Is the Technology Company Business Model Dead?
We live in an interesting time. Technology has changed many aspects of our lives. To a degree so much so that I think that many people take it for granted. If you follow the articles on technology changes on my Help from a Geek site about the impact it has on our lives, you can get a sense of this. After the third article in that series, I realized something rather obvious:
Technology has rendered the Tech company business model irrelevant.
Or has it?
Major companies, industries even, have failed to embrace the paradigm shift, and in doing so, they have sunk their business. If you look at the newspaper industry for example, they failed to recognize the changes in consumer consumption, and they didn’t pick up on the impact that Craigslist would have, and because of this they are either shutting down, or losing money at such a rate that they will be closed in a short period of time.
Next in line are the cable companies. No one doubts that the future of television lies in network. In order to protect their existing business model, these companies have resorted to bandwidth caps, misinformation campaigns, and higher rates despite lowered costs. They are the perfect example of a group that is holding onto the past. By clinging to an antiquated business model, they will find themselves in the same boat as the newspaper industry. Yeah, the one that’s sinking.
But are they any worse off than the darlings of the Web 2.0 sphere? In some twisted version of the practices of the tech boom of the late 90’s and early millennium, the prevailing mantra of the Web 2.0 crowd seems to be – if we get a lot of eyeballs, the money will follow – well, it turns out that none of these companies can make that work. Facebook, Twitter, Flickr, Youtube, etc….all of these sites are hemorrhaging money at an unprecedented rate. So far, not one of them has devised, or even proposed a viable business model.
This has become endemic to the Web 2.0 group of companies. In fact, the aim for many startups nowadays is to be bought out by the cash rich companies such as Microsoft and Google. They want to generate traffic and buzz in order to become an appetizing target for those companies. Once they are bought, the larger company typically ruins the property in the Borg assimilation process.