Who will be the winners and losers of Web 2.0?

Much has been written about the ongoing transformation of the world wide web from a collection of websites to a full-fledged computing platform serving web applications to end users. Here, Clem Chambers, CEO of stocks and investment website ADVFN, discusses the potential winners and losers of what is becoming 'officially' known as Web 2.0. The curse of the dot-com boom was not that the ideas were wrong, but that the orgy of money thrown at the birth of the web attracted the wrong kind of business player. Every opportunist with a live neuron set themselves up as a visionary and piggybacked on the internet epiphany. Millions of investing converts jumped into any hastily thrown together venture and backed a legion of get rich quick flimflam merchants. Bankers and consultants read WIRED magazine and went to a conference or two and claimed immediate guru status. This self-elevation was usually enough to raise as much money as you needed to land on the moon, let alone build a website. Unsurprisingly few of these net parvenus failed to even achieve that. The few internet survivors succeeded for three reasons: they had an explosively successful model; they actually knew what they were doing and were building a business; or lastly they had raised so much funding they could hang on through the lean years. This was how the real internet companies clawed their way through the dot-com bust; meanwhile the hucksters ran for the hills. The internet was always going to change everything and now it finally is. The major flaw in the argument of all the visionaries was that every internet business could explode overnight. eBay did, Yahoo! did, Amazon did, but sadly for many they neither had the capital or the audience to go from nothing to a billion in sales in a few months. Even on the internet, most businesses grow at a linear pace. There is massive structural inertia in the real world. This inertia is the friend and guardian of the old world order and where the web revolutionaries thought the economic uprising was going to be an overnight affair, it has in fact taken nearly 10 years for the net to actually start redrawing the paradigm of the western economy. Ironically it is Gates' vision of 'frictionless commerce' that has been proven to be completely false. Even internet enterprises have vast amounts of structural friction. While every businessman dreams of changing their business at the touch of a button; the rate of change remains at a human pace. It is exactly because it takes years for big companies to come to terms with the blatantly obvious, that small companies can go from zero to goliath at all. If it was not for this inertia, big companies would blot out all opportunities with a swish of their huge corporate check books. Yet it is because it takes people years and even generations to change their habits, that big companies can often afford to hang back and ignore the inevitable future with disdain. So finally the web is entrenched itself in enough lives to start rewriting the rules. The dreams of geek literature are now coming to pass in the 'meatspace'. The visionaries' dreams of 'free information,' 'network computing,' 'business at the speed of thought,' and 'many-to-many communication' are all exploding into the mainstream from their early adopter lairs. Almost unbelievably the nerd fantasy of 'death to Microsoft,' dreams of Apple ascendancy and the web as the platform all seem to becoming to pass. Both Google and Apple are just a reversion away from becoming a credible replacement for Office and Windows. Office in particular looks like a shrunk wrapped dinosaur poised on the brink of a meteor strike of generic free net-based spreadsheets and word processors. The Seattle 'lock in' is broken by the all-persuasive net and its .asp and 'service on demand' capabilities. To consider Microsoft a monopoly any longer is to miss the fact that its hegemony is dead. While Google is destined to quickly replace Microsoft as the new bogeyman, Gates will have to pull off Microsoft's most brilliant manoeuvre to stay anything like on top.