March 13, 2006 4:00 AM PST

Google deal highlights Web 2.0 boom

Google's acquisition of a tiny Web word processing maker turns the spotlight on a growing number of so-called Web 2.0 companies struggling to survive--or angling to be Google's next purchase.

The Web search giant last Thursday confirmed it had bought Upstartle, which produces the hosted word-processing service Writely.

Though a small purchase--Upstartle employed only a handful of people--Google's move is significant because it further highlights the company's interest in Web-based productivity applications, which could be considered an online alternative to Microsoft's dominant Office desktop software.

It's hard to pinpoint which Web start-ups could be bought next. But analysts and entrepreneurs expect Google and competitors like Yahoo, America Online and Microsoft's MSN unit to continue scooping up smaller, niche companies and products to fill out their offerings.

"The general pattern is that big companies let the other companies do the innovations for them," said RedMonk analyst Stephen O'Grady. "Smaller companies can do innovation in a more agile fashion outside the boundaries of a large company, and they get acquired."

The deal has also rekindled speculation over Google's future plans. Observers note that a document-creation service like Writely could complement a Google project called GDrive to provide online storage.

Web 2.0 contenders

The company has not explicitly said what it intends to do with the Writely service, one of a growing number of services often grouped under the Web 2.0 moniker.

Though it lacks a precise definition, Web 2.0 generally refers to Web services that let people collaborate and share information online. In contrast to the first generation of Web offerings, Web 2.0 applications are more interactive, giving people an experience more akin to a native desktop application as opposed to a static Web page.

In the area of Web applications, the last two years have seen an explosion in Web services aimed at consumers or small businesses. These services, many of which are still in beta, span many areas and companies. Here's a sampling:

• Online Calendars: One of the more active areas, with offerings from 30 Boxes, CalendarHub, Trumba, Joyent, Kiko, Planzo and Spongecell.

• Productivity application suites: Full-blown applications bundles offered by the likes of HyperOffice, gOffice and ThinkFree.

• E-mail and collaboration: Examples include Goowy, Zimbra, Meebo (Web-based instant messaging) and Jotspot (hosted Wikis).

• Project management and personal organizers: AirSet, 37signals, Zohoplanner and Stikipad.

• Multimedia social software: Includes sites like the popular Flickr photo sharing service, Riya (photo search), You Tube (video sharing) and Podbop (music podcasting).

Why the sudden boom in Web 2.0 companies? There are a few reasons, both technical and business related, say investors and analysts.

More people have high-speed Internet connections, making applications such as photo, music and video sharing feasible. The underlying software to build Web services is being upgraded as well, lowering technical barriers that existed only two years ago.

More Web developers are using a programming technique known as AJAX, which stands for Asynchronous JavaScript + XML. The end result of using AJAX is interactive Web pages and sites that can automatically refresh information from a server. Overall, it makes for a better user experience, say developers.

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Viva open source..
I guess all these applications would just be open source and available freely online..
More like the winamp from Nullsoft.
Posted by thedevilbegone (139 comments )
Reply Link Flag
One difference
The big difference is that the small web 2.0 companies don't get the crazy venture capital that happened the last time around
Some of them get purchased while they are still small (flikr,, etc etc)

<a class="jive-link-external" href="" target="_newWindow"></a>
Posted by SqlserverCode (165 comments )
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Bandwith, sure, but tech requirements?
&lt;hr&gt;RedMonk's O'Grady expects that many more Web 2.0 companies will need to be acquired, or they will simply burn out. That's because growing a hosted Web application beyond a few hundred, or even a few thousand, users requires substantial resources and technical expertise.&lt;/hr&gt;

So exactly how do the resource requirements change as your user base expands? Bandwidth, is all I can think of. That's cheap. Now what as far as the "technical expertise" requirements change as the user count grows?
Posted by locoHost (25 comments )
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these are exciting times for sure!!

what could possibly be more Boring than Microsoft Office!!

Posted by BillyWarhol (12 comments )
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Web 2.0 Boom and The Year of Internet Video
Two quick comments. One is that any way you slice it, this is the year of Internet video, and I believe that the advertising, user engagement and content distribution goodness that Internet video will play in evolving old media to new media will be increasingly staggering as the year progresses.

To frame this one, a video clip sharing service like vSocial (which I am a cofounder of) is generating over 71M monthly pageviews, 270K unique daily visitors and serving up over 1.5M videos A DAY. That is almost 19 clips watched every second of the day, which speaks to engagement, reach and power of this platform.

Two is that the moral of the story behind the emergence of user-generated content services, such as vSocial, TypePad and Digg is that you can not "game" the process of deciding which content is conversational, what conversations are acceptable and where the conversations can occur.

Consumers will decided what is compelling, interesting and worthy of chit chat and do so at the virtual water cooler of their choosing.

The best smart content owners will be able to do is provide some kindling wood to encourage sparks of inspiration, but basically then get out of the way and allow consumers to do the talking (or not).

Understandably, this is at odds with the way media has traditionally worked, and there will be lots of fits and starts, but the emergence of the blogosphere where millions of bloggers excerpt and point back to original media articles in their posts, seems instructive of where all of this is headed.

Will be an interesting story to watch as it develops, to be sure.


Mark Sigal
vSocial: The Video Clip Sharing Community:
Tell stories, start conversations, extend the web -- with video
Posted by hypermark (43 comments )
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Hey Mark
Read your comment very well done- I'm the owner of we are a media lending software system you can see some screenshots here <a class="jive-link-external" href="" target="_newWindow"></a>

We are looking for company's with content so we populate the software with content but also help promote your web site - if your interested hit me back @

Posted by xtme (4 comments )
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Fun and Cool but Will It Fly?
I think Peter Rip summed it up nicely: "consumer mashups are intriguing and fun, but solid business models around the notion of sharing information are few and far between. I see some real problems in turning mashups from an interesting parlor trick into a real business [http://...|http://...]"

I have a hard time imagining the masses adopting this new breed of applications. First, it'll take a major shift in people's mentality for accepting to pay a monthly fee for a service instead of owning the software on his/her PC. Second, if the service is ads-based, then IMHO it will not work because people use the apps to get a job done in the first place -- people will not stop working and click on ads! Third, corporations will most likely be reluctant having their data reside on someone else's servers. (If the servers are on the customer's premises, then that's a different story.) Fourth, network outage! Already now, when that occurs, most people in my company can't continue working because emails don't work. Imagine what would happen to a web-services-centric company!

I think these web2.0 apps will simply become yet another nice and cool feature web giants such as Yahoo! and Google will offer to keep their general web-users base and attract new users, without having any expectation of generating significant revenue from them.
Posted by dysonl (151 comments )
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