Web 2.0 market to reach $4.6 billion by 2013

The buying market for Web 2.0 technologies such as blogs, wikis and social networks will grow to $4.6 billion in 2013, predicts a Forrester Report released Monday.

Oliver Young, the analyst who wrote the study, says the number of vendors offering Web 2.0 software will likely shrink during the next few years as vendors such as IBM and Microsoft put a chokehold on the market.

The report identified "Web 2.0" as consisting of seven categories: blogs, mashups, podcasting, RSS, social networking, widgets and wikis. Forrester accounted for sales of these technologies both for external use (such as the blogs you read on this Web site) and internal use (such as a corporate wiki that only that company's users can access); and it spanned North America, Europe and Asia Pacific.

The report indicated that the Web 2.0 technology market is in for some abrupt jumps to reach a predicted $4.6 billion. In 2008, the report contended, companies with a 1,000 or more employees will spend only $764 million on Web 2.0 technologies.

That means spending on Web 2.0 will grow at an annual rate of 43 percent to reach $4.6 billion in 2013, and Young says more and more enterprises will have to view these technologies the way we view productivity software such as Office today: it's essential, and will eventually just be "there."

Young also emphasized that the $4.6 billion, though at first glace sounds huge, only accounts for a fraction (around 1 percent or less) of the enterprise software market. "It's a drop in the bucket," he says. "It's not very much in actuality."

The report noted that 56 percent of enterprises in North America and Europe said Web 2.0 will be "on the agenda" in 2008.

In the race to provide these technologies, the large install base of Microsoft's SharePoint will be a big advantage for that company Young says, even though many of its collaborative technologies, such as the wiki and blog functions, lag behind that offered by start-up vendors in terms of ease-of-use and functionality.

"But enterprises don't just buy it [SharePoint] for blogs and wikis," Young contends. "They buy it for a bunch of things [such as file management], but those enterprise Web 2.0 tools will happen to be there."

Many enterprise Web 2.0 vendors, such as Jive Software, Socialtext, and Atlassian have already designed their products to integrate with SharePoint in the hopes customers might pick their product to hook into it rather than use Microsoft's out-of-the-box version of a social network, wiki or blog.