Neal Cabage, Sonya Zhang
A lot has changed since the release of Apple’s first iPhone in 2007. We have witnessed a profound shift in user behavior, away from desktop computers in favor of new form-factor devices. The enabling technology has also brought about an entirely new class of Web-enabled applications and architectural ideals. Meanwhile, monetization opportunities that capitalize on these changes are appearing. It is from a confluence of these changes that we assert Web 3.0 has begun.
We will support this assertion by looking at the types of changes that occurred during the Web’s previous era to support labeling that Web 2.0. We then apply those criteria to show how comparable changes are once again occurring, thus justifying the acknowledgement of an entirely new generation of advancement on the Web. Let’s start with a close look at Web 2.0.
Concurrent to these technological revelations, use patterns online were also changing. With the rising popularity of social sites such as Friendster and MySpace, users were starting to contribute to the Web’s content, in contrast to previous, more passive use patterns in the Web 1.0 era. Blogging was also gaining in popularity, driven by the introduction of WordPress and Google’s popular AdSense network in 2003. Eventually this explosion of social sharing via profiles, articles, comments, and conversations would culminate in what Facebook would later, in 2007, call the social graph.
Interestingly, there was no single innovation that completely represents Web 2.0, yet most agree it was a pivotal time. Reflecting upon the above statements, we identify three significant forces that converged around 2004. Specifically, there was a convergence of new technologies, new user behavior, and new monetization opportunities. Table 1 compares the three generations of the Web from this multifaceted convergence.
To make the case that Web 3.0 has begun, let’s discuss the enabling technology along with new use patterns and monetization factors that have arisen in the past few years.
Whereas Web 2.0 could be technologically characterized by the proliferation of Web services, one could argue that Web 3.0 is characterized by a proliferation of new form-factor devices, leading to new use patterns of the Web. In 2007 Apple introduced the iPhone, which would become the transformative device of its generation. In 2010 Apple released the iPad, which at a technical level is merely a larger version of the iPhone, but which evolved its own use patterns when introduced to consumers.
Concurrent to these activities, Google had been developing Android, which provides an open source alternative to Apple’s higher-priced devices. Hardware developers such as Samsung and HTC have developed popular lower-cost devices that leverage Android and provide a significantly lower-cost commodity alternative, which is helping to drive quicker adoption of these new form-factor devices. In fact, the rate of adoption for these devices is occurring so quickly that sales of them are now higher than that of traditional desktop computers.
There is significant anticipation among technologists and investors alike that a fourth new form factor will soon take hold, the Internet television. Many in the media are anticipating the release of such a device later this year, pending the resolution of licensing issues with the pertinent media companies. In anticipation of this, venture capitalists such as Marc Suster, who is investing in Los Angeles-based entertainment companies like Maker Studios, believe that television is ripe for innovative disruption. If they are right, this could emerge as yet another significant new form-factor device, representing another use pattern.
Another hallmark of a new Web era is the type of applications running on these new form-factor devices. Unlike previous Web applications, which were typically thin-client applications, we are seeing the reemergence of thick-client architecture for specific-use apps. In this context, rather than loading an HTML interface from a remote server, a device launches a native application that runs locally, providing a significantly improved user experience. The native app still utilizes stateless remote Web services, but state persistence and intelligence about location and user interface behaviorthe true application logicoccur within the local native app.
The mobile Web is also making strides toward thicker-client applications. HTML5 has standardized the implementation of geolocation awareness and local persistence storage, enabling an HTML-based document to now manage its own session state and geo awareness, rather than needing to defer to the server to manage application-level functionality. The inclusion of the vector canvas further enables HTML5-based applications to create rich user interfaces and data representations without needing to call back to the server.
Another significant technology that has influenced this new generation of Web use is the geolocation ability of the devices. This technology has given way to an entirely new class of applications that has substantially influenced use patterns and emerging monetization opportunities.
