Profiling Facebook: The Google of Social networking (Part I)

I intended a study on Facebook to be a one blog post initially. However, the literature, reserach and comments on the subject is staggering and hence i feel compelled to give more than one post. Here is the firt one on the phenomemon of social networking and profiling Facebook, the one company which has revolutionalized the power of social networking.

Facebook is accorded a status of being the second wunderkid of the web world. The first web wunderkid is Google!



Consider this:

• Barack Hussein Obama, used Facebook as a cornerstone for his path breaking presidential election last year.
  
• Dell is recruiting new hires from Facebook audience.
  
• Windows 7 "borrows" networking features from it.
  
• It is a 175 million users community..
  
• ...adding 5 million new users everyweek.
  
• If Facebook, were a country, it would be greater than the population of the whole of Brazil
  
• It edges out USs greatest sporting event Superbowl XLIII with a record 152 million eye balls
  
• One of the most addictive sites, users spend an average of 169 minutes per month (compare it with 13 minutes in Google news and 10 minutes in New York Times)
  
• The Maine democratic party uses it to organize regular meetings
  
• Ernst and Young uses this site to recruit new hires
  
• Sometime in October November 2008, Facebook edged past Myspace to become the largest networking site in US.
• In a 2006 survey conducted by student monitor, a New Jersey based company specializing in college student market, Facebook tied with Beer as the second most popular thing among undergraduates, ranked lower than iPod.

At the heart of the Facebook phenomenon is what is now being termed as Conversational marketing (Word of mouth marketing). The underlying insight is that consumers are more liley to trust a pitch from friends rather than paid commercials and other promotions from the company! Thus
Users become product promoters...

1. ..and are encouraged tp spread the word about things they buy and use --> thereby endorsing the product.
   

What Facebook has been successful in doing is blending E - Commerce with WOrd of mouth marketing for results which at this stage are more promising than anyother in the Web 2.0 space. While advertising online as we know it today may be a good profit engine for social networking companies, the FaceBook avatar of e-commerce selling is looked upon with some hope in terms of bringing results.

While a Amazon or a e-Bay uses a rating system to throw up results on relevant products basis current purchases, Face Book ratifies products by adding rating and recommendations from friends. They call this Social Graphs. Thus when a user buys something online through Facebook, Facebook will seek a permission for sharing the purchase with the user's social network, with a product endorsement by the current user. For instance is a user browses through New York Times editorial section using a Facebook application, Facebook prompts the user when he is leaving to rate his experience. Depending upon the users feedback, Facebook flashes a status update to the users social network saying "... has read the editorial in NYT and thinks it rocks! Check it out."

In terms of Online marketing, Facebook thus shifts the focus from ads to consumers to promte purchase (and earning revenues by the clicks on the ad widget) to making people endorse the products they buy and tell it to their friends (Facebook earns from the users endorsement of the company product).

To that effect this strategy has been voted to be one of the boldest moves on the internet!.

Apart from user endorsements, Facebook has three other sources of revenue:

1. Business pages: Where they host the company and its offerings for consumer/users of a particular profile. Thus it creates a platform for companies to talk to their ideal profile consumers and promote its product. A 100,000 of such hosted company profiles are found in Facebook at this point.

2. Social Ads: Ads targeted by user profile data! This source also hosts the Beacon which uses personal information of users (which they would like to share only with their network) for targeting marketing campaigns. There have been privacy concerns around the Beacon, which mined implicit data (which the consumer doesnot want to share with other outside his network). Google and others used Explicit data, which the user has voluntarily disclosed about himself to be used for marketing campaigns. Amidst outrages on privacy, Beacon was made an "opt in" service for users instead of being an "auto enrollment".

3. Insight: Facebook also has a data of usage metrics for advertisers (trends etc) and also sells data on targeting/focussing and clicks.

According to Facebook's own books of account, they value themselves at $3.7 Billion (June 23rd, 2008). However Microsoft, in 2007 bought 1.6% of Facebook stake at $240 million, thus giving Facebook a valuation of $15 Billion. It made $280 million in revenues in 2009 and is yet to break even.

Touch Phones: To be or not to be!

A mobile phone user survey by Reevoo, the online product comparison site, has "almost " damned the touch screen bally-hoo. In a survey that happened across 19000 respondents , they featured 226 handsets and the result that they have come out with defies the accepted standards, trends and beliefs in the devices market today. 5 out of the top 10 least popular phones are touch phones with big marquee names such as HTC Diamond, Samsung Armani, Blackberry Storm, Samsung Omnia being least in terms of popularity. Many of the phones have been drubbed on the basis of poor battery life, "nightmare" touch-screen interface, and virtual buttons that "aren't big enough for male fingers". A hit to Convergence as a upcoming principle, Web Browsing and E mail functionality are not that highly favoured by consumers!

On the other hand Nokia devices with its traditional 12 key pad gets a thumbs up by most users as Nokia swamps the most popular phones list! Style was the most important factor when choosing a phone (15.3 per cent), while size (14.1 per cent), a good camera (10.4 per cent) and decent music capabilities (7.7 per cent) make the 4 most important factors that influence the purchase!

