the reflexions insider

Google is full of really smart people working on really hard problems. This is nothing new. Indeed the image of brilliant young engineers working on game-changing new products has come to define the company’s identity. What’s surprising to me is Google’s relative lack of significant innovation in recent years on its bread-and-butter product: search. Recent rumblings indicate that this may start to change.

The company is understandably hesitant to tinker with its core product, which some analysts estimate generates over 90% of its total revenue, especially given its most recent quarter which exceeded even the most optimistic expectations (in a recession, no less). But the sands are shifitng, and the sheer size of Google means it will be hard-pressed to compete with smaller, more nimble competitors who are starting to get attention, like Powerset and Twitter.

A recent article at Google Watch suggests that Google sees its future in the semantic web, a collection of standards and technologies that seek to deliver more meaning and structure to the web’s content but have largely languished due to a lack of widespread adoption. From the article, Google CEO Eric Schmidt is recently quoted as saying:

“Wouldn’t it be nice if Google understood the meaning of your phrase rather than just the words that are in [...]

(Image by nswlearnscope via Flickr)

Recently the ever-snarky tech/finance blog Silicon Alley Insider held a contest to propose how to fix what they called Digg.com’s “broken business model” (”broken” because Digg lost $2M on $6.4M in revenue, a staggering loss by any standard). The winner would have his or her proposal (and resume) delivered personally to Digg founder Kevin Rose and CEO Jay Adelson. The winner was Keith Cowing, an MBA student at Cornell, who suggested among other things that Digg generate revenue by selling sponsored posts on the home page and data to marketers about its users. Probably something Digg should consider but it’s hardly a revolutionary thought and not exactly the kind of model that will transform underperforming web 2.0 properties into revenue generators.

By and large the “web 2.0″ crop of business models has been disappointing. There are no shortage of examples. YouTube, purchased by Google for $1.65 billion, has a revenue model that’s “so secret, even Google doesn’t know what it is.” While Google doesn’t publish financial information about YouTube, its impact on revenue has been [...]

Consider this: Twitter didn’t exist three years ago. YouTube didn’t exist four years ago. And Facebook, the second most-visited website in the world on Christmas Day, 2008 (after Google), was started as a half-serious side project by Mark Zuckerberg in his dorm room less than five years ago. All of these websites were effectively created after the (now oft reviled) term “Web 2.0″ was coined by Tim O’Reilly and John Battelle in 2004.

By any standard, profitable or not, these are enormous web properties. And the timeline above demonstrates how rapidly the web landscape shifts and how fickle are its users.

Below I’ve identified several trends that I think will make an impact over the coming months and into 2010. This isn’t meant to be a “prediction” list per se, but an attempt at identifying how the current dynamics of social media will play out. Enjoy.

Twitter will launch a commercial subscription service that will generate revenue by letting companies use the platform to connect with customers. It will receive additional buyout offers but will remain independent for at least another year. I believe its investors are convinced that it’s worth more than their potential suitors think. And I believe they’re right. But having zero revenue is not sustainable.
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Something extraordinary happened on November 16, 2008.

At 12:02:32 PM (EST) a magnitude 7.5 earthquake struck Indonesia. Within seconds, users of the microblogging platform Twitter who were located in the affected area had broadcast text messages describing the event. Minutes later, tens of thousands of users had learned about the earthquake as news fanned out across Twitter’s global web of social networks in the form of web updates, RSS feeds, mobile application alerts, and SMS text messages.

About two hours later the New York Times, CNN, and other news outlets “broke” the story. Granted, it was a weekend. But any observer of how Twitter has changed the dynamics of information sharing can see that the days of large news outlets serving as the de facto source of breaking news are effectively over.

As the currency of the web as a communications tool has shifted from documents and pages to blogs and tweets, the following trends have emerged:

1. The discrete units of web-based communication have gotten smaller.

2. The propagation time of information among social networks has gotten faster.

It’s worth noting that these two trends are related. Smaller chunks of content are easier to consume and lead to faster rates of propagation. Information flow becomes more [...]

At sometime just before 12PM EDT the Amazon Simple Storage Service (or “S3″ for short) began to fail, causing major disruptions among applications that rely on the service for cheap and virtually unlimited storage. Amazon’s string of status updates throughout the day barely masks the complete-meltdown nature of the incident. Five hours later the service was restored.

For the uninitiated, S3 is a central part of Amazon’s family of service-based solutions and has been regarded as one of the most useful and reliable of the bunch. In short: it means that developers can offload storage of large or oft-requested files to a trusted third party without having to worry about costly bandwidth, hardware, and sys admins, and far more cheaply than content delivery networks (”CDN’s”) like Akamai. While Amazon charges based on usage of the service, stories abound with companies that save hundreds or thousands of dollars a month by shifting storage to S3.

Analysts have largely responded positively to the service, which originally grew out of Amazon’s internal infrastructure efforts and has come to symbolize the company as a major player in the emerging software-as-a-service landscape of so-called “utility computing.”

What’s noteworthy about this event is twofold: 1) the [...]