Web 2.0 Internet-software entrepreneurs are enjoying the smaller size of Web 2.0 development companies, and shunning the megacorp “enterprise softawre” developers.

Rather then entering the market with a confusing and expensive product, this web entrepreneur from 37Signals and his group of close assistant-developers worked to corner a seemingly tiny market: hosted calendars and project management software.

“I think the idea of enterprise software is dead. Enterprise software is kind of a dirty word–big bulky things that never work, were never delivered on time, and are too expensive,” says the main developer from 37Signals to Cnet’s News.com. Enterprise software is still an immense market, and still growing, however, the various changes to the market and competition from major players such as Microsoft make it less attractive than the smaller scale markets.

The past few years has seen a major growth in the number of smaller companies, even one-man operations, developing web-based applications with a “Web 2.0″ look, feel and platform. These companies are attractive because they can be started much cheaper than a traditional software company, some times just the cost of web hosting and a single developer.

37Signals was self-funded by Jason Fried, the founder. The project sucked a couple of bucks here and there from his traditional living expenses until they started to recieve sales of their subscription-based project management software.

“You can build a great business on a niche product because with the Internet, you can reach a million or a half-million people,” said Fried to Cnet News.com.

Hundreds of other such companies have been created in the past few years, such as Upstartle’s Writely. These products are so innovative they almost promote themselves, with blogs and forums constantly discussing the latest features, and the newest releases.

“In the past, you had to do a huge, overwhelming thing–a suite of stuff. Now it seems like you can do a lightweight part, which would’ve seemed like a feature before, that can be stitched together with something else,” said Writely’s co-founder.

In the long-term, it seems small-scale applications will never catch on to the success level Writely and 37Signals present, as they will be simply too expensive and too confusing for a user to work with hundreds of different companies. Various web-entreprenuers suggest a micropayments based system with a centralized billing area for all these Web 2.0 applications - something we could see another entreprenuer picking up on soon.