WSJ writes about some of the recent investment announcements:

Microsoft Corp. said it plans to invest $1.7 billion and hire 3,000 additional people in India over the next four years, making it the latest in a line of foreign companies to pledge more than a billion dollars each to tap growth and talent in the subcontinent.
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Microsoft isn't alone in its rapid expansion plans in India. This week, Intel Corp., the world's largest chip maker, announced plans to invest more than $1 billion in India over the next five years. Meanwhile, in October, Internet-equipment maker Cisco Systems Inc. unveiled plans to invest $1.1 billion in India. Late last month, SemIndia Inc., a consortium of Indians living outside the country, said it planned to invest $3 billion to use Advanced Micro Devices Inc. technology to produce microprocessor chips here.

The Economist's 2006 Annual has an article by Niklas Zennström, founder and CEO of Skype Technologies:

There is now a relentless need to innovate at a pace modern customers demand. Unencumbered innovation requires speed and vigilance, and slowing down to keep an eye on the competition is a distraction that keeps you from your goal. Competition is healthy, of course, and as the market for internet voice communication matures, competition will continue to grow. This will spur even more significant innovation, benefiting consumers with lower prices and better choices.

To create true change, the focus must be on proving new definitions and value, not just reducing costs for a known commodity. Disruptive companies must provide consumers with ways to enhance their lives, increase their productivity and enable operations to run more efficiently and cost-effectively.

Alex Bosworth has some suggestions. Among them:

# Form driven interaction.

Forms are slow. Very slow. Editing a tag on a del.icio.us bookmark? Click on the edit link to load the edit bookmark form page, then edit the field and hit submit to wait for the submission to go through, then return to the previous page and scroll down to find the bookmark to see if the tags look right. Ajax? Click on the edit link to instantly start changing tags, click on the submit button to asynchronously send off changes to the tags and quickly see in place what changed, no reloading the entire page.

# Deep hierarchical tree navigation.

First of all, applications with deep hierarchical tree navigation are generally a nightmare. Simple flat topologies and search/tagging works very well in most circumstances. But if an application really calls for it, use Javascript to manage the topology ui, and Ajax to lessen the burden on the server by lazy loading deep hierarchy data. For example: it's way too time consuming to read discussion threads by clicking through and loading completely new pages to see a one line response.

Knowledge@Wharton writes:

From its inception, Yahoo has considered itself a media player, or -- as Yahoo co-founder Jerry Yang has said numerous times in the company's early years -- a media platform. The company has held true to its roots as it has expanded by, for example, hiring journalists such as Kevin Sites, who reports from the ground in Iraq, finance columnists, including Wharton finance professor Jeremy Siegel, and writers covering everything from retirement to fantasy football.

Wharton marketing professor Xavier Dreze suggests that Yahoo's approach has allowed it to fly under the radar and still compete with multiple players across many Internet markets. As a result, Microsoft competes with Yahoo, but also partners with it. "Microsoft is just more comfortable with Yahoo," says Dreze, noting that Microsoft and Yahoo teamed up on October 12 to make their instant messaging software compatible.
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Over time, Yahoo could become as big a thorn in Microsoft's side as Google, says Wharton legal studies and business ethics professor Kevin Werbach. "Google is more threatening to Microsoft today because of the breadth of its ambition, but ultimately Yahoo represents a similar challenge in moving the center of gravity away from the desktop to the web."

Phil Wainewright writes:

Advertising is by far the least effective of the three. It's probably a better option than selling perpetual licences for two bucks a time, but it will rarely produce enough income to fund operation and development of a service that offers real value to customers.

Subscription remains the most popular mechanism among vendors, mainly because it has the advantage of being simple to administer and easy to understand.

Transaction commissions are set to become the most important funding mechanism for online applications as time goes on.

Let me start this week by encapsulating what I think were some of the best blog posts and articles of the year. These writings influenced my thinking significantly.

