This is just a prediction, but Facebook's IPO may be just the thing to end the king of social media's reign.
I come to you with this suggestion not just because my Magic Eight Ball told me to, but for other more legitimate reasons. For example: According to a new SEC filing, Facebook's profits fell 12 percent in the first quarter of 2012, to $205 million.
The cause of this? Facebook attributes some of it to the change in season (Mark is chilly, or something):
We believe that this seasonality in advertising spending affects our quarterly results, which generally reflect strong growth in advertising revenue between the third and fourth quarters and slower growth, and for certain years a decline, in advertising spending between the fourth and subsequent first quarters.
Fine, fine. But it still doesn't look very good to witness a drop in profit just ahead of one's IPO.
Further, as The New York Times points out for comparison's sake: "Google increased its earnings by 146 percent as it headed into its I.P.O., not falling like Facebook’s profit."
Of course, the decline in profit is just one of the things that suggests Facebook's time at the top may be coming to an end. Let's ponder some others:
Facebook's model is still uncooked. The important thing to remember about Facebook is that it doesn't create anything. Well, fine, it creates a platform on which users all over the world can document the banalities of their existence. But Facebook's ability to continue earning money depends entirely on people's willingness to keep doing that. That may be a risky bet. I don't know about you, but I suspect activity on Facebook -- and perhaps on social sites in general -- will slow down as users become more and more aware of what's being done with their data. That's just the kind of thing that will be scrutinized when Facebook hits the public markets.
Mounting expenses. Another thing to note from Facebook's updated filing is that its expenses nearly doubled from the previous year. As the company continues to invest in growth, buy up scary competitors for "insane" amounts of money, fight legal battles over patents and privacy, and shell out hundreds of thousands of dollars on lobbyists, it could see its profit -- and confidence in its brand -- decline even further, especially if its ad revenue stabilizes.
Popularity vs. stability. Overall, one thing is clear: Facebook, with around 900 million claimed users, is a massively popular site. But in the digital era, popularity comes and goes in a flash, and Facebook's can go away just as quickly as it arrived. Furthermore, "popular" doesn't mean "responsible," nor does it mean "stable." And those latter two happen to matter a lot when we're speaking of a public company. Once Facebook hits the stock markets, the world will begin to care about a lot more than how many users it has and who and what they "Like." With its profit already falling it's not at all clear that Facebook can innovate rapidly enough to remain a financial success.
Nevertheless, Facebook will go public soon. And while Mark Z may not ever retire his hooded sweatshirt and flip flops (and why should he? Have you seen Sergey's shoes?), Facebook itself will be scrutinized as though it were a real live grown-up company.
"New, yet anticipated revenue streams will be come alive. Commerce as you haven't seen on the web will take place. New ways of spending money (digital wallets etc) will have you forget all about today's methods."
Jwallace: I would love to see new revenue streams come to be. Where are they hiding, though, and why has it only been advertising for the past several years? I am certain that the future requires new revenue streams but less optimistic about Facebook and other social networks uncovering and implementing them because they've failed to really do so up until this point. However, I can agree with you to an extent that Facebook will need another revenue stream in order to survive.
Yesterday I heard that the suggestions of a Facebook phone were resurfacing, Many articles point out that FB has repeatedly said it is not seeking a dedicatd handset. My favorite comment on the article I link to is: "With Facebook's weight behind a phone, it is guaranteed that many people, myself included, will avoid the phone entirely."
I wanted to follow up on this to reinforce a point. Forgive my ignorance but I am not already familiar with "FB Script" per se; apparently an API and I'm guessing to either pull from, or both pull from and push data to one's FB account.
I won't bill myself out as "a whiz-bang programmer" but I have an MSCS and have been programming professionally since 1980. I have "seen it all go by" - the advent of C++ and object-oriented programming, the early days of web commercial transaction support, all the 'specialized' languages one after another, PHP, Python, Ruby and whatever next. The love affair with Java on the server side (the best cannons to shoot the least flies).
