When will new Internet giants appear?

Stickiness on the Internet is a controversial subject. The theory is that, because of its nature, Internet users can be very fickle and jump ship at any moment's notice. But in practice users have shown some strong inertia. Yes, they could switch from Google to Microsoft Live, but haven't done so. So how does it really work?

When looking at over 10 years worth of Website evolution a pattern emerges: users will stick to their favorite websites unless a new site provides something really more compelling... or unless the incumbent screws up.

Consider the following examples:

- Street maps: in the late '90s there was several websites offering street map services, MapQuest being the most popular. Then one day Google Maps came along and blasted everyone away. Why? Because it was way beyond what was out there. The map was finally filling up the whole screen, and was much more pleasant to the eye. Last but not least you could drag the map with your mouse. As a result, users switched in drove to Google Maps. Competition such as MapQuest or Microsoft Live has caught up since. Some competing sites even have better street view than Google Maps. But no offer has been compelling enough to convince people to jump ship.

- Social networking: Friendster was the first large social networking site, but it screwed up big time. First of all, the website didn't handle the charge due to its success and ended up alienating its users. Second, because its management was more focused on becoming the next Google than on growing its core service, it missed the rise of MySpace which offered something much more compelling that Friendster: the ability to customize one's profile and add cool images and/or music. Facebook was able to rise because it targeted a public slightly different than MySpace, and because its open platform let users download funny applications.

- Email client: once again Google tried to offer something that was way beyond what was out there. Not only did its Gmail service offer a very slick Web interface, it offered much more email storage than the competition. This was however not enough for Google to steal the show as incumbents had two powerful arguments to lock-in their users: 1) all the archived emails and 2) the email address they were using. This gave them some time to beef up their offers to be on par with Gmail's.

- Web search: in the early days of the Web Yahoo! and AltaVista ruled along with various other lesser known sites (Excite, Lycos, etc.). Then Google arrived and proposed a service that was just better. A simple interface, more pages indexed, a faster and more efficient search. It didn't help that Yahoo! at that time got sidetracked in too many directions (its main page becoming grand bazaar central) and that AltaVista was at a standstill because its parent company, Digital, was in turmoil. Competition like Yahoo! or Microsoft Live has since caught up, but Google still enjoys the #1 spot.

So if you look closely, you will notice that it's mostly new Web technologies that allowed to steal a user base. Google rose to power because of a superior indexing algorithm and because it pioneered the concept of cloud computing. It then overthrew MapQuest because it was a pioneer in terms of Web 2.0 interface using AJAX. The technology used by MySpace wasn't that terrific, but Friendster was so blinded that it didn't see it coming. Facebook used both a new technology (open application platform) and didn't steal that many users from MySpace as it targeted a slightly different audience.

And there are incumbents (some from the Web 1.0 era) who never saw any overwhelmingly better competition: eBay, Amazon.com or YouTube. eBay has the advantage of a strong lock-in (the largest pool of sellers and buyers). Besides, it has yet to be proved that a sleeker interface would provide a better service. Amazon.com or YouTube never saw anybody who proposed something much more compelling than what they have. Amazon.com has always stayed ahead of the curve by constantly innovating, keeping Barnes & Noble website at bay. YouTube, like any other video Website, relied on Adobe Flash for its video capability. And nobody has yet found a better way to display videos. Maybe one day someone will be able to come up with a proprietary technology to display HD video without consuming more bandwidth. In the meantime, YouTube rules as the #1 video site so much that it's a household name.

So the lessons to draw are that:

1. Brand name is as effective on the Internet as anywhere else. As a matter of fact, this is probably the most powerful competitive advantage incumbents can get on the Internet. Google has become a verb. People commonly refer to "YouTube" or "Facebook" as a category of Website. Users might want to buy stuff from other sites than eBay but might not think of any other site.
   
2. New Web giants could appear by coming up with new services. After all, social networking arrived pretty late in the game.
   
3. Considering that AJAX and more generally "Web 2.0 technologies" have been used quite extensively by anybody, this means the field has been leveled. So future Web giants are likely to throw out incumbents only by pioneering future Web technologies. This doesn't bode well for Microsoft who is obsessed with "killing Google" (Steve Ballmer's alleged words). Redmond has indeed never been innovative. They've always overthrown incumbents using dirty tricks and relying on Windows. Never with a sleeker technology or an innovative product.
4. There is also the risk that some incumbents will screw up. Facebook angered some of its users with its "beacon" advertising/spying program. This was not enough to kill its user base, but another scandal might do. Google might lose focus on its core search system. Time will tell...