I like John C. Dvorak because a cranky ass and manages to stay independent with all the Mac and Linux sissies dancing around. He's now predicting a Bubble 2.0. We had the .com bubble in the 90's and now it's time for another one -- the bubble of web 2.0 -- Bubble 2.0.
Each of these bubbles had a distinctive theme. For the dot-com bubble, it was e-commerce—it really should have been called the e-commerce bubble. Everything was focused on how the Internet was going to destroy all existing brick-and-mortar operations. We were told that you'd be buying sandwiches over the Internet and having them delivered the next day by FedEx. Everything was about "eyeballs" and finding ways to attract customers, whether they bought anything or not. Every article in every newspaper in the country parroted the litany as to how you'd be out of business in a year or two if you were not present on the Web in a big way. Of course, this was all crap.
Although John has trouble pointing out why the Web 2.0 bubble will pop I can give him a hint: lack of business model. Yes, that's a boring answer and it was the same as in Bubble 1.0, but as we all know: in the end it is about the money.
Web 2.0 start-ups are now wildly invested in and spending loads of money, only to attract an audience and build expensive products. Youtube spends $1,000,000 per month on bandwidth alone. That's crazy. How much do they make? Not much. How did they maintain themselves? Investors. For them it paid off, they were bought by Google. It paid off. But the thing is, the story doesn't end at an acquisition. What is Google going to do? They have the monetization problem now. They are desperately trying to come up with some kind of advertising thing, but my prediction is that in the end it won't work.
A small part of the little start-ups will be bought by big monsters like Yahoo, Google and Microsoft, the others will die by themselves, because they were not built to make money -- they were built to be sold. The big monsters then end up with very expensive money losing machines that they somehow have to turn to make a profit. It's going to be a challenge.
Don't be surprised if you hear a loud popping sound within the next few years.
