104 Billion reasons to keep Facebook free for ever ?


Image representing Facebook as depicted in Cru...

104 Billion reasons to keep Facebook free for ever ?

He made it! Zuckerberg made it. He got Facebook more than three times what they were initially looking for, only last year. With 421 million shares sold at 38 USD, Facebook becomes the third biggest IPO on US soil and 5th worldwide of all time, with 16 Billion USD.

This succesful fund raising exercise gets Google looking like a Dwarf with its 2004′ 2.07 billion IPO. Facebook is now valued at more than 100 Billion USD, 104 to be pecise. This would bluntly mean that the 800 million users of the world’s #1 Social Network would yield 130 USD each to the ,now, public company, in terms of what advertisors, social game companies and application developpers would spend to reach out to this huge database. This may well set an unprecedented standard to the “socialmediaverse”.

NOW WHAT?

What should we expect from Facebook ?

Here some ideas from information coming from all over the socialmedia hub, namely from Forbes which has, to my POV decrypted the ideal ways for the Californian company to use its newly won financial powers. One thing is sure, Facebook will be, now, more comfortable at developping and enhancing its platforms.

New huge acquisitions should be expected and the Palo Alto born Juggernaut may well have one eye lurking next generation mobile telephony. If there is need for proof about Facebook’s interest for mobile technology, just look back on it’s 1Bn Instagram acquisition. With it’s almost 500,000,000 mobile users Facebook is bound to improve its mobile and innovate by bringing new features to handheld devices.

Even Mark Zuckerberg was clear and straight about that in his notes:

…Mobile is key to growth for Internet companies in the future.

They do have the means now, don’t they?

BANGING ON THE CHINESE WALL

But to date, China remains Facebook’s biggest challenge. To complete it’s march onto connecting the world and expanding it’s market beyond horizons, it needs to set foot in China and rake in this huge fast-growing Internet consuming red-ant army. How to get there is another story. Mark Zuckerberg has been vigorously learning Chinese and this is a strong signal.

One known fact is that, without China, Facebook would see it’s growth powering down. It will surely need to partner up with a local company and this might spell trouble, with regards to the current Chinese human rights status and its role in copyrights control.

OUT OF AFRICA? Not a good solution

Africa remains a virgin land, a now no-man’s land, where the After-China future may well lie. Investing in technological development on the African continent is a very sensible option with regards to its capacity at developping new markets. But on African soil, time doesn’t behave the same way as elsewhere. No one can actually say when the war-lathed continent will come out of the dark. Social unrest there, remains the biggest barrier to any kind of massive business anticipation.

ADVERTISING!

Advertising remains Facebook’s biggest revenue generator with transactions of the order of 4.2 billion USD in 2011 (Apple does such in 3 weeks), accounting for 89% of total revenues. It may be the #1 in terms of Online Display Ad revenue with 17.7% market share ahead of Yahoo (13.1%), it still lags 4th behind Google, Microsoft and Yahoo on the Daily Unique Visitors’s scene. This means that the Menlo Park SNS giant, has room for improvement, which by ricochet would certainly mean developping new exciting advertising platforms. News are that Facebook could be preparing some awesome Off-Facebook Advertising concept.

Given the widespread FB LIKE buttons that any internet user would find on almost every site he visits, Facebooks has the edge about data mining over its closest competitors. Whenever a user clicks on these LIKE buttons, Facebook reaps data about individual interests, profiles and virtual itinerary as well as demographics. This is invaluable wealth that can be treated and processed commercially in so many ways. Building a platform that would deliver targeted, customized ads that integrate identity information, is definitely a big opportunity to step into Google’s beds.

Where Facebook has been lagging since its inception is on the search field. I do personally believe that this was a deliberate choice, but the newly won IPO will definitely push the Social Network Leader into exploring and exploiting this new venture. They now have means to compete frontally with Google the Search Leader. One thing though, Zuckerberg’s mob may have a definite edge on that; They have the Open Graph, right?

WILL FACEBOOK BECOME COMMERCIAL ?

I don’t see that. I can’t find intelligent people disrupting a system that has been seamlessly funneling a gigantic amount of cash. In fact, if Facebook is rich today, it’s thanks to its +800 Million free accounts which yields an immensely rich database. Up to date, there is no indication that Facebook will need to clinch some cent from its user base. The best way for them to reap in, is still to take their cut from app providers and advertisors. What can eventually happen is The pecular-blue site developping a Hard Cash counter, by implementing a secure, trustworthy commision-based payment portal. Why not imagine Facebook partnering with Paypal on that issue. That would allow direct seamless shopping off branded fan pages and transform Facebook into huge virtual MegaMall.

RISKS AND THREATS, how real are they ?

There is a ransom to global massive success. There is the reliance factor and the dependence denominator. One prominent example is Social gaming company Zynga which slowly shifted away from the Social Network platform to indulge into its own social gaming network and platform, coming down from a 19% revenue share for Facebook in 2011 to only 11% in early 2012. But whoever leaves, makes place for another player. What startup wouldn’t love taking a slice of the Facebook cake? So from a general perspective one can easily say that Facebook’s weight will always attract valuable and dynamic players. It is true to say that for the Californian Social Network Giant, reliance or dependence problems will only be transitional until a new actor comes on the cast.

Bigger challenges will come from sabbered-toothed startups who will see in the user value set by Facebook itself, as motivation towards developping innovative software and systems. Stakes will skyrocket as we might see more and more violent acquisitions in terms of heavier amount of cash being injected into small startups. Facebook might then be fuelling competition especially where it has lesser focus; on mobile. As rightly mentionned in a Forbes article by Tomio Geron :

A pure mobile social company could go after Facebook at its most vulnerable. Could it be a company like Highlight or Circle in the years to come? There are many startups like them still just starting out. It’s just as likely that Facebook’s biggest threat may be a startup that hasn’t even launched yet.

What will the +300k Mauritius user-base get out of this? Nothing, except more enjoyable user experience! That could be an eventual opportunity for local developpers…

TAILWORD

Things will move fast during the next couple of years. Google, Bing and Yahoo, who have tried without the same success some Social Network adventure, will not stay put. We should in fact, watch how Google+ will react especially after Google’s reviewing of its search algorythms in view to make the +1 button an inffluential asset. We should also more particularly watch Yahoo who could be pushed towards a strategic partnership, like the last-minute aborted Microsoft deal. The Socialmediaverse will definitely change, again, with Facebook’s determination to stay on top at all levels.

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One thought on “104 Billion reasons to keep Facebook free for ever ?

  1. Pingback: Facebook IPO Is Bubble Redux? | Machholz's Blog

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