Tim O Reilly Web 2.0

What Is Web 2.0? Tim O’Reilly O’Reilly Media, Inc. www.oreilly.com SAP Tech Ed Las Vegas October 1, 2007

We’re best known as a book publisher 2

What We Really Do At O'Reilly Change the world by spreading the knowledge of innovators 3

How we do it • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Books 4

How we do it • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Books, Conferences 5

How we do it • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Books, Conferences, Online 6

Web 2.0 Summit page 7

MAKE: Magazine “Martha Stewart for Geeks” -- Newsweek 8

Watch the Alpha Geeks • New technologies first exploited by hackers, then entrepreneurs, then platform players • Three examples – Wireless community networks predict universal Wi-Fi – Screen scraping predicts web services and the internet as platform – “The pedal powered internet” predicts new focus on energy Rob Flickenger and his potato chip can antenna 9

\"The future is here. It's just not evenly distributed yet.\" --William Gibson

This is not new 11

Nor is it limited to technology... 12

Pushing the Envelope is Fun! 13

The Same Impulse, In a Virtual World 14

New Ad-Hoc Comms Networks • Brad Templeton’s burning man phone done with 802.11 and IP telephony 15

Foo Camp 16

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We look at people having fun with technology ... and think about what it means 18

It usually ends up meaning something big for business 19

Some Examples • First books on Linux and Perl - 1991 • First book on the internet, covered WWW when there were only 200 web sites - 1992 • Launched first commercial web site, 1993 • First advocacy about web services - 1997 • Organized meeting where term “open source” was adopted - 1998 • Coined term Web 2.0 to describe rules for new internet platform - 2004 • Make: celebrates the new DIY - 2006 20

Pattern Recognition 21

The Open Source Paradigm Shift 22

The Open Source Paradigm Shift • How many of you use Linux? 22

The Open Source Paradigm Shift • How many of you use Linux? • How many of you use Google? 22

The Open Source Paradigm Shift • How many of you use Linux? • How many of you use Google? • What’s being missed here? 22

The \"Killer Apps” of the New Millennium CraigsList Wikipedia 23

What Do These Apps Have in Common? • The Internet, not the PC, is their platform • Built on top of open source software, but not themselves open source • Services, not packaged applications • Data aggregators, not just software • Network effects from user contributions are key to their market dominance “The future is here. It’s just not evenly distributed yet.” 24

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Desktop Application Stack Proprietary Software (Control by API) Network Effects Drive Lock-In System Assembled from Standardized Commodity Components Hardware Lock In By a Single-Source Supplier 26

Free and Open Source Software Cheap Commodity PCs Intel Inside 27

Internet Application Stack Proprietary Software As a Service (Network Effects Drive Lock-In) Integration of Commodity Components Apache Subsystem-Level Lock In 28

\"The Law of Conservation of Attractive Profits\" \"When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.\" -- Clayton Christensen Author of The Innovator's Solution In Harvard Business Review, February 2004 29

Understanding Open Source • Focus on software licensing turned out to be a red herring • What mattered more: – Modular architecture allows cooperating programs – Internet-enabled collaborative development - Users as co-contributors – Viral distribution and marketing Web companies leverage those same principles in new ways. The open source “alpha geeks” showed the way. 30

What Really Distinguishes Web 2.0 Systems that harness network effects to get better the more people use them. 31

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Every time someone makes a web link, they contribute 33

Every time someone makes a web link, they contribute A critical mass of buyers and sellers makes it hard for others to enter the market 34

Every time someone makes a web link, they contribute A critical mass of buyers and sellers makes it hard for others to enter the market More than ten million user reviews 35

Every time someone makes a web link, they contribute A critical mass of buyers and sellers makes it hard for others to enter the market More than ten million user reviews Self-service classified ads - the users do all the work 36

Every time someone makes a web link, they contribute A critical mass of buyers and sellers makes it hard for others to enter the market More than ten million user reviews Self-service classified ads - the users do all the work Viral distribution, user creation, user curation 37

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Didn’t realize that users add value! 38

Rules for Successful Web 2.0 Applications 39

1. Users Add Value The key to competitive advantage in internet applications is the extent to which users add their own value to that which you provide. 40

Blogs and Wikis are a Good Start 41

Collaborative Workspaces Too 42

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CRM 2.0? • What would happen if CRM met social networking? • How would you design CRM so the system got better as every user contributed, not just a small group of sales people? 44

Not just “user generated content” 45

User Generated Openness Sharing Content Social Blogs Networks Wikis 46

User Generated Openness Sharing Content Social Blogs Networks Wikis Love Peace 47

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Harnessing Collective Intelligence Every true Web 2.0 company is building a database whose value grows in proportion to the number of participants -- that is, a network-effect-driven data lock-in -- with accelerating returns to the winners. 49

