Amazon and Web Services – Tim O’Reilly

Tim O’Reilly writes provides a wider perspective on web services: “So much of the industry emphasis in web services has turned to EAI and B2B type applications that a lot of people miss the real transformation that is happening. Once they have SOAP or XML-RPC (or even REST-style) APIs, web-facing databases become program components.”

A few other points Tim makes:

– Web sites like Amazon and Google are applications. And Microsoft has demonstrated over and over again that a platform strategy beats an applications strategy every time. Once you have other companies building added value that relies on you, you have a kind of benign industry lock in that’s a real competitive advantage. [See my earlier post on Platform Leadership]

– A mistake a lot of companies make when entering new markets (especially ones that are discontinuous with the current ones) is to think too hard about where the money is coming from. Disruptive innovations often don’t work all that well at first, so you have to give them room to grow before you try to harvest them. The lesson of the dot-com boom is actually the opposite of the one that people are taking. It’s not “figure out your business model first,” it’s “don’t get greedy; give the market time to mature before you rush to cash out.” (Aside: This is also part of the secret of open source. People do cool things for reasons other than money, because they solve small scale, specific problems that wouldn’t be touched by commercial vendors. (These problem spaces sometimes grow into big markets, but they don’t look that way at first.))

– Companies need to think not just what they can get for themselves from new technologies, but how they can enable others. A marketplace is like an ecosystem. The more life there is, the more there is for everyone.

Also see my earlier post on Tim O’Reilly on Web Services, where he takes of the Internet OS, and Tim’s article on “Inventing the Future“.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.