Open Web Platforms: A Step-up for Start-ups? The ongoing global economic meltdown, has ensured that the ‘biggies’ in the product development domain such as Microsoft, Intel, IBM, Google, Apple etc have also felt the heat. Earnings and market capitalization of these companies have considerably withered in the last 12 months. For instance, between January 2008 and 2009 sales growth of Microsoft grew 1.6% while its market capitalization eroded by 33%. Likewise in the same period, market cap of Google went down by 29% although sales grew by 18%. The ‘blue-eyed’ poster child of the product industry, Apple, too had a tough year. Sales grew by 6% but the company’s market cap declined 42%. This has been a clear indicator of investor confidence on these companies which is at an all time low. How does this translate for start-ups? With high ambitions, products in the pipeline, high development and distribution timelines and VC’s and angels cutting back on investments the horizon has never been much more blurred for start-ups. However, these tough times provide both opportunities and challenges. Key challenges 1. Sustaining the company through the downturn 2. Managing cash flow and budgets diligently 3. Declining access to VC and angel funds 4. Managing motivation level of employees 5. Lack of experience of management in handling crises The challenges are mitigated by opportunities present Key opportunities 1. Able to compete with incumbent players 2. Creating customer value at lower cost 3. Able to tap local market opportunity effectively as existing companies might not be able to serve the market as they used to before 4. Penetrate new markets that companies might have pulled out off or reduced focus 5. Hire best in class talent that was previously difficult to come by In recent years open web platforms (OWP) are challenging the way products are developed and distributed. And the present state of economic crises has only emphasized the importance of open web platforms further. OWP are increasingly offering start-ups the opportunity to reduce product development times, extend distribution reach and enhance brand image. Traditionally product development companies followed the typical ‘S’ curve for development and revenue realization. However, with the advent of OWP, companies especially start-ups are beginning to have multiple ‘S’ curves thereby changing the very fundamental dynamics of the industry. Facebook, LinkeIn, Ning, Yahoo and Google are few of leading companies which have opened up their platforms for developer communities and companies to publish their applications. Developers gain access to API libraries, infrastructure, and training and support along the brand of the companies while service providers have the opportunity to drive user traffic with new features/attractions. Monetization at the moment revolves around advertizing and revenue sharing. As platform service providers and distributors begin to enrich user engagements the monetization models could evolve well beyond the existing ones. Location based apps and games are the leading favorites of user communities at the moment but as developers get innovative with changing user preferences this could change as well. Challenges such as lack of integration between various platforms leading to platform dependencies, training and support for developers, unclear monetization and SLA agreements etc do exist. Start-ups such as Zynga, with their popular games are spreading like wildfire through social networking sites and in that process are quelling any apprehensions that exist. Yahoo! India have launched an online survey to understand the Open web platform ecosystem readiness in India. The survey is intended for the Indian startups. It would be really great if you could take out 5 minutes of your time to take the survey. Survey link: https://www.surveymonkey.com/s.aspx?sm=PHQeGh6kUXS81G1OLJs9pw_3d_3d
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