Friday, September 3, 2010

Another sign Web 2.0 has peaked

The day of reckoning for Web 2.0 companies is approaching just as surely as it did for Web 1.0. We appear to be about a decade behind Web 1.0, which would suggest that the crash could start next spring.

Not all Web 2.0 companies will fail, just as not all Web 1.0 companies failed: Amazon and Google seem to be doing just fine, and the eventual Facebook IPO will graduate it into this camp as well.

But if the sign of a top is when everyone is pursuing a trend (or fad), then there’s not much upside left. Or as stockbrokers have long noted, when shoeshine boys are giving stock tips, it’s time to sell.

One sign is that — as with a decade ago — we’ve been subjected to years of hype about how Web 2.0 is the future and taking over the world. For example, this week‘s article that proclaims that future CEOs (unlike today) will be social media geniuses.

But what really got my attention was listening to a description of consulting projects that two accounting firms were pitching to our honors students. One of the firms was nationally known, one is a medium-sized regional player. Both wanted students to study how the accounting firms can use social media in their operations, e.g. for recruiting students.

True, some accounting and consulting firms are real IT opinion leaders: think Andersen Consulting. However, many are filled with bright people whose skills extend more to disentangling tons of tax code red tape than deploying cutting-edge technologies.

So how much more upside is there to Web 2.0? Yes, there is international growth in countries that use cellphones rather than PCs. And there may be some geezers who aren’t on Facebook that may adopt in the future — or perhaps these geezers will never adopt these technologies.

Either way, the adoption rate of Web 2.0 technologies in the US will be slowing down, and the rest of the developed world too. How many new entrants can be supported in a maturing market?

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