Web 2.0 is set for spending boom

By Maggie Shiels, BBC News, San Francisco

Web 2.0 is set to be embraced by Enterprise 2.0 as businesses prepare to spend nearly $5 billion by 2013 on social networking tools.

Over half of the companies in North America and Europe see Web 2.0 as a priority for next year, a report says.

The news comes as San Francisco plays host to the Web 2.0 conference on next generation of the web.

"This is where we see the future of the web," said conference co-chair Jennifer Pahlka.

"The companies making announcements here are building that future."

Forrester, the research company which carried out the Web 2.0 survey, believes the technologies being developed and unveiled over the coming days represent "a fundamentally new way" for businesses to communicate with employees and customers.

Priority

The report found that consumer giants such as General Motors, McDonald's, Northwestern Mutual Life Insurance and Wells Fargo Bank will drive much of this growth and have already embraced tools like blogs, RSS feeds, podcasting and social networking.

Analyst Oliver Young estimates that another 56% of North American and European companies regard Web 2.0 to be a priority in 2008.

"If I wanted to be anywhere in the Web 2.0 economy, I'd want to be on the enterprise side," says Mr Young.

Forrester analysed seven Web 2.0 categories: blogs, mashups, podcasting, RSS, social networking, widgets and wikis. Of these, social networks will attract the greatest levels of investment but even then that will be dwarfed by the multi million dollar revenues the software industry commands.

Mr Young says "Advertising revenue has been hard to come by with even sites such as Facebook finding it hard to monetise their high volumes of traffic.

"Companies are now looking over their shoulder to the business market where even revenues of $50 (£25) per user per month are looking increasingly appealing"

He also points out that there will come a saturation point and investment will start to slow down as Web 2.0 applications become increasingly prevalent and absorbed into collaborative software packages.

'Disneyland for web nerds'

In the meantime, the world of business will get to see what is on offer in the Web 2.0 world as vendors take the wraps off a raft of products, services and applications during this week's conference in San Francisco.

Everything from the latest in cloud computing to blogging software and from mobile technology to rich media applications will be on show.

With around 7,000 people expected to attend, some bloggers have already nicknamed the conference a "five-day retreat to the Disneyland for grown-up web nerds".

Also taking part is a Web Mission from the UK which consists of more than 20 entrepreneurs looking to forge useful business connections and showcase British internet companies.

The businesses, which were selected from over 100 applicants, were chosen because they have the potential to expand into the US.