870 some bytes of text vs 24 bytes of text....ok.

But with HTTP compression, and given that text compresses down hugely, is it really such a big deal?

I just tested a 900 byte random text file and compressed it with standard WinZip. It brings it down to < 20 bytes.

Even if you had 100 update panels that generate 900 bytes of AJAX repsonse, you're only up to 2k of data. Is it really worth it?

The ViewState is already compressed. You won't achieve anywhere near that kind of result compressing the ViewState. I'd be surprised if you compressed it even an additional 10%, best case.

The JSON response would get compressed too...

Yes, but at 24 bytes, the compression dictionary would be pure overhead, and would actually add to the size of the download.

No offense, but you're missing the point.

The majority of ASP.NET applications that you'll find online have relatively massive viewstates (though, I've noticed that dotnetkicks has a very lean viewstate. way to go, guys). Even if you can compress all of the response HTML to negligible sizes using gzip, the viewstate round-trip alone is usually significant enough to try to avoid when not necessary.

You're also ignoring the performance cost of reinstantiating all of the controls and running them through their life-cycle in order to render the UpdatePanel's HTML.

Compounded across a respectably sized user base, the savings are absolutely worthwhile. Especially given how easy web methods are to implement.