Web 2.0 businesses are being spawned at a rate faster than anyone could have predicted a year ago – although Michael Arrington would have argues this point when he started TechCrunch! Even we at incuBeta have jumped on the bandwagon with Synthasite, our AJAX (Web Based) development platform which is being released shortly. The reality is that this space is happening and Web Applications are the way forward, regardless of the doubt that exists today.
So what are the long term prospects for these types of businesses?
- Make it profitable through either advertising (Google AdSense) or subscriptions (Paid or Freemium model)
- Sell to Yahoo, Google, etc
- Raise VC ad infinitum
- Sell to an ISP (I’ll come back to this point in a sec)
- Take on Microsoft & the other heavy hitter software companies (ala BaseCamp).
So back to point number 4, the main topic of this entry. Given the rate at which the cost of bandwidth has decreased, and the speed it has increased, Internet Service Providers are quickly scrambling to find better ways to improve their margins and acquire customers, given the price sensitivities of their particular industry.
The irony of this is that my personal belief is that ISP’s will start to acquire Web 2.0 startups in order to bundle their services along with their monthly subscriptions and offer a better overall value add to their users (i.e. get your AOL Broadband account and get free web based MS Word(Writely), MS Project/(BaseCamp), Frontpage/(Synthasite), Excel/(Google Spreadsheets), Flickr, etc). Users will look to find ISP packages that also suit their software requirements as well, and pay the flat $30 fee for broadband with software services. Instead of reducing prices, ISP’s might and should start looking to increase their web services offerings dramatically – perhaps this will fuel the buzz around Web 2.0 companies even more.
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