, Apple

Last week I bought a Motorola Razr to replace my Treo650. It is beautiful, highly functional and tiny, and folds open to something substantial in my hand. The Razr synchronizes all business data from my Apple Powerbook wirelessly over Bluetooth, including most contacts and calendar appointments. At a quarter of the size, and a third of the price of a Treo it keeps me just as informed. No wonder Motorola sold 6 Million of them. Lucky Ed Zander, Motorola's CEO who rolled into Motorola (from Sun) after the Razr had already been conceived.

Apart from previous comments in this blog about the Treo with regards to UI, target market etc., the Treo's bulky form-factor (which still reminds me of the old Ericsson, pre-Sony phones) with its pointy antenna, really started to bother me. I felt like a cop patrolling the neigbourhood with a gun in its holster.

But the real reason for my change is a strategic one. I lost confidence in the Palm (Source) platform and so apparently has Palm's CEO. The announcement of the Treo700 based on Windows Mobile has reduced Palm to a commodity hardware player with not much to be proud of. Owning and refining the Palm OS and segmenting it to identifiable target markets would have been the winning business strategy.

Amazing is the power and persistence of Microsoft who now delivers the Windows Mobile version on PDA phones from Motorola, Sharp, Samsung, HP and other brands, steadily repeating its Windows PC software success downstream. I am eagerly awaiting Apple's foray in the phone OS business.

Tags: Ericsson, Motorola, ITunes, IPod, Innovation

On a regular basis entrepreneurs approach me with jaw-dropping technology, wonderful to look at from an innovation perspective but many times hard to envision as a standalone sustainable profit center. So what technology makes a successful company?

Technology is becoming a commodity. Think about it from a macro-economic perspective. Information technology is the instrumentation, not the differentiation of customer businesses. World's largest retailer, Walmart does not rely on technology to be successful, technology was barely available when Walmart started. Walmart built an effective business model and, in-house continuous to shape technology to support the business model. No packaged apps, or technology silos here.

Technology companies do become successful when their technology drives, usually with incremental improvements, the evolution in a marketplace. Google is successful because it optimized the online advertising business model and increased its effectiveness. It's all about market principles, not technology (BTW: which average user can tell the difference between Google and Yahoo! search). eBay is successful because it empowers free-market principles and supports true meritocracy in the sale of goods.

Bottom line:
1) Investigate de-funct, constricted or outdated markets and build technology that improves the effectiveness of those markets.
2) Find capital from investors that understand the market and appreciate technology, not the other way around.

Market principles are seldom wrong, the instrumentation often is.

Tags: Palm, Treo, Motorola, HP, Apple, Windows, Razr

Attended the Churchill Club seminar under the same name. Interesting speakers were Chuck D (Public Enemy), Roger McNamee (Integral Capital Partners, Silver Lake Partners, Elevation Partners) and Blake Ross (Firefox creator). It is becoming clear that the old rules of how to create or tap into large media markets have changed. To own these markets one must provide a large selection. MP3 music sharing has given listeners a taste of virtually unlimited supply they are not willing to give up on. The Long Tail roars its head yet again. Tivo1, Mike Ramsay added that 50% of programs recorded on Tivo are non-popular programs. Roger quoted the Death of the Pareto principle. The Palo Alto library has known this for many years, more than 75% of its purchasing budget is for non-popular selection. Mobility and locality were mentioned as important side effects of Long Tail markets. The ability to serve up that wide selection on a wide variety of devices is crucial. Arbitration of content (the way record companies enforce The Pareto principle) is no longer accepted by buyers. Buyers want to find any creative material they are interested in, and in some cases, want to have the ability to get in touch with the artist directly. New search capabilities become important to weed through large selections, Google capabilities were considered insufficient. Scanning type search, "I know it when I see it", provides interesting new browse capabilities for buyers. Blake added that as a technology industry we have the responsibility to make things easier to use before we move on to another golden opportunity. We agree with Roger that media should become the new Consumer Packaged Goods.

Tags: Treo, Apple, Windows, Palm, IPod, Skype, Experience, Open Source