When cellphones began to include GPS capabilities in favor of the older triangulation method, it dramatically improved the accuracy of location awareness and opened the potential for real-time location updates being used for commercial purposes. When the iPhone introduced a meaningful software platform along with this potential, an explosion of location-aware software applications could begin.
When HTML5 was introduced, it included a provision for a geolocation API that Web browsers needed to implement, giving even HTML5-based applications the ability to be location aware. Most commonly, services such as Skyhook Wireless implement this by looking up nearby wireless access points and cross-referencing them for location data. It is also suspected that Google collected such geo-referenced Wi-Fi data while driving its cars around to take photos for the Street View service, thus providing another source for geolocation lookup.
New Use Patterns
As a result of the massively disruptive innovations that have taken place with emerging technology, users are no longer bound to their desktops in order to use the Web; the online advertising industry has started referring to this phenomenon as the “four-screen user” . They are looking for opportunities to stitch together the entire user experience across numerous devices, both synchronously and asynchronously.
We continue to see increasing splintering of activities across our four devices, commensurate with the nature of those activities. Productive work and research are still primarily performed at a desktop device, but our phone is now frequently used for looking up location-based information, such as maps to nearby stores or houses for sale. When the iPad was launched in 2010, it introduced a new form factor that immediately appealed to the household for casual Web surfing, sharing photos, and other activities characteristically performed from the couch. And of course there is the much-anticipated Internet television, which seems poised for imminent release.
The introduction of new form factors surely will not end with the completion of Apple’s i-series of products, either. There are many apparent extensions of this proliferation of Web activity further into applied devices. Products have already been introduced that enable control of your home’s heating and lighting from a Web application, and industry thought leaders have begun talking about Web-enabled machines that are self-aware of efficiency and the need for repair.
Another meaningful trend we have observed in the past five years is the growth of context-specific applications. What arguably started with API mashups in Web 2.0 has matured into very useful apps that leverage specific meaningful segments of the Web for a specific purpose. For example, one click on the weather app on your mobile phone or tablet and you can see information about today’s weather, without ever needing to open a Web browser or enter your location. Or you can get directions to a destination based on your current location.
Beyond location, applications are learning our preferences and adapting accordingly. Google, for example, has begun factoring our search preferences after observing search results we click and recommendations made by others we are socially connected to via our Google+ accounts . While this is a natural evolution in its service at some level, the fact that we’re using devices that maintain state for us means we no longer need to log in to those applications when we navigate to them. Instead, we merely click the search button on our device and the personalization of our results happens automatically.
Apple’s introduction of Siri with the release of the iPhone 4S was an interesting increment as well toward Tim Berners-Lee’s vision of intelligent machines that understand the Web and perform actions on our behalf. It is a spin-out from the SRI International Artificial Intelligence Center, and is an offshoot of the DARPAfunded CALO project. After you issue a verbal command to the phone, Siri will process your request and respond by either answering a question or taking a requested action, such as initiating a phone call, setting an appointment on your calendar, or playing music.
Perhaps what has driven the rapid innovations of the Web more than anything else is the potential of generating profit. In Web 2.0 this was manifested by well-funded ventures seeking to capture a market share in the social ecosystem, which would enable monetization on a large scale as a media portal, as well as bloggers figuring out how to monetize their own content through Google’s AdSense network.
The acceptance of “Web as platform” also unlocked the potential for subscription-based online software as a viable alternative to the up-front licensing of a traditional software product. And indeed, those three areas where new monetization opportunities were present are where the majority of the innovation occurred during Web 2.0. In Web 3.0, we see an entirely new crop of monetization opportunities emerging, as we will discuss here.
The app store is a new monetization vehicle that has arisen in the past five years and has fueled much of the development of mobile devices. The Apple App Store began a new era of monetizing software as a product. It allows third-party developers to create extensions (apps) that take advantage of Apple’s platform and sell them into a marketplace that is prominently positioned for the users of the platform. The concept has been profoundly successful; the store now boasts more than 900,000 apps.
