Will Microsoft lose in the race to Web 2.0?

PCW interviewed Joe Wilcox, senior analyst, Jupiter Research, to get an insight into Web 2.0

As a senior analyst with Jupiter Research, Joe Wilcox largely focuses on Microsoft and illuminating the right strategies for efficiently deploying Microsoft products, smartly partnering with the software giant or competing more effectively with the fast-moving rival.

Wilcox is part of Jupiter Research’s Microsoft Monitor team. He is main contributor to the Microsoft Monitor Weblog, which, as a companion to the larger service, offers spot analysis on breaking Microsoft news or shifting strategies.

We asked for his views on Web 2.0.

PCW: How would you define Web 2.0 as we currently understand it?

Joe Wilcox: Web 2.0 is really Web 1.0 returned, but this time as a more viable option.

There was talk of software as a service or services consumed via the web browser in the late-1990s. But the dotcom bust and other factors, such as low broadband penetration, doomed the concept.

Yet it reincarnated and took on new life as Web 2.0.

Conceptually I see Web 2.0 as being simply defined with the browser as the main means for consumption. For years, many people bought PCs as much (or more) for the Internet than desktop applications.

The natural extension is for people to spend lots of time on the Internet and consume lots of stuff there, whether websites, blogs, instant messaging, photo sharing, music listening or much more.

In Europe nearly half the population, an addressable market of 188.8 million individuals, are now online.

PCW: There seems to be a clear move away from desktop-based application to web-based software. Do you think that the net as a platform is now changing to embrace the next wave of applications that will exist entirely online?

JW: The shift toward web-delivered applications replacing desktop applications was attempted before without success, and none is assured this time.

Some software developers – Microsoft in particular – depend on their vast desktop assets and won’t meekly let web-based applications run them over.

PCW: Do you think as more data such as music, photos, movies and general data becomes digital people want the freedom to access it anywhere anytime? Is this move to net what Web 2.0 is all about?

JW: Where people store stuff is much more about culture than technology. In the US, 18- to 24-year-olds use the web differently from other consumers. They are significantly more likely to blog, read blogs, podcast, instant-message and share music, among other online activities.

These younger consumers, who grew up with the Internet, behave differently than older consumers.

Another cultural consideration is status in life. Many older consumers already have amassed stuff and have more sense of ownership being proprietorship, which could make them more likely to cling to the desktop than younger folks.

Younger consumers have not only amassed less, but grew up with content and services available in the cloud.

In behaviour, one example shows this difference: 18- to 24-year-olds prefer music subscriptions (un-owned content), while the over-25 crowd prefers purchasing downloads (owning content).

PCW: Large companies such as Microsoft that have an investment in desktop applications seem to be heading towards a crisis. If web services such as box.com and writely.com take off, desktop applications would become obsolete. Are we moving towards a time when large corporations don’t have a monopoly over the applications we use?

JW: Microsoft will not easily cede the desktop, and the company is already marshalling massive resources in order to protect its Windows and Office monopolies. Windows Live and Office Live services are a first effort.

These services, while appearing Web 2.0-like, will all require a desktop connection. Microsoft will tie the services back to the desktop.

In some cases, true consumption will be at the desktop, as is the case with Microsoft Max, a photo-sharing/software service clearly aimed at services such as Flickr. While Flickr can be consumed anywhere in a browser, Max requires desktop software.

PCW: Security is a nightmare on the desktop. If we move applications wholesale to the net, what kind of security will we need there?

JW: Moving applications to the web could improve security. Most web browsers are fairly secure, and most Internet-connected services keep pretty good security.

The real danger is the application layer. As companies successfully fortified the perimeter – the access points to the Internet – hackers shifted to applications. Where have some of the worst, recent viruses come from? Not web browsers, but via the desktop, through software, such as Outlook or SQL Server.

If Web 2.0 truly succeeded, people would simply keep all their data and preferences online, stored somewhere in the cloud and access from whatever devices, maybe a web terminal, cell phone or PDA.

Another major security threat comes from spyware and key-loggers. But what threat could they really pose if people don’t install software but consume content online in a web browser?

PCW: Applications such as Bittorrent – which is finding legitimate uses by the BBC – are showing a fundamental move away from the broadcast paradigm. The way consumers interact with content is changing. How do you see mass media in a Web 2.0 environment?

JW: Mass media is highly resistant to the likes of Bittorrent, because of the amount of piracy. As long as media companies own content they can sell and resell to people, many of them will resist the push online.

However, the visionaries will recognise that Web 2.0 could solve their perceived piracy problems and create more content demand.

MTV’s Overdrive is an interesting example. The media company essentially delivers broadband programming consumed in a web browser. I see the approach as consistent with the Web 2.0 vision.

PCW: Web 1.0 was a walled garden. Web 2.0 is more like a vast mall where you can pick and choose exactly the information you want, or offer your own content for the masses to read and interact with. How do you think the net will look in five years?

JW: Web 2.0 is nascent, a concept that might reach adulthood. Its allies – I’ll say protectors – are interesting.

While companies such as Microsoft would greatly benefit from Web 2.0’s early demise, as was the case with Web 1.0, companies such as Google are protectors.

Few people understand Google, which is not a search company. For Google, search is a means to an end, and that end is information. Search is how Google monetises the information.

And where is that information? On the Internet. For Google, like other companies with Web 2.0 interests, the Internet can and should be accessed from anywhere.

People ask what the Internet will look like in five years. It’s the wrong question to ask. How will people access the Internet in five years is the question.

I would bet heavily on increased use from mobile devices. Already, for example, in some places the first Internet-connected device is a cellphone, not a PC.

A rapid transition to mobile devices –cellphones, PDAs, music players or combinations of them as primary Internet devices – could greatly bolster Web 2.0’s prospects of success.

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