The actual underlying world is based on protocols. If you want to see what is TRULY emerging "on the Net", that is where I would look, and I don't recall any recent RFCs doing anything really special. Did they fix IRC, for example, to prevent the whole channel piracy problem? I haven't checked but I think the answer is No. That world changes only slowly (until the next "really cool protocol" emerges.)
I write this post partly as an "open question." I would like to know: what makes Facebook "so special"?
jabailo in quotes:
(1) "[...] the platform game is over, and whining about the split milk of My Space isn't going to make you rich. However, jumping in and learning some FB Script might."
Anyone could provide an API to interact with their own site's features - in fact anyone would. What is special here?
(2) "The protocol of Facebook is instantaneous personal communication. So it replaces email, chat and so on with the Wall."
It will be only the 115th such "hey! I've discovered what 'portals' are!" nondiscovery. Really: for every 100 programmers, 85 of them could write some sort of integration code to do similar things.
(3) "But, it does even more. Facebook is challenge to very way we use computers. Facebook inherently is a tool for real world relationships, not a cyberworld of virtual ones."
This is nonsense, and it sounds to me like it was taken from some boilerplate that Facebook publishes. Facebook makes your contacts no more TANGIBLE and PHYSICAL than they were when you dealt with the same contacts electronically NOT using Facebook. The most you could say is that Facebook eases repetitive tasks associated with contacting people - but those contacts are electronic and thus virtual and you've made nothing any more "concrete" than it was by communicating otherwise. Here I would point out that this 'selling point' is PROPAGANDA - because it asserts something it doesn't deliver. You feel better to use Facebook because you "believe" the nonsense about being "better connected than you would have been via email and web alone." How, exactly, are you really "better connected"? I almost feel like this statement could be replaced by "using Facebook makes all your social communications MORE SUCCESSFUL", because that is just as empty a claim as the claim they (you) made.
"It insists on webs of trust based on the physical world. What could be better?"
Better would be Genuine Physical Interaction? Now how about "webs of trust." What does that mean? If I "like" someone, does that mean I trust them? Do you actually think Facebook models, in any way remotely approaching our reality, the ways in which one person "trusts" another? I might trust you to date my sister but not to drive my car. Can Facebook model that? Do I have any means to describe WHAT I trust about another person and WHY? No. So to any extent that "Facebook" claims to "model your reality", what they don't tell you is that their model is incredibly simplistic and largely useless.
This error is reflected in Economics as well. There is a school of thought that says the single piece of information you need in order to run your ENTIRE ECONOMY is just the PRICE of any good and THAT IS ALL. Now, this is an amazingly clever idea and a wonderful theory - well developed - but it is also OBVIOUSLY PATENTLY FALSE. The people who wrote this theory live in Ivory Towers; in their minds if people would just behave according to the assumptions of their model, then all would be good because their model would be correct. That is so self-serving and blind. They're supposed to be delivering USEFUL models and so you have to model WHAT IS, not what is EASY TO MODEL. And they do not have the first notion of what to model IN FACT. The simplest refutation of their notions is that when I am faced with a choice - say $1.00 for a Chinese-made doodad and $1.25 for an American-made same thing - I may well choose the American product despite the price difference. For a REASON, too. It shows that I do NOT just use PRICE as the only factor in making a purchase - so the Ivory Tower model is crap. From the outset.
"Facebook" wants to make a claim to have "organized your reality" for you in some cognitively comprehensive way. That is effectively a claim that they have produced an Artificial Intelligence, and they have done no such thing. I say that all their toys are nonoriginal and obvious; and apart from convenience, the site doesn't really offer anything orignal in a programming sense. Hell, they don't even offer a choice of organizational layout: what if I want others to see my life organized by TOPICS and not CHRONOLOGICALLY, as I said: or even make that a selectable choice?
(4) "The next step is that our businesses may be organized this way. For example, everyone has been searching for the Holy Grail of CRM -- Customer Relationship Management."
