I was thinking about this and just wanted to mention it to see what others think. The release of Google Notebook reminded me of this. There are many web services being released by startups and hobbyists, and then when one the big guys releases something similar, even if it is not as good, it overshadows them.

I think one of the reasons for this is that many of these web 2.0 (or whatever you want to call it) products should really be features of a larger service. In other words, they make more sense being part of an existing platform, not stand alone services. Perhaps back in the 90's, they would make more sense as stand alone products, but the web has matured beyond that.

New companies need to develop products that solves big needs to really be successful, not second hand needs. It's much harder for the larger companies to copy a product that solves a universal problem in a unique way. Solve a big need, then put in smaller products as features of the platform. Google Search solved a big need, so now they can build on that with smaller feature products.

I'm not saying you should not release a service if you have a good idea. But if it does not solve a big, universal need then most likely you have three options: be acquired by one of the big guys, be marginalized by one of the big guys, close down sooner or later due to stagnation.

I thought the same Or but you put it into words now! I was thinking:

<<Google can pull off these "nice-to-have's" but you can't win an audience doing that on your own without a "magnet".>>

For Google the magnet for almost anything was their search engine (and possibly now, Gmail, Google Images, Google Maps and Google Groups). Other services are build around that. Why would I want to use "XYZ Notebook" when I can use "Google Notebook" which potentially integrates into Gmail, Google Search, etc.? Besides, I probably won't have heard of "XYZ Notebook" in the first place, unfair as that may be.

But I think there are some niches one can live in when creating a new web product:

- be small enough so that you won't attract competition by the big ones, but big enough so you make money/ achieve whatever goal you have. (There's a niche for the long tail of products – tools that only 5% of the population would ever use, but maybe it's a different 5% of that population for any given tool!)

- grow medium-size without a real scaling plan and be then acquired by GYMA (Google Yahoo Microsoft Amazon). You mentioned this already, of course, but it's a real motivator. Will there still be a Technorati in 5 years if they aren't acquired? Can they scale on their own competing with the big ones? Do they actually hold out waiting to be acquired?

- beat GYMA on a tough solution – and this one's the hard one. You also mentioned this. I believe "modular" solutions that can potentially be integrated serve the biggest "acquisition" factor. Like face recognition (Riya). Easy 3D modeling (SketchUp). I believe if Company X would have create a Notebook service exactly like the Google Notebook a year ago, Google would not even have pondered acquiring them – sorry, but Notebook is not a tough-enough problem to solve (the tough problem for Notebook is getting the audience).

- Get a huge audience with a (seemingly?) mediocre product. I'm sure MySpace is not easy to do in terms of technology but they also didn't solve that tough a technological problem. The thing they solved was acquiring an audience, and this created value. Digg is in a somewhat similar position today – while their tools can be *relatively* easily copied (I'm sure the magic happens in the Digg ranking finetuning and potential anti-spam measurements) getting the Digg audience can *not* be easily copied.

There might be more niches. Maybe a political one – e.g. promise to do things different morally, compared to the big ones.

Yes The Lock-In strategy by Hal Varian,
not easy at all

yes Political and creating the next INTERNET PRESIDENT

is it 2008, the next election....

It has to be shifted to another audience another mass like Elias Canetti says,
Mass and Power ... we need to think more or act fast...in here..

I checked your pointer Elias.
From an interview with Hal Varian at http://www.onewwworld.com/varian.htm

<<-- Can you tell us a little more about your lock-in strategies? --

Since the competition is just a click away on the Web, it pays companies to invest in building customer loyalty. The best way to do this is to produce a product that is so much better than the competition that they don't want to switch! But there are other ways too, such as loyalty programs, like frequent flyer programs that reward frequent purchasers.

-- What about lock-in strategies for suppliers and partners? --

What we were thinking about there was that if you have a group of loyal customers that are purchasing your products, and there may be other complementary products that they would also purchase, but you may not be the best firm to supply that. So then what you do is sell access to your customers.

The portal companies are doing this. For example, I go to Yahoo, and Yahoo charges other companies to have access to me. Let's say e-toys wants to move into baby or children's clothes. They might not do that themselves, but they could partner with other companies that do that.

So once you have a loyal customer base, then you can sell access to that customer base for other products that complement what you are selling.>>

Philipp, you are right that another way is to build a loyal, strong user base. But I think that is harder to accomplish, and only a few do. To do it, there has to be the right flavor – a right mix of community driven features, leadership, timing, and viral marketing; otherwise, build a product that solves a universal problem in a unique way.

I think the timing is right for someone to have a product that solves a problem from a totally new perspective, rather than trying to pack on features on existing web products. Google does that with a few of their products(after all, they can't do it all the time), but they also seem to understand that they have to keep doing that.

I see the paradigm here in a way which is jus 3 pillers of strategy

Google is moving towards
(a) Crediable s/w ,
(b) Content and
(c) Monitization of channels

Over the last 36 months they have luanched Gmail, News, Reader, CL2, Picosa, SketchUP and stuff like this. Ask ourselfs how many of these have actually been 'incubated' within their own labs. I think that all their beta's come out of lab (per sec). This means "home-brewed" software or rather in-house devloped. The rest is aquired companies (lock, stock and barrel) and now they can 'graft' their own code onto these new aqquired models. We see this happening with Keyhole and Google Earth/Maps.

Content is being channeled to a person via gmail, news, alerts, clips, Reader, Writely, Skethup, Pages etc.. User is in control of content creation as well content consumption.

The traditional Revenue model is adsense, adwords. However, with new emgerging markets in terms of local search, Hosted services, Video on demand etc are revenue streams that they will pursure.
   However, they still need to keep churning out Revisions and new products else they will not be able to keep the community 'hooked'. Can you imagine google not giving "Us- the community" something new every 3-4 months ? The expectations are high from the community. We, the community understand that it free software is always buggy. But, google understands that it is not good to ship "half baked" products. Rather- they deploy "half finished" products. From there on, they go into revision mode for that "half finished" product.

Like Or said :

==>they also seem to understand that they have to keep doing that.

Now underlying this is another paradigm in terms of emerging markets are contending with challenges In Net neturlity, Privacy isues and Relevancy issues
IMHO, This is something that is an open wars too!!

or for Internet President. :-) lol j/k

In all seriousness, I use Google Notebook because it's Google. I haven't used any other note-taking tech before, but I can tell that Google Notebook isn't the best one out there. I just use it because it's Google.

I stopped using Del.irio.us because the Google Bookmarks drag-and-drop utility became available. You're totally right. And as for Philipp's niche list, as soon as I read the third one "beat GYMA on a tough solution," I instantly thought of Riya, which he goes on to cite. I'm in total agreement with both of you.

Very well thought out!

/pd:"emerging markets are contending with challenges In Net neturlity, Privacy issues and Relevancy issues"

Ah, now that's three issues that someone can find some real solutions to that can change the game.

About privacy, I really think Google needs to come out with some kind of Online Privacy Control Center (or something like that). Give users a way to monitor and control their privacy levels. If they don't, somebody will, and the company that succeeds doing that will make Google look like the new Microsoft (plagued with privacy issues), and that company would look like the new Apple(the online service without privacy issues).

Shame on Google, if they aren't already developing something to deal with the privacy problem, or at least thinking about it.