The idea of an app store has caught on with competitors and in other verticals as well. Google Play Store is the analog for the Android ecosystem (and now offers as many apps as the Apple App Store), and Microsoft recently launched its own app store for Windows 8. For B2B platforms, Magento has the Connect marketplace to extend its ecommerce platform; SalesForce introduced Force.com, facilitating extensions to its core cloud services by third-party developers.
In an effort to provide “frictionless” checkout opportunities for customers, physical stores are beginning to leverage mobile-based solutions to enable easier checkout. Companies like Starbucks are now offering the ability to make a purchase by simply tapping “pay here” or by scanning a QR code displayed at the point of sale. The system works with Square’s eWallet program, which links directly with the customer’s credit or debit account.
It is an interim solution, however, that companies like Square aim to improve. In an interview with CNN, Jack Dorsey, CEO of Square, said that their plan is to eventually not even require the user to take their phone out of their pocket. The user would merely say, “I’m Laurie, and I’d like a cappuccino,” the proximity of the device would be detected, and her account would be charged in the background .
The one issue remaining for mobile commerce is how to simplify making purchases online, since the small screen and lack of keyboard make it prohibitively difficult to complete a long checkout form. Though this remains a problem at the time of this writing, a solution will inevitably come as a result of this foray into mobile commerce.
The increasing amount of time that Web users spend on new form-factor devices is creating a challenge for content creators, who are finding that their content does not monetize as well through these devices. According to Mary Meeker of Silicon Valley-based venture capital firm Kleiner Perkins, the effective CPM (cost per 1,000 impressions) for mobile devices is five times lower than that of the desktop . Not all devices are created equal, however, with tablets generally delivering higher eCPM rates than phones. Nonetheless, the point remains that the ad-banner and paid-click advertising models may not best fit the use patterns of these new mobile devices. Where one window of opportunity closes, however, another opens.
Geo IP fencing is one such opportunity that takes advantage of hyper-local targeting to serve ads relevant to your physical context. Whereas Google had success with AdWords advertising by dynamically placing ads into contextually relevant articles, GEO IP fencing enables the advertiser to specify a physical boundary within which an advertisement will appear, thus enabling ads to appear only when they are geographically relevant. For example, imagine a cafe offering 10 percent off a morning coffee if you come in now. This ad could be shown within 100 yards of its store, enticing pedestrians to stop in and take advantage of the offer.
It has been only six years since the iPhone was first released, which set into motion many of the changes we have discussed. It is difficult to grasp the extent to which the Web has changed in such a short period of time. When reflecting upon all of this change, one has to wonder if it is sufficient to declare that an entirely new generation of Web innovation has occurred since Web 2.0, and so we sought to answer that question here.
Through reviewing the innovations most commonly associated with Web 2.0, it appears that what defines that generation really comes down to a convergence of three things: new enabling technology, enhanced monetization opportunities, and consequently new categories of products that resulted in new use patterns for end-users. By evaluating these criteria, we observed that indeed a significant transformation has begun that could be described as a generational advancement. And so we conclude, affirmatively, that Web 3.0 has already begun.
Neal Cabage (nealcabage.com) is a digital product strategist, technologist, and author who has spent years leading the development of online products. He has worked with top online brands, spoken at leading industry conferences, and founded and sold two online startups. He co-authored The Smarter Startup (Pearson New Riders, 2013) and is a contributing columnist for Inc.com.
Sonya Zhang (sonyazhang.com) is a professor at the College of Business Administration, Cal Poly Pomona. She holds a Ph.D. in information systems and technology, an M.S. in computer science, and an M.B.A. Her research focuses on Web development and optimization, eCommerce, and Internet entrepreneurship. She has published in top journals and conferences, as well as co-authored The Smarter Startup.
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