New models

Two articles in yesterday's New York Times highlight some of the changes in the structure of the economy that the evolving Internet makes possible.

One article describes the challenge of online apps (in this case, Zoho) to mega-desktop suites like Microsoft Office. Now apps like Zoho's Writer (which I haven't used) and Google Docs (which I used quite a bit, especially the spreadsheet) are good enough to pose a real alternative to desktop bloats like Word. I remember, maybe 15 years ago, the discussion between centralized apps vs distributed apps (i.e. desktop apps). At the time, Bill Gates defended desktop apps in almost libertarian language -- you controlled your app on your own machine.

Today, I suppose the question of control is still real, and one of the real criticisms of online apps revolves around trust and risk -- can you trust Google, or AdventNet (the makers and hosters of Zoho)? What is they start charging? (Possible?) Are they better about backups etc.? (Probably) What about snoops, government or otherwise? (Who knows?) Could they block access to my documents in the event of some dispute? (Maybe? There's probably something in the terms of agreement I clicked through). All valid questions. The question of trust is a big one, across the Internet (and the economy, and life, too).

What's different in the debate now, I think, is the element of mobility and multiple devices. For example, I have a computer at home, one at work, and a handheld, as well as a couple of other systems I sometimes use, running four different OSs. Having access (not just to read but to manipulate too) to any of my documents from any device is a big deal. And so the convenience factor of the online services starts to outweigh the perceived advantages of desktop apps. (Zoho provides an offline option which could overcome of the desktop advantages.)

I think I am digressing -- the point is that the speed of connections, the ubiquity of connections, the variety of devices, mobility all are shifting the center of gravity back to centralized (who remembers timesharing and terminals?), but this time highly connected systems, upsetting old models. Well nothing new, people have been talking about this for fifteen years and more. But maybe now it is really tipping.

The other article commented on the "iPhone gold rush." Some independent developers are doing quite well writing apps for the iPhone, and selling them through Apple's "app store" for prices starting at 99 cents and going up from there (there are also many free apps too, and many of them quite good, which is a whole other thing, that gift economy thing). With some 30 million iPhones and iPod Touchs out there, and the barrier to entry very low, it is a relatively easy business to get into. For $100 you can sign up with Apple's iPhone development program, you write your app, submit it to Apple, they list it on their app store, and return 70% of sales to you ("Just get yourself an electric guitar and learn how to play"). There is some other network phenomenon at play. Make the cost of attaching to the network low enough, and the cost of communicating with other nodes cheap enough, and interesting things will start to happen. Of course Apple does quite well in the process. It's main role is creating the sandbox for all of the developers to play in, and throwing more sand in the box -- the iPhone OS 3.0 will have a number of new features, including new money-making opportunities for developers in the form of subscription services and in-app upgrades and purchases. See the video of the developer announcement event for more.


jd