There are very interesting and successful proprietary applications out there. A good example is bit.ly, one of my favourites.

Yahoo did not killed Delicious (launched in 2003), Google Reader (2005), FriendFeed (2006), Twitter (2007) and bit.ly did!

Of course that whole time, we on the Delicious team were watching the rise of those apps, thinking "Wouldn't it be cool if we could..." but being told "Maybe, though first you'll need to..."