Dan Farber writes:

While the cognoscenti call it Web 2.0, Gartner calls the next phase of the modern Internet (beginning circa 1995) the "second revolution." Instead of mashups, syndication and social media, Gartner’s analysts talk about micropayments, services and Web-enabled communities. They are both talking about the same thing—the Internet is continuing to evolve as the platform for every computing-related activity. It's a continuum, not a second revolution–perhaps a third wave, from pre- and post-bubble and now a new bubble or at least bit of frothiness.

Speaking to the crowd of IT executives, Gartner analysts James Brancheau and Chuck Abrams didn’t talk about mashups, but described the business impact emerging from a shift in demographics and consumer behavior, combined with technological changes wrought by the Internet. By 2010, every business and organizational activity will revolve around the use of Web-based content and applications, Brancheau said. That’s not any news to the cognoscenti, but for the IT crowd it has some major implications—the old way versus the new way.
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There is no second coming of the Internet–it's been coming for the last 35 years. Nor is there any time for complacency…

TechCrunch makes its picks:

- David Cowan of Bessemer
- Tim Draper
- David Hornik of August Capital
- Josh Kopelman of FirstRound Capital
- Fred Wilson of Union Square Ventures

WSJ writes that fuel cells may soon power our gadgets:

Long-running interest in fuel-cell technologies has accelerated recently amid soaring oil prices. Ultimately, the hope is that fuel cells will be able to power cars or electric generators for homes. But the technology has been tricky to develop and extremely difficult to commercialize, especially because the bigger power systems needed for cars or generators use lots of parts and, so far at least, have been prohibitively expensive to produce.
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Toshiba and others are developing fuel cells that run on a type of alcohol called methanol -- also initially derived from natural gas. Toshiba's most basic version of the fuel cell is about the size of a cigarette lighter and, like old-style lighters, can be refilled from a bottle when empty. That means users can juice up portable gadgets while on the run rather than plugging into a wall socket to recharge, a feature that could grow in importance as devices like cellphones start to do more things -- like play music or video clips -- and drain more power.

The Economist writes about how Microsoft, Yahoo and Google are fighting over AOL:

Lest anybody pick the wrong metaphor, it is not the case that AOL is “the prettiest girl at the dance”, says Safa Rashtchy, an analyst at Piper Jaffray, a bank. Instead, he says, AOL “is big open real estate and you don't want your competitor to get it.” That is because the vaguely defined and fast-changing “web-portal” industry, though still young enough to be the fastest-growing advertising medium, is also showing the early signs of maturity. That would suggest that this industry, like many others, will evolve towards three large generalist players and several small niche firms, a phenomenon that Jagdish Sheth and Rajendra Sisodia, two academics, call “the rule of three” in a book of the same title. The big question is which three emerge and in what combination.
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Ultimately, it all comes down to the three suitors' estimates of what Mr Varian calls “the power of the default”. Default users are “the great unwashed”, says Mr Varian. They are the ones who, for instance, use MSN because it comes pre-installed in Internet Explorer, the web browser that itself comes pre-installed on new computers. By contrast, teenagers and geeks mix and match their web mail, IM, online maps, search, blogging and so on from whichever service on the internet they happen to like best. Default users are less demanding, older but nonetheless rich enough to target with small hyperlinked text advertisements. For the dealmakers, it all comes down to figuring out how much these naifs, collectively, are worth.

Dave Winer tests Sphere, a blog search engine that will be released soon, and writes: "I don't want specialized search engines, I want better search engines. That's the nature of search, I want to go one place, ask a question and have the network do the searching. The more places I have to go the less it's search. Think about it...Perhaps Google and the other major SEs should have some kind of plug-in architecture that lets us build our own search engine out of components we like. Then I could add Sphere to MSN, or Mememorandum to Yahoo search, and they could do their magic without being bought by one or the other."

TechnoSight Blog has an interview with Sphere's CEO.

One of the first things an entrepreneur starting a products venture needs to think about is the availability of capital. If limited capital is available, then the most likely path which comes to mind is thinking about taking up services. I have seen many entrepreneurs do down this path – and never return.

I don’t have anything against doing IT or software services. In fact, the entire success of the Indian IT industry is built on the outsourcing model. My point is that it is doing services and products is like trying to mix oil and water; it just doesn’t work.

Services requires a very different mindset from product development. It comes down to building IP (intellectual property) for others. There is someone else laying out the vision with the services company executing on it. (While this is starting to change, for most smaller projects, this still holds true.) It is also easy to get attracted by the dollar-per-hour earnings that the services business brings. With lower risk and higher short-term earnings, it is not surprising that entrepreneurs who have product dreams quickly leave those aside in favour of an immediate, steady (and growing) revenue stream.

So, how does an entrepreneur bootstrap a product-oriented business from India? If one can raise venture capital (or even angel funding), it becomes much easier because that capital buys time to build out the product and go to market to get customers. But what if that capital is not available? What if an entrepreneur has a big dream, a small team and little else? I have three suggestions:

Forget about Services: I think this is an important decision to make because this can mean going down the wrong path. It is not difficult to get projects to do in India given a few contacts globally and India’s arbitrage advantage. But for the reasons just discussed, doing Services is not going to lead down the Products path.

Focus on India: Too many entrepreneurs I have seen want to focus on creating products for the US market – sitting in India! The first rule of product development is to be close to the market and customer. If one is in India, then one should look at the Indian market. If one wants to focus on the US (or any other market), then get at least some of the top management close to that market. I strongly believe that the Indian market has plenty of interesting opportunities in the technology space – if one is prepared to look deep. India has the opportunity to leapfrog and become a model for addressing other emerging markets.

Get First Customer: Even if an entrepreneur eschews services and focuses on India, the challenge of getting the first customer still remains. This is where an entrepreneur has to use a mix of personal passion, network of contacts, and a vision of tomorrow’s world to try and get the first one or two customers. Profitability from selling to them is not as important as the opportunity. As the solution gets built, the entrepreneur has to architect it right so much of it can be re-used for others. In a way, the first customers help the entrepreneur bootstrap the business.

Building product companies out of India is not easy – there have been only a few success stories. But it can be done. And for the ones who venture down this path, monetary rewards and great personal satisfaction lie ahead. But it is also a treacherous road strewn with failures. At the end of the day, it is the entrepreneur who has to make the call based on a self-understanding and analysis of the market realities. To those who chose the product path, what I’d like to offer (as I have often done in these columns) are these inspirational words from Dan Bricklin, the creator of VisiCalc, the first computer spreadsheet:

Being a successful entrepreneur is tricky. You have to live with having control and not having control at the same time. It’s like this: In big business, when you need to cross a river, you simply design a bridge, build it, and march right across.

But in a small venture, you must climb the rocks. You don’t know where each step will take you, but you do know the general direction you are moving in. If you make a mistake, you get wet. If your calculations are wrong, you have to inch your way back to safety and find a different route.

And, as you jump from rock to slippery rock, you have to like the feeling.