Web 2.0 Immune to Recession?

In a post entitled Belt-Tightening in Corporate IT Will be Good For Web 2.0, Eric Schonfeld argues that the projected recession in IT spending will be good for Web 2.0 companies. He claims this, because he thinks companies will increasingly switch from expensive enterprise applications to web-hosted, web 2.0 applications to save money. I think there are two main problems with this argument:

  1. Most web 2.0 companies aren’t application companies.
  2. Most web 2.0 are highly reliant on advertising revenue.

So, when I see a good argument why the coming recession in advertising won’t hurt web 2.0 companies I’ll listen. Right now, though, I expect a shake-out in 2008. Of course, none of this applies to Google who everyone agrees will grow revenue forever.

UPDATE: For Dan Farber’s much more polished and reasoned take on this issue, see Tech Spending Taking a Dip (Naturally) in 2008.

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