I'm sorry but I disagree wholeheartedly with this post (and the way you presented it). Competition is healthy for any market, and for the businesses in that market. Giving consumers the option to choose between services means more flexibility to improve on what you have, and how you plan to introduce it.
Yes, Tumblr is a great application backed by some very competent developers out there, but have you given a look at Chyrp (http://www.chyrp.net)? The immediate user may not directly associate it with a tumblelog from the very beginning, but if you look at the way it's created, even look at the code it's obvious that's just what the application is, and it's doing incredibly well on it's own two feet.
Market economies are all about competition, supply and demand. I think you should take another look at what you've written, and what's going on in the web right now.
Tumblr is hosted, Chyrp isn't. There is an obvious differentiation there and it's two unique sets of users.
I agree that competition is healthy. I also agree that there is more than enough room (in most markets) for more than one player. However, once one player has a large amount of traction in the market it is difficult to uproot that player unless you are either a) uniquely different (and not just differentiated on features!), or b) you have an actual marketing budget unlike 90% of web2.0 apps out there.
"Chyrp and Tumblr are two different markets..Tumblr is hosted, Chyrp isn't."
Not entirely (I mean if you look at it rhetorically, you have to host Chyrp somewhere but I understand the dichotomy you argue). If essentially the bottom-line of both applications is to allow the end user to publish content, they're not at all different. They are different in the way you mentioned, hosted vs. non, but not by much. Tumblr does allow you to use a line of Javascript and transcode a Tumblr feed to another site with very little effort.
Chyrp has all the same functionality that Tumblr does, text posts, links, video, audio, and conversations. In that sense, they are almost one in the same; the only differentiation is that yes, Tumblr has more "traction" if by traction you mean 'userbase'.
I think the issue we debate here is market dominance. Tumblr clearly has this, however Chyrp is still an up and coming engine that performs the same tasks with more options for server-side customization, and user interaction. This alone has granted Chyrp a very respectable number of users.
Marketing is less about budgeting, and more about effectiveness and utility of your product. The WoM movement proves this everyday, and with more and more flexibility in social content development and usage, marketing is essentially being performed everyday on YouTube, even Facebook by the users - much less large, seasoned companies.
Yes, Tumblr is a great application backed by some very competent developers out there, but have you given a look at Chyrp (http://www.chyrp.net)? The immediate user may not directly associate it with a tumblelog from the very beginning, but if you look at the way it's created, even look at the code it's obvious that's just what the application is, and it's doing incredibly well on it's own two feet.
Market economies are all about competition, supply and demand. I think you should take another look at what you've written, and what's going on in the web right now.