Facebook IPO? Flat. Facebook future? Bright.
Facebook IPO generated no big stock gains on its first day of trading. But Facebook has many of the traits that made Apple, Microsoft, and Google great in the long run.
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Next, the site's name has entered the language. Pretty much everyone in the West knows what Facebook is, and essentially what it's for, even if they don't use it. There is a vast group of people who have never heard of it, mostly in Asia and Africa, and many countries where it is not the biggest social network – particularly China. But having become embedded in our language, it won't go away quickly.Skip to next paragraph
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Third, how vulnerable is it to disruption? We can cite Friends Reunited in the United Kingdom (which got old school friends together), Bebo, and of course MySpace as once-giant social networks that are now rotting hulks moored off the shores of the Web, just waiting to be broken up. But a key difference about them: They were bought by bigger corporations. Quite possibly Facebook would be facing the same fate if it had acceded to one of those takeover offers, because corporations struggle badly with the idea of acquiring a company that becomes bigger than the parent; they naturally try to rein it in, or absorb it, and that kills the spark.
Even so, the question everyone has is whether "some other social network" will come along and take away Facebook's unique selling proposition. Google is certainly trying its best with its Google+ network, but there's little sign that people are engaged with it. Facebook has the heft to push aside many others.
The toughest challenge in terms of disruption is the shift to mobile. Born in 2004, Facebook effectively predates the mobile Internet, which only began to take off in 2007. That means its DNA isn't adapted – yet? – to being viewed on a four-inch screen. That's a tough challenge, and one that all the older Web companies – notably Google and Yahoo – are struggling with. This will either be the growth limit for Facebook, or its rocket booster. But recall what I said above about Mr. Zuckerberg. Mr. Jobs was able to pilot Apple into the world of mobility (iPod sales quickly outstripped Mac sales, and iPhone quarterly revenues alone now exceed Microsoft's total). Facebook knows it has a huge shift to make.
And lastly, controlling the platform. Once more, Zuckerberg has seen that it's better to own the playing field and hire it out to all comers than to wall it off and charge an entrance fee. He's turned Facebook into a platform that is spreading all across the Web (through Like buttons, apps, commenting systems, and more). And we all know its name.
So for all those reasons, I think Facebook's best days still lie ahead of it. Note that I'm not making any recommendation about whether the shares are worth buying or good value; that's entirely up to you to decide. (I don't own or directly control any shares in any company, and have no intention of changing that.) This is just the bridge to the next stage.
– Charles Arthur is the author of "Digital Wars: Apple, Google, Microsoft and the Battle for the Internet," published by Kogan Page and available in bookshops, and from Amazon in paperback and Kindle formats, and from Apple's iBooks store. He is also the technology editor of the Guardian newspaper in the UK. He is on Twitter as @charlesarthur.