Tuesday, June 19, 2012

The flaw in FB

FB is currently a USD 68 Bn market cap company and upon listing a few weeks ago was a USD 87 Bn odd mkt cap company.
FB has been revolutionary in the way it has connected people across the world. In addition to that it has given people a new way to kill time that is barely productive - something that humans adore. Nowadays, it is on everybody's agenda to log onto FB at least once a day to see if there is something happening or not happening.
However FB, as a commercial enterprise, is flawed because it does not have a steady revenue stream. It is a great way for local businesses to create a web page on FB and gain access to its customers. Similarly, it's a great way for web-based companies to create a database of its customers by asking them to log in using their FB accounts.
However, as a user I don't go to FB with that motive - I go there to see what my world is doing and as an aside I might click on a Jaguar or a Zomato link without contemplating the use of their service or a their product.

Google, on the other hand, is a wonderful business through its ad revenues because quite often people go online just to find something they want. Hiking boots, coupon deals, new websites for retail, vacation packages, etc. Hence, it has made sense and will make sense for companies to pay Google for its advertising services because slowly, Google is taking away a bigger chunk of the internet search market - especially since the launch of Chrome.
I never go to FB with the intention of finding something I want.
Unless FB finds a way to monetize its 900 million users, it is a powerful, yet commercially poor enterprise. 

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