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Shake up Coming in the Cloud

There is no doubt that 2010 was the year of the “cloud” when it comes to Internet computing. Web applications also multiplied like spring rabbits. That means there is plenty of duplication in the space, with thousands of players carving out market share in a highly fragmented market. The time is ripe for consolidation at all levels.

Whether we look at e-commerce solutions, video hosting, CRM applications, or content management systems the field is crowded. As these companies continue to scratch and claw for market share there is every reason to expect to see many competitors join forces in various combinations.

FeedMyApp, a listing service for web applications, has featured over 12,000 web applications in the last 30 months. Pick any category and a dozen duplicate offerings will be available. With the cost of customer acquisition so high, and struggling companies so plentiful, it seems natural that many companies will opt for a strategy of growth through acquisitions.

Google itself has acquired over 125 companies in the last 2-3 years, and there is no sign of them stopping.

We see consolidation happening throughout the web application space all the way through 2011.

We think web business owners with an open mind willing to pursue some creative deal making will be in the driver seat when it comes to consolidation efforts. We think lots of business can get done without a lot of cash changing hands. The trick is to be creative.

Taking time to bring people together and finding ways for them to continue to contribute will be key success factors in the coming consolidation. Most of the young entrepreneurs running these web 2.0 companies are too young to retire and have a lot to offer if the acquiring company has flexibility.

In short, we like the consolidation opportunities in the “cloud” and in the web application space and we firmly believe 2011 will see consolidation efforts begin in earnest.

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