I'm ever the contrarian ... CRM here as I perceive it used, means a proactive bothering of your clients to pound more advertising and sales at them. How about an international system of CRM of the nature "I hate advertising and would like to opt out of all of it?" Embedded in this concept of CRM is the notion that people are stupid, passive consumers and that you have the "right" to invade their attention spans to try to push crap on them. I have yet to hear how the industry recognizes that now with the Net, people can specifically elect what, if any, products they would LIKE to hear about.
Implicit under the conversation is the notion that these new invasive techniques are ACCEPTABLE and DESIRED by the Public - and I say that is bullshit; we were never asked if we wanted our world of information to be COMMERCIALLY ORGANIZED AND DEDICATED. In that sense, "CRM" is what businesses want to do that the public probably doesn't want and never asked for: more interaction in hopes of squeezing the last possible cent from sales.
"Putting people's neice's birthdays into a database never really worked. Could Facebook and its honeycomb of personal contacts do a better job?"
Are there not a half-dozen "integrated sales tools programs" of the nature of "Act!"? And I believe what Act! does is aleady far more sophisticated than what Facebook offers. The answer to your question is NO, Facebook is not doing a better job. It's a pedestrian tool (so far as I have seen) and NO program can do a better job of sales "for you" than you have a talent for selling in the first place.
"What about customer service? What about product introduction? What if all these terms are completely archaic."
You're confusing "the website Facebook" with generic issues of sales and marketing. Facebook is not, after all, really, a "sales and marketing tool", is it? Is that all it is? How boring.
In summary I ask: what really profound thing is it that Facebook does, that makes it "the place to use"? I'm not asking about NUMBERS - let's not be confused. The NUMBER of people "I can reach" on Facebook is one thing and I don't want a reference to that in the answer. I want to know: what specifically is it that Facebook does that makes it in any sense "necessary" to use?
no they won't charge regular users. Not only because facebook said they wouldn't but becuase that is similar to starbucks charging at the door.
New, yet anticipated revenue streams will be come alive. Commerce as you haven't seen on the web will take place. New ways of spending money (digital wallets etc) will have you forget all about today's methods.
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We never thought we'd write about carrier pigeons. Or the Pillsbury Dough Boy. Or corned beef hash. But these are some of the many ingredients you'll find in this week's mashup of top technology -- yes, really -- stories from around the world. Grab a fork and dig in.
Anyone still convinced that Amazon is essentially an online bookstore should at long last revise their opinions. Amazon may be gearing up to bring its full range of products and services right to your front door.
Google and Apple don't have a lock on wearable technologies. Neither do the Pebble watch or Sony. Plenty of other developers -- from well-established corporations to startups -- want a foothold in a space expected to be worth $6 billion by 2016, according to IMS Research. (See: Mary Meeker: The Future Will Be Wearable.)
IBM is advancing both its Mobile First and open-source strategies through a partnership with 10Gen, the company behind open-source NoSQL database MongoDB. Under the agreement, unveiled last week, both companies will work together on a new standard for mobile enterprise applications.
Facebook's Graph Search may face some profound challenges and risks, first, because Facebook users haven't been thinking of their posts as product reviews; and second, because Facebook will now have to contend with the social-network equivalent of SEO "gaming" of results.
Twitter's changes are clearly aimed at being more Facebook-like, and this is because both companies are vying to serve the mobile social network market. But can that market work for anybody, given how difficult it is to push ads to social-update readers?
Facebook's "Improved Friends Lists" are rolling out, but they're very different from Google+ Circles. The latter are like private labels; you're the only one who sees them. The former are like rooms you can invite visitors to, where they see you and each other. Google's approach is better.
Big-data and analytics tools enable marketers to understand customers as individuals, identifying unmet needs and addressing each customer as a "segment of one," says John Kennedy, VP corporate marketing, IBM.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
Enterprises would like to move to cloud computing but are hesitant because they are concerned about providers’ ability to secure company data. Here are some tips that help to ensure that if breaches occur, the business is not left holding the bag.
Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
So here we are, the last day of the 2013 US Open Golf Championship at Merion, and Phil Mickelson -- who has been a US Open runner-up five times now but never taken the trophy -- is right up there at the top of the leaderboard.
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