The technology industry has been experiencing a round of inspired innovation. Venture capital money is pouring into startups, and the new as well as aging giants are burning the midnight oil Innovation will slow as the big companies become slower. to take advantage of this second major wave of the Internet. The Web is the platform and the great virtual land grab is in full flower. AJAX pixie dust, XML stores, mash-ups, on demand infrastructure, Web replacements for traditional client/server applications, PHP, open source, tags, RSS, deeper user interaction and so-called disruptive startups are creating new kinds of applications.
There are signs, however, that the rampant innovation is turning in part into rampant imitation. That's not necessarily bad or unexpected. Innovation continues to be fueled by competition and dreams of a richly endowed Web OS and wireless world. But at a macro level, the big companies--Google, Microsoft, Yahoo, AOL, eBay, etc.--are focusing on the big market opportunities, while the smaller companies and startups fill the in between spaces, looking for a bit of open field or hoping to get acquired by one of the biggies. Just as in the past generation of technology or any other industry, the big fish get bigger and the smaller fish find a niche in deeper water, get swallowed by the big fish or quietly disappear. This Web 2.0 phase has reached a plateau yet. Richard MacManus lists some Web 2.0 products that he wishes would surface. But the plateau is beginning to come into view.
The most obvious evidence of a kind of plateau is the biggies focusing their energy on competing in the super lucrative areas, such as classifieds. eBay and others pioneer online auctions, Craig's List (partially owned by eBay) turns classifieds upside down and now the new 800-pound Gorilla Google and the older Microsoft Gorilla have turned their attention to those kinds of services. According to JupiterResearch, U.S. online classifieds is forecast to grow from $2.6 billion in 2005 to over $4 billion in 2010. Yahoo already has auctions and classifieds. AOL and Yahoo already have classifieds. Google has released Google Base, which is expected to become more of a classifieds engine, and Microsoft is following up with Fremont, which MSN product manager Gary Wiseman describes as "a free listing service, with a bunch of twists to make it very unique, such as integration with social networks, in particular integration with MSN Messenger." The cost to generate a new service is minimal compared to the old days, and they already have millions of users willing and able to test out and offer feedback for the new services. If at first they don't succeed, they can try again or buy a competitor's service with their stock and billions in cash reserves.
Reaching a plateau--a more stable, less disruptive level--is inevitable, just as it is that the cycle of rampant innovation will start again, but it also means that innovation will slow as the big companies also inevitably become slower, more insular and more bloated stuffing their bellies in a quest for more growth and profits.