Business Gets Social

Corporate usage of Web 2.0 explodes

By Joshua Levine

Wikis, blogs and social networking -- once exclusively the Internet playground for techies, kids and dedicated enthusiasts -- are being adopted by corporations at an explosive rate.

The race is on to embrace the power of the Web to harness collective intelligence and sell products in new ways.

For anyone needing proof that Web 2.0 is big business, just look at Microsoft's (MSFT) battle with Google (GOOG) for an equity stake in Facebook, one of the leading social networking sites. Microsoft now owns 1.6% of Facebook after making a $240 million investment, marking a $15 billion valuation for the high-traffic Web site.

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The Race Is On

ChangeWave Research recently completed a benchmark survey on Web 2.0, which confirms the explosion in usage. Our survey of 2,081 Alliance members shows that a huge percentage of their companies not only believe in the benefits of collaborative Web 2.0 tools, but are rapidly moving to implement them in a wide variety of ways.

Key findings include:

• 24% of respondents said their company already uses Web 2.0 social software. Another 8% said they'll begin using it in the next 12 months.
• Focusing on specific Web technologies, we found that wikis (20%), blogs (18%) and social networking (15%) are attracting the most attention.
• Surprisingly, while current users find wikis to be most beneficial to their company, future users think blogs (26%) and social networks (21%) will be most beneficial.

All told, 39% of respondents reported that their companies are very or somewhat willing to use Web 2.0 social software for business purposes.

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But why are companies so hot on using Web 2.0?

The top two reasons given by current users are both internally oriented: To improve internal employee collaboration and to increase internal efficiency and productivity.

However, a wholesale transformation is occurring between current and future corporate users in terms of why they're using Web 2.0 software.

While current users are more internally oriented in their usage, it seems future ones will be far more externally oriented. Here are the top reasons given by future corporate Web 2.0 users:

• To improve internal employee collaboration.
• To improve external customer service and support.
• To increase external brand awareness and loyalty.
• To increase external sales of products and services.

Following the Money

Among respondents whose companies currently use or plan to begin using Web 2.0 software, 35% said they'll spend more resources on it during the next 90 days, while only 2% said they'll spend less.

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To better understand where this corporate investment is headed, let's compare current Web 2.0 users with future ones in terms of where they'll be investing the most money in the next year:

While current corporate users are investing the most money in wikis (26%), future users will make their greatest investment in social networks (22%) and blogs (21%).

But who benefits from this and who really controls the Web 2.0 software space?

Our survey shows it's a relative handful of vendors -- with Microsoft the dominant player in terms of market share across virtually all Web 2.0 technologies, and IBM (IBM) ranked either second or third within each technology.

The Big Guns of Web 2.0

Here are the leading software vendors identified within each Web 2.0 technology:

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Above and beyond the big guns, open source software still remains the No. 1 option for wikis and is also relatively popular for blogs.

Similarly, software developed in-house ranks as the top option for mashups and is also rather common within each of the other Web 2.0 software technologies we asked about.

What Lies Ahead

For all the hype, Web 2.0 is still essentially the same platform as Web 1.0. The real difference is in the way corporations, software developers and legions of users are reshaping collaborative intelligence and networking over the Internet.

Our survey shows that companies big and small are changing their ways of thinking about the power of the Internet, and a Web 2.0 arms race is underway. Concurrently, investors should diligently monitor the activity in this space.

ChangeWave Research will closely track breaking developments in the cascading worlds of Web 2.0 and 3.0 Internet -- and we expect future surveys of our 13,000 early adopters to uncover exciting new investment opportunities.

Stay tuned.

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Josh Levine is editor of ChangeWave MicroCap Investor. The Alliance is a network of 13,000 highly qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.

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