The Hype That is Web 2.0

 | April 09,2010 11:57 am IST

Software Industry Marketers have an interesting habit to coin new catchy terms and generate huge hype cycles around it. Web 2.

0 is such a term with relevant substance but tremendous amount of hype surrounding it.


It doesn't help either that the hype around Web 2.0 and resulting mushrooming web start-ups remind us of 1999-2000 tech bubble and its subsequent burst, which burnt million of dollars of VC money and generated worthless penny stocks. As we discuss this, numerous Web start-ups in and around Silicon Valley is busy churning out new Web 2.0 applications. Many of these start-up ideas are focused around grabbing teenage-eyeballs, which is a peculiar user group with large amount of Internet usage time, but questionable online spending discretion. Is anyone talking of a wide-base business model yet? A critical look at these interesting web start-ups will force us to think whether these start-ups have the required differentiation, execution potential, broad-base user adoption and value-add to end-user that is necessary to sustain user interest and success in long-term. Are we witnessing yet another tech bubble? Let's take a look at various components and analyze.
Web 2.0 - Under the Hood
Let us take a brief look under the hood of Web 2.0 concept and then proceed to dissect the business strategy of these upcoming web start-ups.
The phrase Web 2.0 was coined by O'Reilly Media in 2003. It refers to websites, web-communities and services such as social net-working sites, wikis and folksonomies that facilitate communication, collaboration, information and data sharing between users.
Web 2.0 is an umbrella term for existing web technologies such as -
* Ajax 
* CSS and Semantically valid XHTML markup 
* Aggregation of data in RSS/Atom 
* Folksonomies 
* Wiki software 
* XACML over SOAP 
* Web log publishing 
* Mashups
XML Web service APIs 
Web 2.0 promises to bring large-scale changes to World Wide Web. How an individual end-user communicate and co-exist as an online entity will undergo a radical change in the next decade. Social Network Analysis and Collective Intelligence are the bedrock of Web 2.0 phenomena wherein individuals communicate and collaborate using innovative technical features of Web 2.0, and create a common cohesive intelligent network, which moderates itself and generates zillions of bytes of useful data and information. Corporations by and large are already worrying about the affects of Web 2.0 and re-working their business strategies around it.
Dissecting the Hype 
A critical analysis of the emerging start-ups and the phenomena that is Web 2.0 takes us to the following observations: -
1. What's the VC saying?
VCs who have burnt their fingers in Web 1.0 are funding the Web 2.0 party, but are investing a lot less now. In the Web 1.0 world, a typical VC funding would be in range of $5 Mn, which has now shrunk to abysmal amounts like $250 K in the first round of funding.