Facebook's Future May Still Be in Play
May 15, 2012 2:09 PM PT
Half of Americans believe the social network giant Facebook is just a passing fad, and a similar number believe the expected asking price in its upcoming IPO is too high, according to a new Associated Press-CNBC poll.
Since the dot-com boom of the 1990s ended with a dot-com bust, many once dominant players have fallen by the wayside. Before there was Facebook -- or even competitor MySpace -- there werre AOL, Compuserve and GeoCities. Today the latter two are just memories -- Yahoo's GeoCities live on only in Japan -- while AOL's presence is much diminished. Will Facebook share their fate, or is it here for the long haul?
Not Just Passing Through
Where Facebook clearly has an advantage that even AOL didn't have is that it is truly a global phenomenon. Facebook could hit a billion users by August, iCrossing predicted earlier this year. Can a billion users be wrong?
More importantly, Facebook's Wall Street debut could exceed US$100 billion, making it worth more than Ford or Disney.
"Without knowing how well the IPO will go, I do not think it is a passing fad," Jeffrey S. Silva, senior policy director for Medley Global Advisors, told the E-Commerce Times. "Human beings are social animals, and they like to communicate and connect. To that end, Facebook has developed this technology better than anybody."
But can it continue to appeal to everyone? While size matters, younger users are increasingly connected through mobile devices and tablets, where Facebook could face increasing competition. Some 51 percent of young adults even predicted Facebook's appeal could fade over time, according to the poll, compared to just 44 percent who believed it would last for the long haul.
"The big question is whether the company will be able to create a brand that users appreciate," said Josh Crandall, principal analyst of Netpop Research.
There are also those lagging privacy and security concerns.
"Will Facebook continue to undermine users' trust by exposing what they read, watch or listen to to their friends without explicit approval?" wondered Crandall.
"Does my friend even realize that I know they read '5 Reasons Why She Isn't Attracted To You' in The Washington Post? For me, this reflects poorly on Facebook and reduces my affinity for their brand," he told the E-Commerce Times.
Facebook's Timeless Face Forward
The other part of the equation isn't just whether Facebook could fade away, but what could replace it. Users have to rely on it as a way to connect, and so far nothing else has reached its scale.
"Someone could supersede Facebook, but even if they could, Facebook is not a fad," said Billy Pidgeon, principal analyst for M2 Research. "I used to even think that Facebook was a fad, but they've simply grown too much."
It won't likely be a replay of AOL -- it would take much more than just the next big thing to bring Facebook down a peg.
"First off, you'd need competition in the social networking space," Pidgeon told the E-Commerce Times. "But I expect them to react and crush competition as soon as it shows its head."
Facebook Could Require Some Facelifts
Facebook has an advantage in that the lessons of past dot-com burnouts can be easily recalled, even if the general public has a short memory for such things. This could work to Facebook's benefit.
"Facebook will need to adapt as users become more savvy with social media," emphasized Crandall. "Consumer memories are short, and the mistakes that Facebook has made will fade quickly."
While there have been several candidates for the next thing, including Twitter, Google+ and more recently Pinterest, the social photo-sharing site, none of these alone could likely break Facebook. Together, though, they could force the company to adapt or wither.
"It would take Pinterest and 50 other things -- but that could be enough," said Pidgeon. "To succeed, a competitor would only need to create different communities. This is the strength of Facebook -- but more importantly, it's also its greatest weakness. Everyone has multiple communities that don't usually interact together. You can do that with Facebook, but it is a lot of work. This opens the door, and there is plenty of room for competitors."