Web 2.0 Distilled

The CEO (Satoshi Nakajima) of the company I work for, recently pointed out a great memo written by Ray Ozzie which to me distills the key important aspects of Web 2.0.

Ray's excellent summary of Web 2.0:

"Key Tenets
Today there are three key tenets that are driving fundamental shifts in the landscape -- all of which are related in some way to services. It's key to embrace these tenets within the context of our products and services.

1. The power of the advertising-supported economic model.
Online advertising has emerged as a significant new means by which to directly and indirectly fund the creation and delivery of software and services. In some cases, it may be possible for one to obtain more revenue through the advertising model than through a traditional licensing model. Only in its earliest stages, no one yet knows the limits of what categories of hardware, software and services, in what markets, will ultimately be funded through this model. And no one yet knows how much of the world's online advertising revenues should or will flow to large software and service providers, medium sized or tail providers, or even users themselves.

2. The effectiveness of a new delivery and adoption model.

A grassroots technology adoption pattern has emerged on the Internet largely in parallel to the classic methods of selling software to the enterprise. Products are now discovered through a combination of blogs, search keyword-based advertising, online product marketing and word-of-mouth. It's now expected that anything discovered can be sampled and experienced through self-service exploration and download. This is true not just for consumer products: even enterprise products now more often than not enter an organisation through the Internet-based research and trial of a business unit that understands a product's value.

Limited trial use, ad-monetised or free reduced-function use, subscription-based use, on-line activation, digital licence management, automatic update, and other such concepts are now entering the vocabulary of any developer building products that wish to successfully utilise the Web as a channel. Products must now embrace a "discover, learn, try, buy, recommend" cycle -- sometimes with one of those phases being free, another ad-supported, and yet another being subscription-based. Grassroots adoption requires an end-to-end perspective related to product design. Products must be easily understood by the user upon trial, and useful out-of-the-box with little or no configuration or administrative intervention.

But enabling grassroots adoption is not just a product design issue. Today's Web is fundamentally a self-service environment, and it is critical to design Websites and product 'landing pages' with sophisticated closed-loop measurement and feedback systems. Even startups use such techniques in conjunction with pay-per-click advertisements. This ensures that the most effective Website designs will be selected to attract discovery of products and services, help in research and learning, facilitate download, trial and purchase, and to enable individuals' self-help and making recommendations to others. Such systems can recognise and take advantage of opportunities to up-sell and cross-sell products to individuals, workgroups and businesses, and also act as a lead generation front-end for our sales force and for our partners.

3. The demand for compelling, integrated user experiences that "just work".
The PC has morphed into new form factors and new roles, and we increasingly have more than one in our lives -- at work, at home, laptops, tablets, even in the living room. Cell phones have become ubiquitous. There are a myriad of handheld devices. Set-top boxes, PVRs and game consoles are changing what and how we watch television. Photos, music and voice communications are all rapidly going digital and being driven by software. Automobiles are on a path to become smart and connected. The emergence of the digital lifestyle that utilises all these technologies is changing how we learn, play games, watch TV, communicate with friends and family, listen to music and share memories.

But the power of technology also brings with it a cost. For all the success of individual technologies, the array of technology in a person's life can be daunting. Increasingly, individuals choose products and services that are highly-personalised, focused on the end-to-end experience delivered by that technology. Products must deliver a seamless experience, one in which all the technology in your life 'just works' and can work together, on your behalf, under your control. This means designs centred on an intentional fusion of Internet-based services with software, and sometimes even hardware, to deliver meaningful experiences and solutions with a level of seamless design and use that couldn't be achieved without such a holistic approach."