Tuesday, April 19, 2011

Facebook Prediction Part II


On January 28, 2011, I took a stab in the dark about Facebook's future. My exact words were that it has "two more years of being relevant". I must admit, I was guided by my own negative feelings towards the website. I compared Facebook's lifespan to that of Friendster and MySpace. However, there is one variable that I did not take into account, let us call the variable "K".

"K" is the critical mass of users needed before businesses can not ignore you and in contrast join you. Friendster and MySpace never reached "K", Facebook definitely has. Even the US government is getting in on the Facebook action. Every company seems to have a Facebook page and is enticing Facebook users to "like" their page. Some companies even reward users for "liking" their page, like American Airlines, which recently gave away miles.

But Facebook can still die off. Businesses have just extended the lifespan of Facebook. With its current business model Facebook will stagnate. In January 2011, the US market already showed signs of stagnation, see here. Prolonged stagnation leads to queasy investors which will flee, which can lead to an exodus of top talent of Facebook employees and eventually Facebook users.

If Facebook wants to be around in ten years it must dig deep into other markets, for example e-mail and cloud storage. Ideally, some of their other offerings will not require a user like me to have a Facebook page, although a Facebook account is fine. I refuse to ever have a Facebook page again.

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