Hosting 365

Congratulations to the 17 year old who created ZooomR, what someare calling a ‘FlickR killer’. But while what Kristopher Tate has created may technically be a fantastic application, and currently provide more features than FlickR, it’s unlikely to cause any harm to the photo site.

Why? Critical mass. Social media is about sharing and connecting. If I create an auction site better than EBay will it work? No. Because I need the critcial mass of people selling things, and people looking to buy items.

I must admit, the ’single sign on’ style (you don’t need to sign up, just log in with GMail, OpenID, Livejournal, etc.) and 15 languages is really cool; as is the meta-data abilities and geo-tagging functionality. But unfortunately cool isn’t enough. Buzz is what’s required - and not buzz amoung a few geek bloggers (myself included obviously!).

The trolls no doubt will cite Google, FlickR itself and other small scale projects that ultimately become huge and toppled industry behemoths as examples - but that’s much more the exception than the rule. Especially when you consider the timeframe - 3 months - and some of the features - Google Maps - that can easily be replicated; whereas Google had ’secret search sauce’ the others did not, and PayPal was very much first to market with a GOOD service.

This post is starting to look very negative, and that’s not the idea at all. I’m not trying to say the small guy will never succeed - just that there’s so many Web 2.0 apps that are being developed for next-to-nothing and in short timeframes, with no resources behind them, and competing for the same users, that the nature of social media means that only a small handful can survive - and thrive.

I think the hosting industry is moving this way as well. It’s easy become a hosting company - just buy some servers and resell space on them. What’s not easy is become a GOOD hosting company - and provide a quality support service on reliable and redundant infrastructure. What we’ll see over the next few years is a consolidation of the hosting market - with bigger hosting companies snapping up the little ones (or just their customers). The reason I say this is the critical mass one again. When a hosting company reaches that critical mass in customers it likely has the resources - it’s own data centre, secure finances to fund required infrastructure, and a wealth of expertise in staff - to offer both a better service, and because of economies of scale, better prices.

If you consider Bowman’s Strategy Clock, the ultimate position to be in is the high-quality, low-cost segment in a growing industry with high barriers to entry (at data centre level. See Porter’s 5 Forces for a great model on Competitive Analysis). Not blowing our own trumpet here (okay, clearly I am!) but because of our success, we can offer superior service (I can back this up … challenge me, I dare you!) at a lower price - that’s just what Economies of Scale does for a business, and hosting is no different.

I’ve diverged a little bit from the ZoomR story … but the point I’m trying to make is that WHEN you’ve got resources, and you’re not being complacent, it’s very hard for a start-up to profitably compete - unless there offering a serious increased value-add (i.e. not something the competition can duplicate / replicate in a matter of weeks).
For a more balanced review you can read Micheal Arrington’s review of ZoomR here!