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Enterprise spending on Web 2.0 technologies will surge over the next five years, reaching $764 million in 2008 and growing at a 43% compound annual growth rate to reach $4.6 billion globally in 2013, despite a future marked by commoditization, according to Forrester Research.

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The five-year Forrester forecast, “Global Enterprise Web 2.0 Market Forecast: 2007 To 2013” includes a breakdown of business spending on social networking, RSS, blogs, wikis, mashups, podcasting, and widgets, and analysis of enterprise Web 2.0 spending across North America, Europe, and Asia Pacific.

Some 56% of North American and European enterprises (firms with 1,000 or more employees) consider Web 2.0 to be a priority in 2008 according to another recent Forrester survey; more than half are buying or considering Web 2.0 technologies:

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Large businesses are spending more on employee collaboration tools than customer-facing Web 2.0 technologies, but that trend will reverse by next year, Forrester expects:

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In 2013, investment in customer-facing Web 2.0 technology will dwarf spending on internal collaboration software by nearly a billion dollars, according to the forecast.

“Software firms can make money selling enterprise Web 2.0 software, but it will not be an easy road to hundred-million-dollar run rates,” said Forrester Research Analyst G. Oliver Young.

“The market for enterprise Web 2.0 tools will be defined by commoditization, eroding prices, and incorporation into enterprise collaboration software over the next five years. It will eventually disappear into the fabric of the enterprise, despite the major effects the technology will have on how businesses market their products and optimize their workforces.”

The key question for software firms is who pays for Web 2.0 in the enterprise. Three challenges face vendors, according to Forrester:

  1. IT shops are wary of what they perceive as insecure, consumer-grade technology
  2. Ad-supported Web 2.0 tools on the consumer side have set “free” as a starting point.
  3. Web 2.0 technologies enter a crowded space dominated by legacy software investments.

More from the report is available at ReadWriteWeb and ZDNet’s Between the Lines?blog.

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