The Blogosphere and the Peak of "Inflated Expectations"

By November 04, 2006 1 comment

For years now, the Gartner Group, the renowned information technology research company, has been suggesting that there exists a curve describing the “hype cycle” of emerging technologies over time. The curve analyzes the time it takes for a technology to be adopted by the market and how it is used, compared to the expectations.

Here, for example is the e-business hype cycle introduced by Gartner several years ago:

This curve clearly shows that pre-2000 hype regarding the internet triggered inflated market expectations. These expectations had a bubble effect, followed by market disillusionment about the potential of internet technologies. Ultimately, the internet emerged as a profitable business, even “business as usual.”

Google, Amazon, Yahoo! and eBay, which all went through these same phases and survived, also fit the pattern. Today, they have clearly become an integral part of the global landscape of industry and commerce, with revenues, profitability ratios, and market caps that put them firmly in the lead pack of major players. And no one could have predicted that in 2000, at the height of the hype peak. In hindsight, the Gartner curve has proven an accurate tool for analyzing the internet technology cycle.
What happens when this same curve is applied to blogging, and the broader phenomenon of Web 2.0? Clearly we are just beginning the ascent toward the peak of inflated expectations! This is particularly evident in the Silicon Valley.

Thus far, no blog has found a significantly viable business model, as the downfall of bayosphere.com aptly illustrates. Furthermore, today’s blogging and the pre-bubble internet have at least one thing in common: people are convinced that a model based on advertising is the way to go. But very few Web 2.0 companies are currently able to make it that way!

Nevertheless, Google has built a powerful search engine that attracts real customers for many commercial sites—both e-retailers and more traditional companies that have a web showcase. But blogs don’t currently have anything to sell, just content. Can the Google model alone tap enough advertising for sites with often mediocre content and haphazard updates, especially considering that there are probably about as many blogs as blog readers (around 30 million)? The audience just isn’t big enough to earn significant advertising revenues—even though there seems to be a market, and internet advertising investments continue to grow. A few sites, like Ubergizmo (http://www.ubergizmo.com ), the excellent blog dedicated to gadgets, is beginning to see revenues, but not enough to enable the site’s two Silicon Valley founders and publishers to make a good enough living from it to quit their other professional activities.

The expectations are there, and many entrepreneuring bloggers are going for it. But few are succeeding. When the buzz has subsided, the market has done its sifting, and users have settled into major-trend uses, blogs, too, will become “business as usual.” Blogs and the blogosphere constitute an underlying phenomenon. We will probably not see a “blog bubble” like the dot-com bubble of 2000. Companies are now reasonably valued, investors more cautious, and entrepreneurs more realistic. But the excitement is palpable! Perhaps that is what creates this feeling of inflated expectations. It’s an exciting time. The Google, Yahoo! and eBays of tomorrow are here today among all of these tiny blog-focused Web 2.0 companies. They are creating expectations that we may later look back and see were well justified.

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1 Comment

[...] The Blogosphere and the Peak of “Inflated Expectations” For years now, the Gartner Group, the renowned information technology research company, has been suggesting that there exists a curve describing the “hype cycle” of emerging technologies over time. The curve analyzes the time it takes for a technology to be adopted by the market and how it is used, compared to the expectations. [...]

Submitted by Special Report: Blogosphere (not verified) - on September 15, 2008 at 06:20 pm

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