Please Don’t Squish the Startups
Google is, once again, on the move. Today, they announced the limited launch of their new online spreadsheet program, another brick in the wall for MS Office (Google already has Gmail and Google Calendar, and they purchased the online word processor Writely. in March). Google is obviously moving to counter its two behemoth competitors, but it’s not just Yahoo and MSN that have to watch out.
The advent of web2.0 spawned tons of little startups, who are hocking everything from online to-do lists and virtual desktops to full-fledged online collaboration tools and social networks. All very cool, all very small. But a great majority of web2.0 applications were developed with small budgets, limited server capacity, and no revenue model. There’s nothing wrong with that if you plan on building up a small service gradually over a long period of time. But what was an open sandbox of ideas six months ago has been growing more and more crowded, not only with more startups, but also with the big synergized, diversified, corporatized, and, most importantly, capitalized online gorillas like Google, Yahoo, and MSN.
Google Spreadsheet is still in the beta phase, and doesn’t currently serve advertising. But there’s no doubt in anyone’s mind that it will do so eventually. Writely has not yet been integrated with anything Google. But it looks like things might start happening for them this summer. In response, Microsoft may also step up development of whatever Office Live applications they might have in the pipe. With these two fixing to knock heads, I wonder what will become of other online office applications developed by much smaller companies like ThinkFree Office.
When the titans make war, the whole world trembles. This past weekend, Fold.com, one of the many slick-looking virtual desktops, called it quits. Fold’s creator has decided to focus on other things. No doubt the ever crowded virtual home page industry contributed to Fold’s demise, but the real threat to virtual home pages, online to-do lists, calendars, and word processors, is the ongoing battle between Google, Yahoo, and MSN. Not only do the big players have oodles of cash to throw at each other, but they also have their own revenue models, their own contextual advertising technology, and their own well-known brands. While they’re fighting each other, developing, copying or buying new web applications to attract more users and provide more delivery systems for their advertising, many of the little guys will probably get crushed underfoot.
And those web2.0 startups that are designed to be purchased for millions of dollars by a Google or a Yahoo should especially watch out if one of the big services has already purchased or developed something similar. After all, why would Yahoo buy another photo sharing service when they already bought Flickr? Fold folded for good reason: Google, Yahoo, and MSN have already developed their own AJAX-powered virtual home pages. With no advertising model, and no chance of getting sold, it had no future. The same thing will happen to most other online applications once the war of the titans really begins to heat up and Google, Yahoo, and Microsoft choose their weapons. Good luck to any web2.0 startups looking for a buyout then. If they don’t want to fold, they’ll have to go all in.
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