The Coral Reef of Future Internet Innovation and Disruption

This post was actually inspired by Kristen Nicole‘s post entitled Twitter Economy: The Coral Reef of Social Networking. For those of you who believe or understand the theory of The Long Tail or the power law, those that study the Internet, or are in the space have heard the theory that in order to succeed in today’s Internet economy, you have to take a platform approach to providing web services and applications. The marginal cost of an extra unit of software or code approaches $0 and to attain success and ultimately profitability, it requires critical mass. You must cross the chasm as early as soon as possible, and that can only be done through a platform approach.

The latest platform to jump into the fray is Google’s app engine, which enables developers to easily build applications using Google’s infrastructure. To all of the non-hackers out there, one of the major challenges of building web application is dealing with scaling and infrastructure. Eliminating those two issues are an extreme value add, enabling developers and entrepreneurs to solve problems by pushing the limits of innovation.

Amazon Web Services, for the past 18 months has been the developer backbone of choice, because of the ability to provide scalable solutions at optimal prices, which has saved tons of money for start-ups. They use economies of scale to provide storage and cloud services at price points that are far cheaper than server companies. Amazon is preparing themselves to become a web services platform, diversifying itself away from a longtail book, music, and movies Internet retailer.

Amazon doesn’t offer the brevity of services as Google’s app engine, in terms of ease of use for developers from a thirty thousand foot view. But Google’s entrant into this landscape, probably followed by Microsoft’s entrance will make it more beneficial for developers, so they can solve problems and be disrupters.

The challenge that it does present, as O’Reilly questions is the developer platform lock-in. It would probably take an inordinate amount of time to port over code from the Google app engine over to an Amazon Web Service. It’s absolutely about creating switching costs, and since developers drive the next Internet, any of the major bigcos (Google, Yahoo, Amazon, MSN) would be silly to allow one of the other bigcos to waltz in and easily become the market leader. Despite all of the early adopters believing GMail is the best thing every created, Yahoo Mail is far and away the market leader, all because of first mover advantage and switching costs. Amazon had to know that Google and Microsoft won’t sit idle and allow this to happen in front of their faces.

I’m thrilled to see the competiton and see how this evolves, but as Kristen Nicole states that the Twitter economy is the coral reef of social networking, the Google App Engine and Amazon Web Services will take us away from the digestion phase, and into the next phase of the Internet. Although many believe that Facebook’s applications will be the social media platform of the future, I think the bigcos will be the one to deliver on that promise.


One response to “The Coral Reef of Future Internet Innovation and Disruption

  1. Great post! I wish I had seen it earlier… the thoughts about switching costs are great. So, it started me thinking… a great deal of web development these days is open source (LAMP), and even many of the parts that are commercially driven are open standards (Adobe SWF, etc.).

    Sooooo…. if you’re a big player, and you’re really going to make it easy for developers to choose your service, you might consider NOT building a walled garden. If you built a platform that acted like a single Linux box, but scaled (seamlessly, and without user input) as needed, developers would choose your solution rather than the less standards driven competitive offerings.

    Now, if you’re a big player, why would you choose to do that? Perhaps because you’re a late entrant to that market (MSN, AOL?) and it’s the easiest way to break the stranglehold that Google and Amazon will have built up. I dunno. I hope so. I wrote about what I want for scalability in my post:

    I hope someone’s listening. It should be a commodity problem. Hopefully someone will turn it into one.

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