I'd say they're wrong. The laws of economics don't change. Winner take all markets with big positive network externalities are the same whether it's now, 100 years ago, or a 100 years from now.
However, I think they have picked niches where there are network effects, but not huge, crushing ones, so they're not going to see that.
I think this is a conscious choice on their part. Just like there are many other "niches" in the long tail that can be served without hazard from network effects.
I'd say they're right. The web is expanding markets. The remaining fraction of the market after the giants have had their lion's share is still larger in the 'web' world - perhaps not in percentage terms but in absolute dollar terms. Which is what matters.
I'm not going to say that technology hasn't changed anything - it's doubtless opened some things up. But where there are big network effects, it is still going to lead to a dominant player in a given market. Where there aren't, there is room for more competition. That's always going to be true, whatever technology you're talking about.
“Ignore basic economic principles at your own risk. Technology changes. Economic laws do not.” -- Hal Varian (who is now Google's Chief Economist)
http://www.squeezedbooks.com/book/show/7/information-rules-a...