Looking back over 2006 it's clear that we've experienced one of the most remarkable growth surges in Web application history. Literally hundreds of Web sites and applications were launched this year and brought to our attention via the popular review sites like Michael Arrington's TechCrunch, Pete Cashmore's Mashable , and Emily Chang's eHub. And our very popular list of last year's Best Web 2.0 Software of 2005 was ultimately read by hundreds of thousands of readers in over a dozen languages. This makes it clear that not only is the ongoing supply of capable, online software flowing freely but that there is high-demand from the general Web populace as well.
The overall trend: We have begun moving all our software, data, and even our social activities onto the Web en masse and the demand for high-quality online sites and applications that support this shift in primary focus from the PC to the Internet is there in vast numbers (there are now 1 billion users on the Web today). The net result is that 2006 brought us some of the best online applications ever created and you can see the results for yourself below.
Last year's Web 2.0 software list we had a variety of categories ranging from Image Storing and Sharing to Web-Based Word Processing. Since then, the scope of Web applications has broadened considerably as has the definition of Web 2.0 itself, which has formalized and settled a bit as well. This reflects the real diversity in online applications from every kind of social media site to online productivity apps. Thus this year's categories have been consolidated and new categories added. Most notably I've added a Office 2.0 Suite category to cover the growing lists of ensemble software sites such as Zoho's Office Suite that are increasingly treading squarely on the integrated feature set that traditional productivity suites like Microsoft Office and Open Office. We've also added an Honorable Mentions section to reflect the fact that some of the new Web applications are so innovative that they nearly defy description but clearly deserve to be highlighted.
So I hope you enjoy touring the applications on this list. Finally, this list is entirely subjective and any errors or omissions are mine alone. You may not agree with some of the software I've listed but this isn't a one-way web; I definitely encourage you to list anything you feel we missed or got wrong below in the comments (and last year we received hundreds of submissions via comments). Please use the wiki link syntax ([url text_desc]) in the comments to make sure you embed plenty of good links.
Note: The site did not have to launch in 2006 to make this list, it just had to provide the best offering in a given category during the calendar year.
The Best Web 2.0 Software of 2006
Category: Social Network
Best Offering: MySpace
Description: The pre-eminent granddaddy of all social networking sites, MySpace needs no introduction. And while it's taken hit in numerous quarters for the quality of its users and content, for its lack of attractiveness, and even garnered a reputation for being a somewhat unsafe place to socialize online, it's still far and away the leader in terms of users. Easy to use and very customizable, MySpace offers some of the best user experience as well. And users apparently agree. If you take a look at the (unscientific and off-the-cuff) Alexa traffic chart of the other top social networking sites, you'll see that MySpace remains an absolute juggernaut. And it's because of this very fact MySpace remains the place where the most users are and there are now those fully taking advantage of that fact. A key trend: Businesses are increasingly opening up storefronts on MySpace. Why? It's easy to do and a great draw for customers in a younger demographic. Hollywood has taken to promoting its films with MySpace profiles and countless companies are using it has a marketing and advertising platform such as HBO with their Entourage car giveaway earlier this year. And while commercialism of just about any new media is inevitable, it reaffirms that MySpace remains the king. That's not to say that plenty of other good social networking sites don't exist. But they simply can't come close to matching in terms of scale, which means MySpace remains the most significant online community today.
Runners Up: 
Category: Start Pages
Best Offering: Netvibes
Description: Netvibes won this category in last year's list and also gets the #1 spot this year. The start page pheneomenon has been an interesting online Web app trend that got underway in 2005 with the release of numerous different products in this space. In short, start pages provide a roaming desktop that can host all of a user's most common Web information such as news, weather, e-mail, RSS feeds, and more, all in a single user-controlled Web page. My overview of these earlier this year on ZDNet was Slashdotted, just another indicator of the apparent popularity of these personalized Web desktops, usually powered by Ajax but often by Flash as well. During 2006 however, not many of these products saw serious growth and their visitor traffic growth has been slow. Except for Netvibes that is, which has been growing month by month by offering things like an extremely polished look and feel, localization in many different languages, and open API. The last piece is critical for allowing others to add to and build upon the Netvibes platform (turning applications into platforms being a key Web 2.0 technique) and result of this shows clearly in the Netvibes product. The Netvibes developer ecosystem is vibrant and growing with over 500 different add-on modules from Comic of the Day to a module that will quickly turn any document into a PDF file. While Live.com has much more overall traffic than Netvibes, it's likely due to Microsoft's own mega-ecosystem since personalization has moved to the back burner of the front page of Live.com and has been upstaged by Microsoft's search engine. Click here for a more complete list of existing start pages.
