Wednesday, May 30, 2012

What Good is Facebook?


Facebook had its Initial Public Offering less than two weeks ago. This was the first time that general investors could own shares in Facebook. The IPO valued the company at around $100 billion. Why?


First of all, I do not own any shares of Facebook, nor should anyone consider this to be investment advice.


But from a technology columnist perspective, Facebook offers all of the aspects that most people already know and love. This includes the ability to share one's status, comments, photos and videos of one's experiences. Facebook also allows instant messaging, status updates and other ways for people to communicate.


From a business perspective, many companies have stopped having websites (e.g., www.mycompany.com) in favor of a Facebook page (e.g., www.facebook.com/mycompany). This is happening mainly for small companies, but large companies are having a Facebook presence, too. Why? Because that's where people are spending their time.


Advertising is, of course, how Facebook is making most of its money. That's why Facebook is free to you and me.


But I believe that Facebook's value is not in what it is now, but in what it will become. It's clearly a platform on which people can build their personal and business lives and interests. And strong platforms can become fundamental value generators. Facebook seems to have done this quite well.


Remember, though, that there are some companies who have built platforms that have not been successful. Two in fairly recent history include America Online (AOL) and SecondLife. AOL built a proprietary world that was separate and apart from the Internet. It did very well for about a decade, but the proprietary platform has all but disappeared. SecondLife (www.secondlife.com) is a virtual world on the Internet. While it started out as a possible fully virtual world, with everything from shopping malls to embassies to countries in it, interest in SecondLife has dwindled over the years.


With each iteration of platforms, some people get it right. Facebook certainly seems to be on the trajectory for getting this right, attracting people and allowing extensions to the Facebook platform for where people can add their unique aspects.


Look for more and more interesting developments on Facebook. In five years, I doubt you'll recognize it as what it is now.


But also remember that Internet users are fickle. Quite literally with the click of a mouse, they can be off on another website where their friends and interests are.

Mark Mathias, a 30-plus year veteran of information technology and a resident of Westport, Connecticut, was named by Computerworld magazine to their inaugural list of “Premier 100 IT Leaders.” This column was originally published in the Westport News on Wednesday 30 May 2012.

No comments:

Post a Comment