challenge its proposed purchase
of T-Mobile USA.
Netflix has rejuggled pricing for its streaming and DVD by mail products, created two separate operating entities with their own internal financials and watched its stock price cut in half, while generating an unprecedented level of customer anger
Google now faces antitrust action on a number of fronts, which, if history is any guide, will put Google in a box for a decade or more, stifling its growth, and threatening its ability to innovate.
And some think Facebook, despite its dominance in the social space, is failing in a significant way to generate revenue to match its usage. All of that suggests growing instability in the application, mobile, software and entertainment businesses, all of which have been facing significant challenges already.
The latest wrinkle is a suggestion that “Facebook is quickly becoming
the new Yahoo.” In case that needs deciphering, think “fail whale.”
In technology, timing is everything. In order to succeed, you need to have not only the right product, but come out with it at the right time. Just as surely, massive success is possible, for an era. But history suggests no firm ever survives as a leader for more than one era. Think mainframes, minis, PCs, and now mobile. Then try to image what the next era looks like. It’s tough.
Facebook knows what its members apparently do not, which is that today’s Facebook won’t allow the service to survive on the social Internet of tomorrow, argues Mike Elgan at Datamation.
The only way for Facebook (or any online service for that matter) to succeed is to re-invent itself. Facebook is trying to do so.
Facebook tried to become the default e-mail client for members when it rolled out Facebook Messages, which enabled people to use a facebook.com
e-mail address. Then Facebook saw that FourSquare and Groupon were gaining some traction with social location check-in and coupons, and so it launched Places and Deals. Facebook has added Skype,
Facebook has failed to come out with a tablet app. Facebook’s new strategy appears to be “copy Google+.”
Facebook appears to be very worried about its own decline, says Elgen. The most recent numbers show that during the month of May 2011, Facebook lost six million US users, 1.5 million Canadian users and hundreds of thousands of users in the UK, Norway and Russia.
PrivCo, which specializes in information about private companies, apparently has analyzed papers circulated to potential shareholders by Goldman Sachs, which say that forecasts were for the social networking company to record $4 billion in revenues over the course of 2011. Expectations were raised that Facebook's earnings in 2011 would be double what was achieved in 2010.
Apparently, that has not happened
. Goldman Sachs itself invested $450 million in Facebook and argued the firm would make “at least” half or that $4 billion in the first six months of 2011. Revenue in the first half is said to have come in at about $1.6 billion.
PrivCo's CEO, Sam Hamadeh, says, “Facebook has seriously missed its own revenue forecasts. If this were a public company, its stock would be dropping dramatically, perhaps by a third overnight.”
We normal human beings tend to think markets are stable. In technology-driven industries, stability is an illusion. Leadership in one era rarely – one could safely say “never” – can be sustained in the next era. It might be going too far to say we already can pick the winners of the next era.
But the travails leaders of the current era seem to be facing suggests the next era is struggling to be born. Think of a time when everybody agrees Google, Apple, Facebook, Netflix and AT&T are “legacy” businesses. As hard as it might be to conceive of, that time is coming. When it comes is hard to say. We will only know in retrospect. But it is coming.
To be sure, an era lasts a while. Firms sometimes survive into another era, even profitably. Some telcos already have. But they don't define the era, or lead it. For most firms, making money is reward enough. For a few, capable of making extraordinary returns because they lead an era, it matters greatly whether they can gain leadership, then hold it, for at least one era.
Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.
Edited by Jennifer Russell
It is one of those times when significant change seems to be brewing in communications, technology, application and entertainment, all at the same time. AT&T is facing a possible turning point as U.S. Department of Justice litigators