Or so says venture capitalist Ann Winblad, who believes the big boys have just three years left on top before proprietary software becomes a thing of the past.
As you might imagine, when the Hummer Winblad founding partner made this bold prediction at the Churchill Club's annual top tech trends debate in January, her words were met with more than a bit of skepticism. Even though Ms. Winblad cited the advent of Internet-based software, web services, new pricing and business models, open source, and open standards to support her claim, I must admit that I, too, was skeptical.
But then I thought about it. And as I did, I was reminded that VCs are often wrong—particularly when it comes to timeframes. Could it be that Miss Winblad's prediction is correct but just ahead of its time?
In a recent sandhill article, Geoffrey Moore, of crossing the chasm fame, states that not all innovation is inherently disruptive, as author Clayton Christensen (The Innovator's Dilemma) and others have posited. Indeed, Moore writes, there are all kinds of nondisruptive innovations: application innovation, process innovations, integration innovation—the list goes on and on. Frequent AlwaysOn blogger Tom Forenski, however, disagrees, article that “if an innovation is not sufficiently disruptive it will not overcome the inertia of the status quo—and will therefore not be classed as innovative.”
I happen to be on Moore’s side in this debate. Not all innovation is inherently disruptive, and much of it is incremental. But rather than quibble over semantics (and since I'm an engineer by training), I prefer to use numbers: Googling “incremental innovations” resulted in about 5.5 million hits, while Googling for “disruptive innovations” yielded a measly 2.6 million hits. If all innovation is disruptive, why are more people talking about incremental innovation?
Regardless of whether you consider innovation to be inherently disruptive, there’s a lot of it going on right now—particularly in the software world: It's been a long time since we’ve witnessed the convergence of so many areas of potential innovation. Consider the following:
Marketing innovation: New business models such as open source and software as a service (SaaS) are turning enterprise marketing and sales upside-down—models that JotSpot cofounder and CEO Joe Kraus describes as “addicting the end user and selling to the enterprise.”
Application innovation: Until recently, web applications were slow and cumbersome compared to their native Windows cousins. Not so today, however, as new technologies such as AJAX are providing a look and feel superior to many native Windows applications.
Product and integration innovation: Hybrid web apps – mashups - which seamlessly combine content from a variety of sources, represent a promising area, with many interesting applications already emerging.
Platform innovation: By taking advantage of open-source and low-cost application infrastructures, companies can significantly reduce the cost of software.
Established companies—which often stumble dealing with just one innovation—will find it difficult to deal with (and get right) simultaneous innovations. They simply have too many stakeholders who want to maintain the status quo. For startups, however, it's a different story: With innovation occurring in so many areas, opportunities abound for newcomers that are able to take advantage of the challenges presented by evolving markets and platforms.
Zimbra is one such startup: An an-open source company that uses a SaaS delivery model and AJAX technology to deliver rich Internet applications, Zimbra is taking on Microsoft and IBM in the messaging area—something that would have been unthinkable (and unfundable) a few years back. Fast-forward to today, however, and Zimbra has attracted a strong following and raised $16 million to date. Further, its applications can be integrated with other apps to create mashups. In other words, Zimbra—by embracing innovation—is now getting it right!
An upcoming event put on by the MIT/Stanford Venture Lab focuses on just what I’ve been talking about here—innovation within the software industry (specifically around AJAX technology) and at Zimbra. Microsoft will be represented as well, and to stir things up, Om Malick will be the moderator. I’ll provide a summary and analysis of the event in my next column.
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