Runners Up: 
Category: Social Bookmarking
Best Offering: StumbleUpon
Description: StumbleUpon has unseated last year's winner, del.icio.us. Search engines like Google can help you find the material you're looking for using keywords, but social bookmarking sites can let you directly harness the collective intelligence of other users on the Web the directly share personal interests with you. Theoretically, this can help you find what you're looking for better, but what it really ends up doing is helping you find things that you never knew existing, but wished you did. StumbeUpon installs a toolbar in your browser and lets you collaborative rate content. This improves the recommendations for other users and behavior matching is used to find users like you and pages that you haven't seen before, on-demand. One indicator I use for the popularity of a social bookmarking site is how much inbound traffic I get from it, and I've seen a clear switch during the year from del.icio.us bookmarks to StumbleUpon referrers. StumbleUpon reports that it has over 1.7 million registered users and growing. Bottom Line: Del.icio.us is still my favorite bookmarking service, but for true content discovery, StumbleUpon now makes it much easier to find new content than del.icio.us does. StumbleUpon is a winner by a nose for taking content discovery to the next step.
Runners Up: 
Category: Peer Production News
Best Offering: Netscape.com
Description: In a decision that likely won't be agreed with by the users of last year's winner in this category, Netscape has been selected as the best all around peer production news site. Though Digg is more popular in terms of traffic than the next three most popular peer production news sites in this category combined (though only barely), Digg remains primarily a technology news site, with actual general purpose news seeping in occasionally around the edges. In contrast, Netscape consistently delivers news on its front page that is genuinely newsworthy and geared towards a broad audience, combined with a mature community that frequently engages in genuine civil discourse in the comments. This highlights the demographics of the site of course since peer production sites have the news stories delivered by their users and the top stories selected by other users. Thus Netscape currently provides the best overall mix of news content and community and wins this year's peer production news category.
Runners Up: 
Category: Social Media Sharing
Best Offering: YouTube
Description: The rise of YouTube this year has been one of the most phenomenal rises of an online property in Internet history. With up to 100 million viewers in a given day and averaging 65,000 videos uploaded per day, YouTube has successfully leveraged network effects for growth and viral adoption with a success that few have ever equaled. Last year image sharing was the hot social media sharing play, but 2006 is clearly the year of video. You can find a video on just about anything you can think of on YouTube and its radical ease of use, innovative tagging infrastrcture, and drop-dead easy to host YouTube badge (with the Javascript snippet it for it right next to each and every video) sets the standard for the rest of the industry. The selection for this category was easy and YouTube was the clear choice.
Runners Up: 
Category: Online Storage
Best Offering: Amazon's S3 with JungleDisk
with 
Description: I did a round-up earlier this year of most of the leading online storage products (and there are many), but the one that I have ended up using the most by far and ultimately selecting as my permanent online storage solution is Amazon's terrific S3 storage Web services API combined with Jungle Disk for Windows Explorer integration. S3 stands for Simple Storage Service and that's exactly what it is. There's no limit to how much data you can store with S3, how much data you can transfer to and from your home or work PC from S3, and S3 is very fast, reliable, secure, and cheap. I now host hundreds of gigabytes of data in my S3 account for a few dollars a month and I can access it from anywhere I travel without having to worry about backups or otherwise maintaining my data to make sure it's not lost (Amazon does it all for you). While there are other good online storage solutions, nothing comes close to the freedom and security of using S3 since Amazon is one of the leading Internet companies and will likely be around for a long time.
