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March 04, 2009

Boring May Be Profitable

By Rob Diana of Regular Geek (Twitter/FriendFeed)

YAWN. Supposedly, that is what we are looking for in an application. Before you misunderstand me, the idea started with a quote from Fred Wilson's blog, "the great moves are usually greeted by a yawn". I am not commenting on the product in question, Twilio, but the general idea. So, what are the great successes in software and internet businesses? Microsoft, Oracle and Google immediately jump to mind. I am not sure if anyone would have called Microsoft sexy or really interesting like they do with Twitter or FriendFeed. Oracle was never an interesting company, by most standards, because they work in data management, which only data people like myself find interesting. Lastly, Google was mostly greeted with "what do we need search for" questions.

Steven Hodson wonders if the future and Web 3.0 will be very boring:
"There is a hubbub of activity as everyone is rushing around putting all the pieces together... At some point though everything is in place – the building is completed and then everyone sets about to do the day by day business of working in that new building. You know the boring stuff."
Typically, boring means corporate or enterprise systems. Boring means data management. Boring also means stable. However, these things normally translate into large amounts of revenue. Social media and social networking have not really converted mainstream corporations. There are some early adopters using sites like Twitter, but that is not the norm. Social media will take some time to gain adoption because there is very little direct return on investment. Advertising is easy to measure, but using Twitter for customer service has no direct correlation to revenue. So, there needs to be a lot of convincing in order to start using social media in the enterprise.

On the other side of the coin is the semantic web or what many people have been calling Web 3.0. The semantic web will not be what people were originally expecting for quite some time. However, many of the semantic companies are trying to create a bridge to the future. A concept that is being promoted is "linked data" for the web. This is the infrastructure for the semantic web. Once the data is linked, we can query the data. But there is a lot of data management that needs to be completed before we can really take advantage of the semantic nature of the data.

Yeah, all of this sounds boring, but the revenue model is much different. To earn a significant amount of revenue on the internet, you need either a million subscribers paying $5 per month or a ton of traffic in order to generate ad revenue. An enterprise installation of social media software could easily start at $30,000 with yearly maintenance of 25%. Granted, corporate customers can be harder to get and typically require a dedicated sales force, but the revenue can quickly grow.

Yes, it is boring, but it is also profitable.

Read more by Rob Diana at RegularGeek.com.