Why Facebook is not Apple

Its been an exciting year. With an ailing global economy and the banking sector just being a pain in the ass, there have been silver linings in the technology space. The fight between Google and Apple seems to be intensifying and Microsoft seems to be lurking to jump when one of these guys fall. But fights like these leads to bigger and better products and services for the consumer. In spite of Apple not releasing a ground breaking product this year yet, the hoopla has been, well to say the least, a little muted.

But in May 2012, the world watched closely as the much anticipated Facebook went public.

As many analyst labelled it, May 18th, 2012 was Facebook day. An internet behemoth with close to 1 billion users decided to sell a part of their billion dollar company to the people. But this excitement turned out to be a major buzkill not only for its investors, but also for the people of the internet as everyone was left wondering, now what?

But before heading into this analysis, I would like to flux capacitate to May 17, 1 day prior to the Go Public date. Facebook was the king of the internet. Boasting close to 1 billion users, a pot load of cash reserves and no competition in sight, it seemed there was nothing that could displace modern Rome. It was so outrageous that the IPO price was on a constant rise at pre-launch purely on reputation. More so was the cocky attitude with which CEO Zuckerberg decided to show up on Friday morning in a sweat shirt and jeans to ring the coveted bell at the exchange. But Wall Street honcho’s were not phased by this rebellious 20 something billion dollar man. These guys knew, a shocker was in store for just about everyone.









Some facts:
Facebook debuted at a price of $38 per share, $3 more than the pre-ipo set price band on May 18, 2012. On August 16  the lockup period ended and early investors were allowed to offload their shares in the public domain. And these investors dumped! By August 17 exactly 12 weeks since its illustrious debut, Facebook was trading 50% below its IPO value at $19 per share. This was the shocker Wall Street was waiting for!

So lets analyse Apple for a second:
Apple has always focused heavily on technology innovation. Jobs was so visionary that he was able to design life altering technologies. From the PC to the iPod to the iPhone and iPad, Jobs always created the need for his customers and did not address it. People always had phones. But the iPhone changed the way people used the phone. The laptop and computer has started become obsolete. But Apple introduced the iPad and revitalised the personal computing space. Apple went above and beyond designing just hardware. They bundled path breaking software as well. Their iOS platform has been so successful that they have not applied a major update to it since the beginning yet its growing exponentially in popularity. Their iTunes service is a gateway into the Apple ecosystem. The power of billing that it gives Apple, has skyrocketed their revenues. OS X Leopard, Lion and Mountain Lion along with sleek designs has made Apple PC’s the second most preferred PC vendor today, something nobody thought would ever happen. This dominance will be hard to break because it exists in multiple avenues. Moreover, these avenues are intertwined in a very subtle way. The user is not able to differentiate in the device he/she uses but wants to own every Apple device. Such customer stickiness and loyalty is what protects Apple from potential threats. And Apple has worked very hard in building and maintaining threat management. Apple successfully broke the telco cartel which has not happened since the Bell dominance. They managed to reign in the music industry which has been at war since the advent of mp3. In short, Apple changed the world.

So in what way is Facebook not Apple?
The problem that plagues Facebook is deeper than its share price. Facebook isn’t Apple. Facebook was founded inside a dorm room by a guy who stole the idea from his peers. From initially setting up a college based social networking service, Zuckerberg made Facebook publicly accessible with the help of Sean Parker. Even though Facebook boasts of 900 million odd users, these users are Internet Users. Its tough for a company to claim internet as their own. The Internet is free. People use Facebook by virtue of its existence. That use is also coupled with other avenues of the internet. Amazon, Google (everything google has), News and Media sites and entertainment sites still hold their own Internet real estate. Whether the user visits these sites through Facebook or on his/her own is immaterial to that user. This poses a challenge for Facebook as it creates an air of uncertainty for Facebook in terms of revenue. General Motors already fired the first salvo by deciding not to spend on advertising on Facebook. I’m sure that set off a few alarm bells. Many internet sites that piggy back on Facebook social plugins benefit hugely monetarily without Facebook seeing any upside on that. Facebook in an attempt to get rich, has grown isolated. Facebook as not created anything special.  And they have paid dearly for it. Maybe they haven’t lost their popularity but their image has taken a beaten.

The path from here seems grim. Facebook is not able to address this downslide because its leadership lack vision. He created a site which grew not because he created something special, but because the users made it grow. It became like a hangout place for many. But generations pass and new one’s are take their place with new ideas and new hobbies. If Facebook doesn’t innovate fast enough, a newer generation will replace them.

To finalise, Facebook is in trouble. A company that focused on delivering quality services to their users is now pre-occupied in bring up their revenue numbers and stock prices. They should have focused in developing a stronger sustainable future without trying to go head on with Wall Street. But in contrast, Facebook still has tons of cash and the market is filled with genius innovators.I don’t see its user base being affected any time in the short term. Facebook has a few advantages it can capitalise on but it needs to do this fast.

Its up to Facebook to chart out the path to success. Because for Facebook, the future is NOW!!


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About Nlyten

I have always been a tech enthusiast, to the point where i have become an addict. Tech to me is crack; Always trying to get my fix every chance i get ! I have always loved sharing anything that fascinates me which again 90% of the time is about tech related content. I used to share content on Google Reader Shared pages (http://www.google.com/reader/shared/surdie) but after their not so brilliant idea to shut it down i felt i needed a new platform where i could share and distribute content and thats how Nlyten.com came about. So keep reading and get Nlyten ed !

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