The Year Online

Dec. 26, 2008— -- Our collective obsession with social-networking sites continued in 2008, as did their search for a viable business model. Although economic conditions have been grim for the industry in the past few months , enthusiasm for the sites continues to run high. Twitter, a popular but non-money-making poster child for the whole Web 2.0 industry, spawned an ecosystem of competitors, knockoffs, plug-ins, and add-ons, some of which struggled to stay afloat as the site strained under the ever-increasing amount of data produced and requested by its users. Users themselves struggled to manage information overload from multiple social-networking services, prompting some companies to come up with ways to streamline by sharing data. However, one of the biggest networks, Facebook, took a different approach: it carved out a position apart from its competitors.

Amid the economic turmoil, some good news was that Web companies became cheaper to start than ever before: they could simply lease access to computer power from a growing list of "cloud computing" providers. On the other hand, since many infrastructure services are offered by large companies such as Amazon and Google, this raised questions about smaller companies' increasing dependence on these giants. (See "Web App Writers: Rejoice, Beware.") Amazon's popular storage service also began functioning as a way to draw companies into relying on more and more of Amazon's offerings. And a variety of open-source solutions jumped into the mix, hoping to make it easier for companies to understand how these infrastructure services work, while, in some cases, also grabbing a bit of market share for themselves. Meanwhile, the old guard rushed to catch up. Apple's MobileMe stumbled initially, and few people seem to understand what Microsoft's LiveMesh was supposed to do. But Microsoft is pushing hard to realize a plan in which cloud computing augments software rather than replaces it.