Runners Up: 
Category: Office 2.0 Suite
Best Offering: Zoho Office Suite
Description: The Office 2.0 phenomenon become a true reality this year as just about any kind of business application could be found in a purely browser version. Zoho has been diligently releasing product and product this year and now has entire online productivity suite that has a word processor, spreadsheet, wiki, project management, presentation, contact management, and much more. While you can find the individual pieces from various other Web apps, Zoho provides a nice integrated, one-stop package that is very reminiscent of Microsoft Office. Microsoft and Google have been slow to get fully into this space and it may very well end up that smaller players establish dominance in an area that most expected the Big Two would dominate in this space. And an important space it is too: Online apps ultimately will be where our software and data is for most users, and establishing leadership in this product space with the Web as the only major new software paltform on the horizon is a major open opportunity.
Note: Last year I broke the individual categories of Office 2.0 out, and with the overall quality of such tools now being fairly consistent, I'm now highlighting the suite aspect as an important trend trend in 2006.
Runners Up: 
Category: Honorable Mentions
Blog Filters: Like last year, Gabe Rivera's brilliant meme engine for the blogosphere still reigns supreme as far as taking the pulse of the conversation on the Web right now. And its permalinking structure with history support is just about the best example of Web design and content addressibility that I've seen. If you aren't using TechMeme daily to see what's going on, you don't know what you're missing.
Social Music: Online music doesn't get easier than Pandora, which has now become my favorite way to discover new music. Just a single Web page written in OpenLaszo, Pandora creates a custom radio station for every visitor in seconds based on the names of artists or songs you know, and then continously plays new music related to what you suggested. Now with social features, Pandora serves The Long Tail of music demand very nicely and is very easy to use and it shows: Pandora reportedly has over 2 million users.
Professional Social Network: 2006 was the year that having a LinkedIn profile was almost mandatory if you were in business, particularly now that all profiles have a URL. Almost everyone has received a LinkedIn invitation at some time or other, and LinkedIn really made it on the radar this year. While lacking robust social networking features such as blogging, LinkedIn's core functionality of maintaining a network of contacts that is automatically updated as people move around from job to job is just about the best out there.
Consumer Generated Advertising: The Chevy Apprentice campaign was just about the best example of a true Web 2.0 phenomenon as GM opened up the doors in early 2006 of a competition for anyone to create online videos about the Chevy Tahoe SUV, tends of thousands which were ultimately created and submitted. GM even left the negative ads up and sparked a real conversation about how much control of their marketing message should companies hand over to their customers. Since the original competition site is no longer online, click on the picture above or here to see the YouTube hosted copies of the ads that were created, some of which are very creative and are just as often negative as they are positive.
Online File Conversion: There is a growing list of online file conversion sites, but Zamzar has an impressive list of support file formats for documents (including MS Office docs), images, audio, and video including WMV, AVI, and many more. More importantly, the site is incredibly easy to use and very handy when you need to do an urgent file conversion while on the road or want to avoid the hassle of the numerous freeware downloads.
Web Application Stack: Ruby on Rails took a front seat this year as it become one of the most popular new ways to develop online database-driven software, Web 2.0-style (collective intelligence apps) or otherwise. I wrote up a more detailed story about Ruby on Rails for ZDNet that's worth reading if you want more details but the big take away is that Ruby on Rails is optimized for ease-of-development, extremely rapid results with little effort (10-20 times more productive that previous platforms like J2EE and .NET). I suspect that in 2007 the majority of new Web apps will be developed in Rails or PHP, they're just that much better.
Mashup Tool: While next year will see the release of a flood of end-user mashup tools, a few good ones hit this year, but DataMashups.com gets the credit for getting there first and with a surprisingly robust product. I recently wrote up the state of mashups for 2006 as well as a round-up of mashup tools , and while it's still an product space that is in its very early stages, the promise is impressive for users to soon be able to assemble the software solutions they need onthe fly. Expect the mashup tool market to start growing rapidly in 2007.
And that's it for now. And since this is a Web 2.0 blog, please do contribute your own mentions and nominations below and I'll do an update a few times with some of the best suggestions so we can make this the best Web software list of 2006.