The way it sees, there are a few vital take outs from here:

1. Many of the manufacturers have been inspired by the iPhone. But it is not all the hardware, for UI forms the bedrock for consumer experience which in this case has dulled out the sheen off a few marquees.

2. Users do take refuge in the tried and tested and that is why you will find all Nokias out there. They are not necessarily the best phones but the most reliable ones that consumers seem to prefer.

3. Convergence is still a mile away as people havent really gone infavour of the swanky, technology edge. So tech marketers have some work to do to make convergence mainstream!

4. Price of the handset is an important factor when people think of its utility and usefulness and value. That is probably why mid ranged handsets occur with regularity in the most popular list.

5. People also would probably like to have a reliable handset rather than a flashy one. Nothing otherwise puts in context, why Nokia scores so heavily while a few of the Big names failed so miserably.

Top 25 Social Networks: US

Compete.com put up the top honours for social networking sites in US sometime back. No one expected the result to to be anywhere different than featuring Facebook and MySpace at No.1 and No.2 ranks. Tweeter completes the top honours at No.3! A massive 1.1 Billion hits at Facebook with 68 million unique visitors does justice to the massiveness that Facebook is achieving. It has edged past myspace.com, last years no1.

The statistic doesnot just stop there, Facebook has also reported an exponential increase in sessions per monthly unique visitor!

Twitter, may be the one to watch next year, as it has galloped through to No 3 rank from a no.22 last year. The number on Twitter can be significantly higher especially because often it is browsed through third party applications where as the study is based on browser data.

Interestingly Orkut which was buzzing loud till some time back and is still the no 1 networking site in India doesnot feature in the top 20. This is probably because in terms of innovative applications, Orkut has not kept pace with the social networking scene. Do we see Google beginning to loose steam here as well?

Positioning: Still relevant in the digital age

http://www.contentsutra.com/entry/419-big-adda-to-break-even-in-3-years-says-rajesh-sawhney-president-relianc/

in 2008, ADAG backed Big Adda spend money on advertisement campaigns to get eyes balls. Not stopping at that they hosted Amitabh Bachchan's blog and ran promotions. The cost of all the spends on advertisements and promotions was about 5 crores. The other prominent spender in the social networking space in 2008 was iBiBo.com with its "Balti nahi Bolti" campaign.  The spends were budgeted at 60% on the traditional mass media and 40% on the online audiences. The results of those efforts is that while total internet audience in India surged by 22% and the Social networking numbers surged by 51%,  BigAdda lost 25% of its audience and iBibo lost 50% of its audience.

On the contrary sites like Bharat Student, Linked In, Orkut, Face Book,hi 5 and others didnot invest in any marketing activities and yet they registered significant growth beating the median (growth of the market). 

Does this lend credence to the fact that online marketing is more than eyeballs. Probably it is content related, probably more features to do more things, probably the No 1 social networking website Orkut is riding a threshold mass. Probably it is do to with being "in", as in Facebook. I have a inkling that while in 2008 Orkut rode Threshold and Facebook was "in", in 2009, Orkut will saturate, Facebook will ride the threshold and Twitter will be "in". Probably it is to do with your positioning, e.g Bharat Student or serving a speciality, LinkedIn.

In absence of a clear hook, IBibo and BigAdda spent a lot creating awareness, but were after all not able to make a clear and uncontested spot in the mind of the user (positioning themselves effectively). That could lead them to a "aslo ran" status. That could be one of the reasons of their negative inspite of the social networking scene being in 50%+ positive.

Lessons from the day

1. Dont try to be too many things to every consumer. He will seek you out if you deliver the benefits.

2. Traditional media vehicles may create awareness. But if the offering is not sticky enough, you cannot get your consumers to stay back. (I believe in.com is headed the same way)

3. Postioning is as relevant as ever.

One important thing is Monetization bit. How do you monetize the 3.3 millions users on your books.

Debating WiMAX and LTE (Part II)

Picking the winner

Experts and bloggers all over have contested and claimed on which one is better than the other LTE or WiMAX? This is perhaps precipitated by the camps which back the technologies. However, a third view on these technologies suggest that there is no winner in strict terms because these technologies are complementary in nature. Bore OFDM parent, WiMAX has a data background and LTE has a voice background. Furthermore, WiMAX will work on 5 levels of service such as emergency services, public safety, data transmission (real time and otherwise) and Voice. To that extent it appears to be more versatile than LTE which has only two levels of service (one for voice, and the other for everything else). So the usage and market positions of these two technologies will depend on customers and their usages, spectrum positions and other technology quantities. Thus the idea (as depicted bythe graphic below) is complementary technologies for divergent telecom needs. There is a possibility that a single vendor may be use both these standards to provide services to different class of consumers!

Advantage LTE: Where does LTE score above WiMAX?

LTE is the natural evolution resultant from 2G to #G and onto LTE. Thus

1. Handset manufacturers are likely to weight toward LTE handsets (as an extension of their 2G,3G,3.5G lines)

2. Using the existing UMTS network for 80% of its needs, LTE will not involve very high CAPEX involvements. Thus a better experience can be rewarded to the consumer with less investment as far as Telcos are concerned.

