The Future of Business 2.0 II: Web 2.0 & 2nd Life

Here is the continuation for the 2nd part of my talk which I gave in the Gananan Forum tonight. You have heard about how different forces have catalyzed the 2nd internet revolution with the development of AJAX, LAMP, Ruby on Rails & etc. In the 2nd part, I will offer my perspective where web 2.0 and 2nd Life are situated on the Gartner’s Hype Cycle in the technology business landscape.

I decide to take a step back and review the development of web 2.0 and 2nd life using Gartner’s Hype Cycle graph. In a nutshell, the hype cycle is a graphic representation of the maturity, adoption and business application of specific technologies. The graph depicts the over-enthusiasm or “hype” and subsequent disappointment that typically occurs with the emergence of new technologies. Hype cycles illustrate how and when technologies move beyond the hype, offer practical benefits and become widely accepted. In this representation, hype cycles aim to separate the hype from the reality, and enable CIOs and CEOs to decide whether or not a particular technology is ready for adoption.

Here is a core principle which I use to think about web 2.0 and 2nd Life. When you conceive an idea about a web 2.0 or 2nd Life application, the first question you must ask is, “What is the value proposition or benefit for the user to move from the offline into the online world?” Once you can answer this question, the chances of your web 2.0 or 2nd life start-up would look better. For example, Flickr offers a way for people to share and index personal photos in an interactive manner and allow people to create beautiful moo namecards. There is a proposition that the service offer to everyone offline to come online.

A hype cycle in Gartner’s interpretation comprises 5 steps:

• 1.Technology Trigger: In this phase of a hype cycle, a product launch or other event generates a significant press and interest. In fact, recently, Joost, a IPTV based on peer to peer sharing has generated a lot of interest with a US$45M investment and also strategic partners made with several major content providers. In fact, 2nd Life has also generated the same kind of trigger sometime back and one should differentiate 2nd Life from World of WarCraft in light that the latter is a game where the characters need to fulfil a specific quest and aim.
• 2. Peak of Inflated Expectations: In the next phase, a frenzy of publicity typically creates over-enthusiasm and unrealistic expectations. As a matter of fact, web 2.0 applications involving text, audio and video are now in this phase given the successes of Flickr, YouTube, Feedburner and many other applications that turned up along the way. The question is whether the innovation phase of web 2.0 has truly reached saturation. Another area in web 2.0 that is generating the same kind of hype is social networks. With the success of Facebook and MySpace, a lot of people are creating their own social networks. Without a strong offline presence, anyone can duplicate any other person’s social network. Of course, if one closely examine web 2.0 now, the real onus is to apply web 2.0 technologies or reasoning to the traditional business landscape. It is also my view that 2nd Life is also experiencing the peak of inflated expectations. Most of the time, I hear about the fast growing population of 2nd Life users but if you dig deep carefully, one important question is to ask what the retention rate for 2nd Life users look like. In fact, as long as Linden Labs do not decentralize the server load of 2nd Life via ways that are similar to bittorrent or P2P sharing, it will be difficult to sustain the entire 2nd Life Universe. Of course, many big players have entered big time into 2nd Life, for example, IBM and Dell. Yet till today, we still do not know how much value these corporations have gained by their entrance with 2nd Life.
• 3. Trough of Disillusionment: Of course, that has happened to the 3G phone. Think about the days when 3G is first introduced into the market, there is so much hype, and yet till today, the adoption of 3G has not lived up to the expectations. If you think of web 2.0 like the 2G phones, does that provide an analogue of virtual worlds to 3G phones?
• 4. Slope of Enlightenment: In some sense, I see that Facebook has now evolved towards another phase in the hype cycle. If you consider them to be the thing after friendster, it is moving towards the slope of enlightenment. Similarly, the same can be said about PayPal.
• 5. Plateau of Productivity: Definitely online ads have reached the plateau of productivity. With the acquisition of DoubleClick, Google has flexed their muscles to convert online advertising as their major core competency. What comes after that, will be the video ads which they would be experimenting. In fact, as some pointed out, perhaps, contextual search for video ads would be another interesting evolution or breakthrough to look out for in this field.

Of course, I am merely offering my own opinion on how web 2.0 and 2nd Life looks like now in the technology hype cycle. If you have other ideas, I will look forward to hear your opinions.

Acknowledgments: The author thank James Seng and Alvin Loo for the discussion on their opinions on web 2.0 and 2nd Life.

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