Social Networking Moving Along the Hype Cycle
Social Networking seems to be tracing a normal hype cycle for popular innovations in the market. It is a scenario where a core group finds value in a concept, it progresses almost under the radar until it makes that mass market leap to “cross the chasm” (to use Geoffrey Moore’s famous concept*) into wide mass market adoption. By this time, venture capital would have been funding the early leaders, the media would breathlessly cover the subject, valuations would skyrocket, consolidation occur as traditional players try to buy into markets or provide their solutions, and then at some point we actually have to make some money doing it. We are obviously to the point where someone needs to make money doing “social networking”, but what are those next steps?
Early on, the value of the network was proportional to the membership of the closed network making outreach somewhat difficult for new entrants or companies trying to reach their customers via this technology. OpenSocial and other similar initiatives seemed to change the dynamics slightly to open those networks which helped users who became burdened by managing so many siloed logins or buddy lists. However, as companies tried to reach out to their customers using these new developments in social networking, they found a market of fragmented technology providers, single vendor technology stacks that create “lock in” to vendors with custom solutions, or a separate option to be beholden to launching within a platform provider such as MySpace or Facebook. Obviously due to brand considerations (with some exceptions for teen brands), having your own social networking platform was a better from a control perspective, but created a significant amount of risk due to the high cost of integrating and managing all the disparate technologies involved in establishing a consolidated offering. Furthermore, commerce would need to be added to enable revenue opportunities which also increased integration cost and complexity.
For these reasons, I am most excited about Infosys’ current social commerce and marketplace offerings which encourage customer intimacy and co-creation activities while providing revenue streams for commerce and advertising. Our hosted model based on an open architecture reduces the risk of deployment by supporting flexible commercial models for our enterprise customers to let them pay as they grow. This transfer of capital expenses to operating expenses more closely matched to revenue recognition is a winning proposition in this current economic climate. The key is to not only provide the basic social networking functionality, but to enable a unified platform to provide 360° views of customer behavior within the platform. Our team has dedicated a significant amount of manpower to solving these complex issues to enable a quick launch and experimentation with social networking concepts. I may be biased, but this sounds better than risking the development cycles on doing a single custom build. I look forward to writing more on this in the future and am interested in your thoughts.
(*Moore’s chasm applies to new disruptive innovations to which I feel social networking applies)
Comments
Really, this is an outstanding article/thought on social networking. And also waiting for your next article.... thanks.
Posted by: lokesh | September 24, 2008 09:11 AM