3. Mobile operators will roll out LTE and users can fall back on the 2G/3G networks where-ever there is a "hole" in the LTE network.

Advantage WiMAX: Where WiMAX would outscore LTE?

1. WiMAX works on a open standard which translates into a cheaper network.This reduces the cost of operations to almost half of that of LTE

2. As discussed earlier with 5 levels of service, WiMAX is a more versatile service compared to LTE.

3. Build on the IEEE 802.16 wireless broadband standard, fixed WiMAX (802.16D) will tantamount to a huge WiFi area. So this can be used in large campuses and office complexes and for within city Broadband and voice services (as long as in line of sight). Thus in terms of usage, WiMAX can be versatile in terms of group usage as well.

Weaknesses LTE and WiMAX

1. LTE will be limited to single subscriber system on a large carpet area.

2. WiMAX would work on a multi subscriber system in a small carpet area. Also, with loss in line of sight and distances between the tower and the reciver, the rates of data transfer may be erratic and inconsistent.

Final Verdict

Yet again, it will be different strokes for different folks sort of a thing out here. Taking pole positions with any one technology could prove to be counterproductive for the players in the market. While LTE will ride upon 80% GSM market share, WiMAX will be handy in Enterprise operation markets and data heavy networks. So while LTE will be at a lesser advantage in Data, WiMAX may find it difficult to cover full geographies as exhaustively as LTE!

The interesting bit is that a study into cellular subscriber patterns in 2012 still reveal that 55% of 4.8 billion cellular subscribers (by 2012) would still be using the GSM/EDGE/GPRS technologies and only a lowly handful will be into WiMAX and LTE.

Debating WiMAX and LTE (Part 1)

LTE (Long term Evolution) and Wimax (Worldwide interoperability for Microwave access) are the two competing fourth generation technology standards that will usher in next generation wireless. (Thats a long long way off for a country like India, which struggles with 3G roll outs.)

As the graphic above suggests, the debate today centres around LTE versus WiMAX. Interestingly enough both these technologies come from the same parent OFDM. To that extent they are siblings and this is about sibling rivalry (Kane and Able anyone?)

Graphic on how data speeds stack up in Technologies. This doesnot mention the super standard which would be a combination of LTE and WImax and is supposed to have 1GB/Sec speeds on data transfer.

The Camps and the Lineage

Wimax is being rolled out by Sprint Nextel - Clearwire partnership. The roll out barnd would now be Clear (It was Xohm earlier). The roll out is expected to begin in 2009. This group has the auspices of Intel, Time Warner Cable, Google and Comcast and we will see why they have this backing. Mobile WiMAX has been implemented by WiBro in South Korea since 2006. As a technology WiMAX has been around for sometime now and it is now that it is beginning to see serious on the ground action.

LTE is being spearheaded by carriers At&T and Sprint in US, NTT Docomo in Japan. 7 major Telecom companies have agreed to a mutual framework for licensing I P Rights relating to LTE. This includes Alcatel Lucent, Ericsson, NEC, Next Wave Wireless, Nokia, Nokia Siemens Network and Sony Ericsson. The clamor for LTE standards recieved a big boost when Nortel deserted its WiMAX position to check into the LTE camp (Nortel is a toast of recesssionary history now). Vodafone, the worlds No 1 operator also supports LTE standards, which comes as a huge fillip to the LTS camp!

Time to Market

WiMAX will see the first level of deployments and serious action in 2009 and it will have a head start over LTE, which would only come alive by 2011-12. Having a 2-3 years head start can be a boon as GSM proved against CDMA. GSM was ahead of CDMA in terms of launch and till date enjoys 80% of the world market share.

This time to market for WiMAX as a technology will be offset by the pace of LTE launch. LTE will use the existing UMTS networks for a quicker launch. Thus it makes up for the time disadvantage by the incumbent advantage in terms of roll outs.

Return of the Prodigy:Palm (featuring Pre and WebOS)

Palm pioneeered the PDA and the smartphone scene way before RIMs and Apples of the world were in the scene. However, over the years Palm lost its way and is almost out of contention. Almost! The recently announced web OS and Pre have been appreciated and its time, we shall see whether Palm has any fight left in it or not!

For a start, Palm Pre makes a point. It has the works and it works pretty smartly!. It starts with a 3.1 inch 320*480 res screen with a built in accelerometer and a QWERTY keyboard. Inside is a 8GB storage and a 3 MP camera with a LED flash. It has a neat multitouch screen and it supports WiFi.

However, it is the UI based on the new WebOS that Palm introduces with the Pre which seems to be the "meat" of things. WebOS is based on the webkit which uses the Synergy data integration combining data from outlook, Google and Facebook to provide a universal address book and calendar. It also auto updates these sites for changes made in the device address book. The new App store that Palm is making would provide other applications. From the first look Webkit outclasses competition in terms of smoothness, speed, application, switching and menu views.

Palm from the very introduction of the WebOS and the device seem to have the Apple iPhone i its sights! We will wait to see how this one shapes up when it is shipped somewhere around the first half of this year.

Go Palm!