Web 2.0 – Service vs. Software

In a previous post, I discussed the evolving defintition of the word “platform”, how it now includes the entire World Wide Web. It is as though, when you sit at your computer, your platform extends off of your desk, out of the building, and across the entire Internet.

As the Web becomes the platform, it becomes the base for a plethora of new applications spawned continuously by sources all over the world. Microsoft understands this shift and knows that the days of the boxed software business are numbered. This explains its interest in buying Yahoo, a last chance to own a piece of the growing Web application market.

The distinction that is made between service and software is a bit misleading in the case of Web 2.0. The real difference lies in the source of the software and, to a real extent, in its cost. On the small platform (one ’s own computer) programs are bought and installed. This is the case for applications like Microsoft Office (Word, Excel, PowerPoint), Photoshop, video editors, etc. It is this kind of product that should experience a shrinking market in the future as a wider array of services becomes available on the Web.

The services offered tend to reflect what users really want and need. Although there is presently not an online word processing application that can match MS Word in power or sophistication there are adequate text editors in most Web applications (blogs and wikis, for example) to enable the creation of well formatted documents for the online environment.

The question of what applications computers users want to use is an interesting one. It would seem that what we have been wanting for some time are ways to network with other people, to locate others of like (or dissmilar) mind and to communicate or share information with them and perhaps to collaborate with them. These applications include flickr, delicious, myspace, facebook, YouTube, twitter and many others.

In addtion, there are many practical tools that are offered as free Web applications, such as pbwiki (free wiki site) and wordpress (free blog site). There are also applications, such as course management systems, which formerly would have been supplied by commercial vendors and now are freely provided online (edu20).

These shifts are significant for entrepreneurs. Under traditional marketing models a few potential customers might receive a free sample of a new product while most eventual users will pay for it. On the Web, this paradigm is often reversed: many users receive the product for free while a few eventual customers will pay for premium service.

Your comments are welcome.

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