Last year about this time I did a post celebrating the best Web companies of 2004. I was planning on doing a mega version of that this year, extending it to software and services. But then Dion came up with his excellent list of best Web software of '05, as close to definitive as you'll get. So I'm going to focus once again on companies and innovators - the people behind the products and services.

Best Web Bigco of 2005: Yahoo!

Last year I thought Google was the best bigco, with Amazon a close runner-up. As I wrote last year: "2004 for Google saw the release of Gmail, Orkut and Google Desktop Search, the popularization of AdSense, and an IPO." Pretty hard to top that. So it was curious that this year Google didn't fire as many convincing shots. They still had successes, notably Google Maps and the all-encompassing Adsense and Adwords. But they had a number of underwhelming products launches too: Google Talk, the RSS Reader, Personalized Homepage, even the potentially big classifieds offering Google Base was a fizzer (as a product).

Amazon had a quiet innovation year by their standards, but they reminded us of their presence right at the end with two thought-provoking launches: Mechanical Turk and Alexa web services.

So if Google and Amazon didn't make the grade this year, who did? Two big companies stood out for me: Yahoo! and Microsoft.

You may be surprised at the latter choice - Microsoft a Web company? But in 2005 Microsoft has embraced the Web as a development platform in a big way. In late June they announced RSS integration in Vista, the next Windows OS. Then in November came an extension to RSS called Simple Sharing Extensions (SSE). This was followed by The Live Era announcements - Windows Live and Office Live. Their catchphrase was 'software as a service' and the release of so-called leaked documents by Bill Gates and Ray Ozzie confirmed that Microsoft is meeting the Web challenge head-on.

However the most impressive Web company this year has got to be Yahoo. Ever since they introduced RSS into the MyYahoo portal in 2004, I've been following them closely. This year Yahoo acquired 3 of the trendiest Web services: Flickr (my best LittleCo in 2004), del.icio.us (my runner-up last year!) and konfabulator. As my post earlier this week illustrated, Yahoo has integrated RSS into a whole suite of products: from mobile, to news, to podcasts, to email. They also released Yahoo 360 (a social networking platform), My Web 2.0 (a relatively unsuccessful imitation of del.icio.us), a Podcasting service, Yahoo Shoposphere, ... too many things to mention or link to! They're also still the world's top website. Yep, Yahoo! is the Best Web Bigco of 2005 and I defy anyone to argue with that.

Best Web LittleCo of 2005: 37Signals

As I mentioned above, last year I gave this to Ludicorp - the then independent company that created Flickr (now of course owned by Yahoo). There are a lot of 'smaller' companies that continue to battle away in the shadow of the big companies - not all of them trying to cash out to the bigcos either. Ones that spring to my mind are Feedburner, Technorati, Feedster, 43Things.com, Topix.net, Findory, Odeo, Broadband Mechanics, WebJay, Jotspot, Six Apart, PubSub, Rojo, Newsgator, MySpace, Facebook, Gawker, zvents, Flock, Blogbridge, Chandler, Firefox, Adaptive Path, Spanning Partners, SocialText... I could go on all night and I apologize to those I missed mentioning. 

But the one LittleCo that really stood out in the Web world in 2005, based on the buzz it created for itself and its almost slavish 'less is more' design philosophy, was 37Signals. Their flagship product is Basecamp, a web-based project management product. Their other claim to fame is Ruby on Rails, an open source web development framework created by 37Signals partner David Heinemeier Hansson. Ruby on Rails got rave reviews from developers throughout 2005 and at one point it seemed like every 'cool' Web startup was using Rails!

The other thing I have to admire about 37Signals is the community of people they've created around their products and philosophies, centered at the Signal vs Noise weblog. The number of comments they get on that weblog is phenomenal. Love 'em or hate 'em, 37Signals shows that a little Web company can still have a big impact.

Most Promising Web Company/Innovator: Memeorandum & Digg.com

Last year I gave this award to Feedburner, which I said "burst onto the scene in 2004 with the one essential service that bloggers were missing - a way to track RSS statistics." They haven't let me down in 2005, continuing to innovate and becoming the best RSS Publishing service around. 

When I think about what will be the big products and services in 2006, I look (as I did last year) to RSS services and also next-generation search services. There's a real need for search services that can not only aggregate the vast amount of content on the Web - but effectively filter and organize that content based on individual preferences. There are some promising companies tackling this big problem: Rojo, Findory, Newsgator, PubSub, Topix.net, digg.com.

One innovator - not a company but a single person, as it often is when starting out - came up with a great solution in 2005 that captured the imagination of many people. Gabe Rivera's memeorandum bowled me over when he first showed me the beta in September this year. It very quickly became one of the few sites I continually visit, to check out the latest technology news. It's not perfect and I think Gabe would be the first to admit that, but the mix of clustering and aggregation is IMHO currently second-to-none. It's a hint at what I hope to see more of in 2006. If Gabe adds personalization to the mix, well...

Digg.com is also an extremely promising service. It's already overtaken Slashdot in many regards, but what impresses me is the vision of the digg developers for future enhancements. In a BusinessWeek interview, the founders spoke of their plans to make digg customizable:

"One of the things we're already developing is making digg as customizable to the user as possible. You may want to create your own version based on certain interests or create category views that allow you to see those interests. There are lots of different ways we plan on presenting the data."

They also mentioned opening up data with APIs and making digg "a little bit smarter".

Memeorandum and digg.com: two services to keep an eye on in 2006.

Summary

2005 has been a great year for web-based companies/innovators and we've seen a few surprises too. The dip in form of Google and Amazon, Microsoft coming to the party big-time, Yahoo streaking ahead of them all and set to challenge the big media companies, Feedburner moving into item-level feed management late this year (a sign of things to come in '06), 37Signals being an exemplar of how to run a small Web business, memeorandum and digg.com blowing us away with their innovation.

I hope 2006 continues to roll out great Web products and services. I can't wait to see which companies make it big in '06!