Driving the change: Cheaper start- up costs, less Microsoft dominance

which makes business software that’s used over the Internet. “ The pioneers often get turned into fertilizer, and the rest harvest off them. It seems to be harvest time.”

Behind the scenes, other factors are helping to propel the interactions Web.

Broadband Internet connections

— necessary for

this kind of interactivity — have pushed t heir way i nto a c ritical mass of homes. The cost of starting tech companies or creating digital content has dropped precipitously, allowing more people to try more newthings than ever before.

Also important is the easing of Microsoft’s dominance over computing. Entrepreneurs are emboldened to compete in businesses that for a decade had been off limits — such asword processing.

The result is that the industry seems vital again after 4 ve years of atoning for the dot-com bust. Entrepreneurs are launching start- ups at a feverish clip. Venture capitalists, while still more watchful than in the 1990s, are doling out money at an increasing pace. Venture investing was up 13% in the third quarter vs. a year ago, according to the National Venture Capital Association.

Hollowed-out of 4 ce space in Silicon Valley is beginning to re 4 ll. Conferences — notably Web 2.0 in San Francisco in October — are jammed and humming. Industry leaders are spending on high- stakes bets, as when eBay paid $ 2.6 billion for Skype.

“ I’ve never seen this kind of activity from these kinds of companies,” says Mary Meeker, Internet analyst at Morgan Stanley.

“ There is this tipping point coming,” says Patrick Grady, founder of a Web-based services start-up, Rearden Commerce. “ I expected it sooner, but now I see it’s going to happen.”

Or is happening. Here are some of the hottest developments popping out of the interactions Web:

uWeb- based applications: More than a decade ago, companies such as Oracle and Sun Microsystems imagined that instead of owning complex and costly pieces of software such as Microsoft Of 4 ce, people would use the Internet to tap into applications that were running on a server somewhere else.

That vision needed a lot of technologies to fall into place, and by now, most have. A last important piece seems to be Ajax, which stands for asynchronous JavaScript and XML ( extensible mark- up language). This software coding hooks your computer into a Web-based application and makes it seem as though whatever you’re doing is running right on your PC. As long as you have an Internet connection, using an Ajax- based word processor should seem a lot like using a more typical word processor running on your hard drive.

Heavy- lifting Web applications for managing businesses have been around a while but have really taken wing in the past year. Leaders include Salesforce.com, which has more than 300,000 users, and NetSuite. The next step is in applications that nearly every business user touches, including word processing, corporate e- mail and calendars.

One start- up company, Writely, offers a new Web-based word processor. Go to writely. com, sign up and startwriting. When done, your document gets stored on Writely’s servers, so you could access it over any device anywhere. You could also open it up to other people, so up to 50 users anywhere on the globe could edit it or add to it.

In e- mail, the hot newcomer is Zimbra, which is pitching itself as a replacement for Microsoft Outlook. Thanks to Ajax, Zimbra’s e- mail is more interactive than Google’s Gmail or Hotmail and feels more as if it’s on your own PC. But because it’s on the Web, it can do some neat tricks. If you put your cursor on an address in an e- mail, for example, it will open a small window showing that spot on a Google map.

Zimbra realizes it’s staring into the jaws of Microsoft, but in this new age, it doesn’t seem intimidated. “ We have a leader in e- mail but no real alternatives,” Vice President John Robb says. “ We can 4 ll that hole.”

A truckload of start- ups is jumping into Web applications. One other example: Trumba, a new kind of Web-based calendar. It lets people share calendars across different websites or devices — and it automatically pull in dates from websites. For instance, you could ask for all of U2’ s concert dates to be constantly updated on your personal calendar.

An inverse side of Web applications are pieces of software that sit on your computer but become most useful when they pull in stuff from the Internet. These are new ways of using the Internet that often don’t involve a browser.

One of the best- known, 4 rst- generation examples is iTunes software, which pulls in its music store from the Web. More sophisticated is Google Earth, which runs on the desktop but continuously pulls in Web-based information to create J y-over 3D maps.

uWeb services:

In the Web o f the past decade, websites didn’t speak to one another. Each site was pretty much its own silo. But now, thanks to XML a nd i ts o ffspring, RSS (really simple syndication), websites can talk. That’s opening up some interesting possibilities.

This is why the popular My Yahoo can assemble a page of headlines and links from dozens of news organizations, creating a personalized news dashboard. It’s how a Trumba calendar can pull in those U2 listings.

The next phase gets better: automated websites that use XML to go looking for things for you. While the industry has been talking about such technology since the late- 1990s, companies such as Rearden Commerce are beginning to pull it off.

Rearden, a Web service for travel, has about 500,000 corporate users so far. The site acts a lot like a human travel agent. You tell it your preferences — hotels downtown, non- stop Jights and so on. Rearden also knows corporate preferences — preferred airlines, hotel cost limits — for the company as a whole and for every individual user.

When you want to book a trip, you say when and where, and Rearden can query thousands of airline, hotel and other travel websites and cross-reference them with individual and corporate settings. It could pull in non- travel items, too, such as listings from local jazz clubs during the time you’d be in that city.

Then Rearden can assemble all the pieces on a screen on your computer and let you make 4 nal decisions.

“ The Web ought to be an alwayson personal assistant,” says Rearden’s Grady. “ It ought to knowwho you are and where you are and understand the context of what you’re trying to do and do things on your behalf.”

Though Rearden, as are most Web services, is mainly a corporate offering today, look for the technology to race into the consumer market in 2006.

“ That’s the next wave of innovation — not the Web page but delivering services through the Internet,” says Jonathan Schwartz, president of Sun Microsystems. “ This is not your father’s Internet.”

uUser content:

Inside the exposedbrick of 4 ces of Current TV — the cable channel co- founded by Al Gore — a nerdy, pasty- white guy named Joe Hanson pops onto the screen in a comical short about his entering a freestyle rap contest competing against African- Americans.

Hanson 4 rst submitted the clip to Current’s website, where it got tossed in with thousands of other short videos created by hundreds of individuals. Then visitors to the website voted Hanson to the top. That, in turn, won the piece a spot on Current’s companion TV channel, which reaches 20 million homes.

“The website more than anything was built to be an extended production facility,” says Joanna Earl, president of Current’s on- line operations. “ It feeds back and helps us program the cable channel.”

Current is one example of usergenerated content, and the Internet industry is a J utter about the concept. By now, consumers have the tools they need — digital cameras, recorders and camcorders, plus editing software — to make digital content. Websites are 4 nding ways to pull in that content and create a new kind of people’s media.

Blogs are one form. So are the photos that populate Flickr, now owned by Yahoo, and similar sites. MySpace, bought by News Corp., began as a way for teenagers to post lists of their favorite music and share information about bands and songs. Now, users post videos, photos and blogs, and the site has nearly 25 million registered members.

Investors and executives believe the trend toward user- generated content will continue, further integrating people into websites and, in turn, the Web into people’s lives. The interactions Web should drive that integration deeper, as people count on the Web to be a servant, assistant and constant companion.

This is why the Internet industry seems to be bursting out of its doldrums. “ We believe the 4 rst 10 years of the Internet were a warmup for what’s about to happen,” says analyst Meeker.