Faceboom: Microsoft trying to save face RRS feed

  • Question


    In the latest Internet bonanza, Microsoft paid a staggering $240-million (about R1.5-billion) for a mere 1.6 percent of Facebook, giving the second-largest social networking site the almost unbelievable valuation of $15-billion.
    It sounds like Monopoly money, and it is. As the fastest-growing site in the social networking phenomenon — let’s call it the Faceboom — Facebook has been on everyone’s acquisition list.
    A few weeks ago, when the rumours surfaced and Facebook chief executive Mark Zuckerberg went to Microsoft’s headquarters in Seattle, I was sent several invitations to join a Facebook group that said: “If Facebook sells to Microsoft, we’re leaving.”
    How many are left, I wondered? The group I was invited to join had 441 members on Friday — big dent in Facebook’s 50-million user base if they should jump ship.
    I think the purchase is a clever move by Microsoft, which has been on the back foot for years.
    At $240-million, it works out at $300 per Facebook user. That’s a bargain for Microsoft , which is spending more than double that on that thing they made called Vista, which is a window onto frustration.
    Microsoft is spending $500-million on marketing Vista and the Facebook buy is a significant battle in wining its war with Google for online presence and the next generation of online interaction.
    Microsoft chief executive Steve Ballmer has said the company is evolving towards selling advertising (like Google) and Microsoft will now sell all Facebook’s advertising outside the US. He is hoping Facebook will reach 300-million users.
    It’s also a public relations coup for Microsoft after the Vista debacle, the document format blunder (more later) and any number of ill-advised recent missteps.
    Compare Microsoft hitching itself to Facebook’s tail with HP spending $300-million to relaunch its Print 2.0 printing strategy — in part to make it easier to print from Internet sites. It’s the same amount Intel spent marketing its newfangled wireless networking thing to increase sales of its WiFi-enabled Centrino chips a few years ago.
    South Africa is the seventh most website populated country and Facebook surged past 350 000 members two weeks ago. It was at 394986 people on Friday. The addition of almost 50000 members in about two weeks is pretty good considering most companies now block access to it.
    The “We are the Rugby World Champions” website has 15 169 members compared with the 11 051 members of the “One Million People against Crime in South Africa” website.
    The former no doubt includes President Thabo Mbeki, who has given Jake White the kiss of death by declaring he should stay on as the Springbok coach.
    Manto, Ivy, Selebi and a bunch of Aids denialists are among those Mbeki has defended in the past.
    Historically, such massive Internet real estate sales have yielded varied results.
    Rupert Murdoch was declared insane (for the nth time in his career) for paying $580-million for MySpace in 2005. This year he will earn 800-million in Google advertising.
    No one knows how Google’s 1.65-billion for YouTube is faring, but eBay recently wrote off $1.43-billion for Skype, for which it coughed up 2.6-billion in 2005.
    Skype was the biggest thing online two years ago as Internet telephony seemed poised to topple the world’s telephone companies — much like Facebook, YouTube and MySpace have been the flavours of the year for the last three years.
    Whatever you do, don’t call it a bubble.

    Tuesday, October 30, 2007 11:19 AM

All replies