Web Services Strategies
Beyond the technology, IT strategies for implementation of Web services by Doug Kaye.
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Java Takes the Bait. Today at Java One saw a slew of announcements of support for web services. Particularly, consider web-service client announcements in mobile devices from Nokia, Vodafone, NTT DoCoMo, Verizon, Sprint and Motorola. Nokia, the top maker of phones, has said it expects to ship 50 million Java-enabled phones by this year and 100 million by 2003. But who's going to profit from web-service enabled phones? Not Nokia. It's revenues have collapsed now that most of us have cell phones. They're forever relegated to the replacement market, slugging it out for market share. Even if they manage to sell 100 million of 'em, there won't be much profit. And it won't be the carriers that win big either. They, too, have been reduced to selling a commodity.
As Clay Shirky suggested nearly a year ago, it's Microsoft that is so brilliantly positioning themselves to reap the benefits. Gates and Gang must have been watching the news from Java One this week, and saying, "Yeah! They went for it." Those phones represent 100 million web-service clients, and it's the web-service provider(s) that will benefit the most. For Microsoft, that's .NET My Services. Get your competitors to mass-produce a commodity client for which you can then supply high-profit services. Brilliant. And just think...Microsoft doesn't care one bit that the clients are written in Java.
Just one final question to ponder: Can AOL Time Warner pull together a web-services offering to capture the mobile loyalty of their 35 million steady customers before Microsoft takes them away? (Maybe they'll finally team up with Yahoo to get this done.) It's no longer just a battle over no-revenue instant messaging at the cell phone. Now it's shared calendars and everything else in Hailstorm/My Services. For a monthly fee, of course. [Dangling thought: Jabber, the open-source XML-based protocol for IM and more, starts to look interesting.]
Posted Tuesday, March 26, 2002 10:47:32 PM 
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Investment Opportunities in Web Services? Many people would like to make a few bucks off of web services. Surely, they believe, there must be some legitimate business models underneath all the hype. Well, maybe not. At least one major and well-respected venture capital firm is saying "No" to any business plan that toutches web services. Their take is that it's all hype.
Who will make money? Not the J2EE players: IBM, BEA, HP and (finally) Sun. While they have no choice but to compete with Microsoft and one another, none of them can use web services to offer anything new to their customers. These vendors have the opportunity to lose market share to one another by failing to offer adequate tools, but almost nothing they can do will cause substantial dollars to switch in either direction across the Java/.NET boundary. Microsoft, on the other hand, has the ability to create entirely new business models, providing software-on-demand to those platforms they don't already control, such as mobile devices. (IBM's Global Services will, I believe, become the leader in professional services consulting for web services.)
One niche that gets some attention is web service networks (WSNs). The most notables are Grand Central Communications and Flamenco Networks. And just today a newcomer appeared when Blue Titan launched at PC Forum. This morning, I interviewed Dave Spicer, CEO of Flamenco Networks, and I'm meeting with Grand Central next week. As soon as I can reach Blue Titan, I'll report back with an overview of the sector. I've also yet to complete my interviews with the EAI vendors--another potentially profitable niche in web services.
Web services are an important development, and they'll forever change the way we link systems to one another, but other than perhaps the WSN and EAI niches, I have to agree with those VCs. No one other than Microsoft and perhaps IBM through professional services has a way to turn that significance into cash.
Posted Tuesday, March 26, 2002 8:26:23 PM
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