“Red Shift” 50

Red Shift in Action 51

2. Network Effects by Default Only a small percentage of users will go to the trouble of adding value to your application. Therefore: Set inclusive defaults for aggregating user data as a side-effect of their use of the application. Harness self- interest, not volunteerism. 52

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Flickr vs. Web 1.0 Photo Services 55

Network Effects by Default Only a small percentage of users will go to the trouble of adding value to your application. Employees Volunteers Self Interest 56

The Cornucopia of the Commons The most powerful sites build or harness network effects through an architecture of participation. 57

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Some Lessons from Google • Harnesses users without them even knowing it • Search relentlessly focused on relevance - All available data mined to give better search results • Advertising serves the user - unobtrusive • Top ad position doesn’t go to highest bidder but to bid times expected click-through-rate • Increasing returns in both improved search results and ad performance help google pull further and further ahead 59

3. A New Programming Paradigm “How cool is it that I can finish this project tonight and push it live to the world tomorrow?” -- Mark Lucovsky, Google 60

Key Concepts • Rapid development methodologies • “Two pizza teams” -- Amazon.com • Instrumentation and real-time feedback • Moving back-office processes and data into real-time user-facing applications 61

Web 2.0 = “Bionic Software” 62

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It’s not just about code (or even algorithms) 69

It’s about finding meaning in user-generated data, and turning that meaning into real- time user-facing services 70

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So What Does All This Have To Do With the Enterprise? 74

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Turning 1.0 into 2.0 Web 2.0 Your Bank Massive Data Centers Yes Yes Data from customers Yes Yes Data gets better all the time Yes Yes Data mining of customer Yes Yes behavior Real time user-facing Yes No services based on that data 76

Turning 1.0 into 2.0 Web 2.0 Phone Co Massive Data Centers Yes Yes Data from customers Yes Yes Data gets better all the time Yes Yes Data mining of customer Yes Yes behavior Real time user-facing Yes No services based on that data 77

How Ridiculous Is This? • Dialed calls (last 10) • Received calls (last 10) • Missed calls (last 10) Where is the Web 2.0 address book? 78

How Ridiculous Is This? • “Will you be my friend?” (Anyone with a communications network already knows who my friends are!) Where is the Web 2.0 address book? 79

Web 2.0 Means Turning IT Inside Out • Data is the “Intel Inside” • Back office reporting becomes user-facing application • Interaction IS data • Beyond Software as a Service: “Live Software” • Beyond Live Software - the Live Enterprise 80

Widgets Syndicate the Back Office 81

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Key Questions to Ask Yourself and your Customers • What useful sources of data do you own and control? • What user-facing services can we help you build against this data? • How can you make these data sources get better automatically as customers use them? 83

4. Software Above the Level of a Single Device The PC is no longer the only access device for internet applications, and applications that are limited to a single device are less valuable than those that are connected. 84

Listening to ITunes iTunes • Tens of billions of songs ripped from CD •1 Billion songs sold • Software above the level of a single device • Database back end • Web services-enabled (CDDB) • Songs, not Albums • User controlled playlists • Local sharing (loose DRM) 85

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What’s Next? 87

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OpenCV: Computer Vision 90

5. Data is the Next “Intel Inside” Applications are increasingly data-driven. Therefore: Owning a unique, hard-to-recreate source of data may lead to an Intel-style single-source competitive advantage. 91

Google Maps/Navteq 92

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Google Maps again 94

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6. A Platform Beats an Application Every Time •Lotus 1-2-3 •WordPerfect •Netscape Navigator 97

6. A Platform Beats an Application Every Time •Lotus 1-2-3 Microsoft Excel •WordPerfect Microsoft Word •Netscape Internet Explorer Microsoft Navigator 97

6. A Platform Beats an Application Every Time Microsoft Excel Microsoft Word Microsoft Internet Explorer 97

Two Types of Platform • One Ring to Rule Them All • Small Pieces Loosely Joined 98

Operations As Competitive Advantage “In the future, ‘being on someone’s platform’ will mean being hosted on their infrastructure.” --Debra Chrapaty, VP of Operations, Windows Live 99

But so does scalability... 100

6. Small Pieces Loosely Joined Web 2.0 applications are built of a network of cooperating data services. Therefore: Offer web services interfaces and content syndication, and re-use the data services of others. 101

Google Maps + Craig’s List 102

The Programmable Web http://www.programmableweb.com/tag/mapping 103

Lessons from Google Maps If your users aren’t surprising you by the ways they build on your product, you’re doing something wrong. If they are surprising you, learn quickly from them, and support them in what they do. 104

“I’m an inventor. I became interested in long term trends because an invention has to make sense in the world in which it is finished, not the world in which it is started.” -Ray Kurzweil 105

For More Information • What is Web 2.0? http://www.oreillynet.com/go/web2 • http://tim.oreilly.com • http://radar.oreilly.com • http://www.makezine.com 106

Tim O Reilly Web 2.0

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