Thursday, August 2nd, 2007

Bubble 2.0?

Category: Editorial, Web20

<p>The sky is falling! Every publication has to have it’s resident curmudgeon. It’s a franchise, and PC Magazine’s is held down by John Dvorak. Now he’s moaning about a dot-com bubble redux involving Web 2.0 based companies.

Each of these bubbles had a distinctive theme. For the dot-com bubble, it was e-commerce—it really should have been called the e-commerce bubble. Everything was focused on how the Internet was going to destroy all existing brick-and-mortar operations. We were told that you’d be buying sandwiches over the Internet and having them delivered the next day by FedEx. Everything was about “eyeballs” and finding ways to attract customers, whether they bought anything or not. Every article in every newspaper in the country parroted the litany as to how you’d be out of business in a year or two if you were not present on the Web in a big way. Of course, this was all crap.

The current bubble, already called Bubble 2.0 to mock the Web 2.0 moniker, is harder to pin down insofar as a primary destructive theme is concerned.

He goes on to scoff at the various concepts that are in vogue in the Web 2.0 space, all of which could come tumbling down in a crash.

  • Neo-social networking
  • Video mania
  • User-generated content
  • Mobile everything
  • Ad-leveraged search
  • Widgets and toolbars

An economic bubble is defined as “trade in high volumes at prices that are considerably at variance from intrinsic values”. Is that really where we are? I don’t see all that many “me too” or momentum investments in Web 2.0 companies — just a $10 million investment here or there by some VC’s. Facebook has a large valuation because they actually generate lots of advertising income (shoot, 1% of all online time is spent on Facebook), and online advertising it here to stay.

Most of the Ajax/Web 2.0 activity I see right now is existing companies retooling their online presence to take advantage of some of the new technologies and ideas.

Sorry Dvorak, no bubble here yet.

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Posted by Dietrich Kappe at 6:30 am
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I’d like to see the Dvorak-bubble burst.

Comment by Steven Schrab — August 2, 2007

Dvorak’s been around for a while and seems to enjoy stirring the pot. If he had written something like, “Hey, everything’s fine, we’re having fun”, then I’d be concerned. ;)

Comment by Scott Schiller — August 2, 2007

Information overload will be the downfall of web 2.0

Only so much time and so many eyeballs.
Not enough for everyone.

Web 2.0 is an Information Bubble!

The Market can’t handle all the Wannabes.

Comment by Tom — August 2, 2007

(I didn’t read the article)

While I agree that it’s not a bubble on anywhere the scale of the dot-com bubble, I am concerned about how much the Web 2.0 concepts have been touted.

When you look at VCs that invest in Web 2.0 companies, and the hundreds (thousands?) of small businesses banking on some flickr, del.icio.us, or similar knock-off, I wonder if the importance of these concepts (social networking, SaaS, etc) isn’t highly exaggerated. I suspect that the percentage of successful Web 2.0 startups might be less than that for startups in general.

Comment by Scott — August 2, 2007

Here was my detailed response to his idiotic PC Magazine article.

http://www.secondcityceo.com/2007/08/02/john-dvorak-the-new-fox-technology-news-anchor/

Anyway, does anyone actually taker anything PC Magazine seriously?

Comment by Seth — August 2, 2007

I saw that this morning, and just went right on by. Apparently you wanted to spend time reading his crap lol.

Comment by BillyG — August 2, 2007

complete BS. I want that 10 minutes back!

Comment by justin — August 2, 2007

The .com burst was about overvalued publicly traded companies that had no income model. Now that most industries trust the web and actually spend money on online advertising, sites DO have a revenue stream. The burst was also part of a bigger economic picture — corporate misreporting of income ala Nortel, Enron and others. Stock values tumbled, investors got nervous and the while tech industry fell on its face.

I do not see either of these problems lurking at the moment.

Dvorak is a columnist, not an economist. He’s doing his job, which helps sell magazines.

Comment by James MacFarlane — August 2, 2007

“shoot, 1% of all online time is spent on Facebook”

What’s the source for this fact?

Comment by Vijay Santhanam — August 2, 2007

Dvorak might be out of his mind most of the time, but booms are always followed by busts. With the sudden need for every widget in the world to take VC, we’re obviously headed into a boom.

Are we about to experience another correction/crash/adjustment? No, I doubt it’s as immediate as Dvorak suggests. But to say that he’s completely insane is being a little ….. “hopeful”

Comment by Alex Rudloff — August 2, 2007

ha! …that link should be in the Friday humor page. There is basically zero substance to that article. For a second I thought I was reading Wired magazine (another rag rarely with substance) …I think some of these magazines are desperate for traffic.

Comment by Mark Holton — August 2, 2007

Vijay,

the 1% figure was from a January 2007 survey by Compete.com.

Comment by Dietrich Kappe — August 2, 2007

Dvorak… yawn.

Comment by Jim Jones — August 2, 2007

Man… why respond w/ opposite irrationality? I’ll tell you one thing; .com’s can’t stand economic strain… they don’t provide much of a real service, and if advertisers are strapped… so are you.

Comment by brice — August 2, 2007

Facebook is financed by 3-letter intelligence agencies for the incredible amount of information that it provides. Advertising revenue came after the investment (around 13 milion dollars for a start-up!!!). The rest is business as usual. No bubble for you today!

Comment by Adrian — August 3, 2007

There is no bubble and nothing will burst… ;)

Comment by Kjell — August 3, 2007

ajax and such are much about technology. dot-com was more about conviction.

Comment by britneyfreek — August 3, 2007

I sat around a meeting table about 10 months before the bubble burst with all of the “big” names in new media – even then they’re were laughing and joking about how some peoples business plan equated to one side of A4 paper and “We’ll IPO in 6 months”, and yet they still invested millions?!?! A year later those huge gobal businesses no longer existed….

The dot-com boom was about stupid people investing millions of pounds on a whim.

Comment by Dave — August 3, 2007

Some “web2.0″ will burst maybe not as hard as .com did but there is all indications that something goes down. There is of course companies that will survive, its just cleaning up bad trees from the forest. Old business rules still works, companies who actually make money will survive.

Comment by Jukka-Pekka Keisala — August 5, 2007

Web2.0? I’m still not sure what that exactly is supposed to mean. User interaction was there long before the term was coined, and if Web2.0 should be defined by “User-generated content”, than thank you very much, but no!
Where anyone is allowed to contribute content unsupervised, the quality of any project as a whole will drop dramatically, simply because it would be so much harder to find useful articles under a huge pile of user-generated junk.
Take youtube comments as an example…

Comment by tommy australien — November 1, 2007

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