1. Adaptive Path on Ajax

Ajax has been the biggest innovation to the Web interface in recent times. The term was coined by Jesse James Garrett of Adaptive Path in a February essay. It has been the rage since for software development, and has spawned numerous start-ups. This is what Garrett wrote:

Take a look at Google Suggest. Watch the way the suggested terms update as you type, almost instantly. Now look at Google Maps. Zoom in. Use your cursor to grab the map and scroll around a bit. Again, everything happens almost instantly, with no waiting for pages to reload.

Google Suggest and Google Maps are two examples of a new approach to web applications that we at Adaptive Path have been calling Ajax. The name is shorthand for Asynchronous JavaScript + XML, and it represents a fundamental shift in what’s possible on the Web.

Ajax isn’t a technology. It’s really several technologies, each flourishing in its own right, coming together in powerful new ways. Ajax incorporates:

standards-based presentation using XHTML and CSS;

dynamic display and interaction using the Document Object Model;

data interchange and manipulation using XML and XSLT;

asynchronous data retrieval using XMLHttpRequest;

and JavaScript binding everything together.

An Ajax application eliminates the start-stop-start-stop nature of interaction on the Web by introducing an intermediary — an Ajax engine — between the user and the server. It seems like adding a layer to the application would make it less responsive, but the opposite is true.

Instead of loading a webpage, at the start of the session, the browser loads an Ajax engine — written in JavaScript and usually tucked away in a hidden frame. This engine is responsible for both rendering the interface the user sees and communicating with the server on the user’s behalf. The Ajax engine allows the user’s interaction with the application to happen asynchronously — independent of communication with the server. So the user is never staring at a blank browser window and an hourglass icon, waiting around for the server to do something.

Ajax is one of the strands which epitomises the discussion around Web 2.0 and the web as platform. Tim O’Reilly captured the essence of the transition in a September essay which highlighted seven themes:

1. The Web As Platform
2. Harnessing Collective Intelligence
3. Data is the Next Intel Inside
4. End of the Software Release Cycle
5. Lightweight Programming Models
6. Software Above the Level of a Single Device
7. Rich User Experiences

One other feature of Web 2.0 that deserves mention is the fact that it's no longer limited to the PC platform. In his parting advice to Microsoft, long time Microsoft developer Dave Stutz pointed out that "Useful software written above the level of the single device will command high margins for a long time to come."

Of course, any web application can be seen as software above the level of a single device. After all, even the simplest web application involves at least two computers: the one hosting the web server and the one hosting the browser. And as we've discussed, the development of the web as platform extends this idea to synthetic applications composed of services provided by multiple computers.

But as with many areas of Web 2.0, where the "2.0-ness" is not something new, but rather a fuller realization of the true potential of the web platform, this phrase gives us a key insight into how to design applications and services for the new platform.

To date, iTunes is the best exemplar of this principle. This application seamlessly reaches from the handheld device to a massive web back-end, with the PC acting as a local cache and control station. There have been many previous attempts to bring web content to portable devices, but the iPod/iTunes combination is one of the first such applications designed from the ground up to span multiple devices. TiVo is another good example.

iTunes and TiVo also demonstrate many of the other core principles of Web 2.0. They are not web applications per se, but they leverage the power of the web platform, making it a seamless, almost invisible part of their infrastructure. Data management is most clearly the heart of their offering. They are services, not packaged applications (although in the case of iTunes, it can be used as a packaged application, managing only the user's local data.) What's more, both TiVo and iTunes show some budding use of collective intelligence, although in each case, their experiments are at war with the IP lobby's. There's only a limited architecture of participation in iTunes, though the recent addition of podcasting changes that equation substantially.

This is one of the areas of Web 2.0 where we expect to see some of the greatest change, as more and more devices are connected to the new platform. What applications become possible when our phones and our cars are not consuming data but reporting it? Real time traffic monitoring, flash mobs, and citizen journalism are only a few of the early warning signs of the capabilities of the new platform.