Microsofts Ballmer Does Not Grasp Facebook
Published by Rodney Rumford October 2nd, 2007 in Facebook, Facebook News.
Microsoft’s Ballmer Does Not Grasp Facebook: I rarely speculate on the financial issues regarding facebook and investors; but I can’t remain silent on this one.
The source for these quotes is from The Times Online. The remarks follow reports last week that the Microsoft boss is considering taking a stake in Facebook that could value the social networking site at ~$10 billion.
Steve Ballmer, the Microsoft chief executive, believes that the craze for individual social networks such as Facebook risks being exposed as a “fad”, an admission that places questions over the software giant’s mooted interest in the website.
“I think these things [social networks] are going to have some legs, and yet there’s a faddishness, a faddish nature about anything that basically appeals to younger people,” Mr. Ballmer told Times Online yesterday.”
Hey Steve… facebook appeals to a much broader audience than “the younger people”. In fact more than half of the new members that join facebook are over 28 years old. I guess he has not used the site and does not understand it’s usefulness. Facebook facilitates better communication and an easier way to share & discover meaningful content… nothing faddish about that. A desire for improved communication tools are not limited to younger demographics. 
Facebook “exposed” as a fad? Not even close. I guess email is a fad too.
He also says: “There can’t be any more deep technology in Facebook than what dozens of people could write in a couple of years. That’s for sure.”.
Steve, here is the deal; it is not about technology. It is about the value of the network and how the underlying technology makes it easy for users to connect and communicate. Sure facebook has some unique technology; but they also have momentum, adoption, great user experience and they create loyal fans. All signs of a brand on the move. Additionally, facebook makes communication with my real world friends much richer and efficient.
People rave about facebook and become addicted fans. When is the last time someone raved about word or excel or powerpoint? Why does microsoft sit where they do? Adoption; surely not technology and users raving about the products or experience. Just wait until some developer finds a way to integrate open office into facebook.
One final parting thought: The fundamental value from facebook is increased efficiency & ease in how I communicate. I use facebook to primarily communicate for business, and just a little social stuff. The value of the network and the ability to share and discover information from people that are in my network is inherently valuable. A part of the facebook secret sauce is the News-Feed. While it might not be considered a technological triumph; it is indeed a revolutionary concept & execution to sharing and discovering information.
I would hardly call facebook a fad. When something becomes integral to communication with people that I know; it is here to stay. I have not even begun to address the benefits of the facebook platform and how thousands of developers are creating value and usefulness for the facebook user community. This is already creating an additional point of gravity and usefulness for users.
So quite possibly Ballmer is just taking a stance for negotiating purposes with facebook or he truly does not get it. What do you think?
Technorati Tags: facebook, facebook microsoft, ballmer, microsoft
5 Responses to “Microsofts Ballmer Does Not Grasp Facebook”
- 1 Trackback on Oct 3rd, 2007 at 4:17 pm
Depending on your time scale, Facebook probably *is* a fad.
Do I think Facebook will be used in 10 years? Yes. Do I think it will hold near the prominence that it does today? Heck, no.
Almost all technology titans, particularly those with a consumer focus, get knocked down a peg. Apple was king of the hill before the IBM PC. AltaVista was king of the hill of pure search before Google came along. GeoCities was king of the hill before MySpace came along, which was itself king of the hill before Facebook came along.
Will Facebook’s *capabilities* be around in 10 years? Yes, probably in improved forms. But they won’t just be Facebook’s capabilities. The only thing Facebook has that isn’t eminently copyable is its network of users, and there are moves afoot to make social networks more portable between sites. That means Facebook will either have to eschew portable social networks and hope nobody beats them sufficiently at technology to cause an exodus, or Facebook will embrace portable social networks and give up some of their momentum to other niche players. Either way, Facebook’s dominant market position will likely tumble.
This doesn’t mean they’ll be dead, and they can always leverage their current position to move into new markets or offer decidedly different services that keep them a step ahead. Unfortunately, lots of firms think they can do that. Few actually wind up pulling it off (Microsoft and Google are two examples).
So, the odds are stacked against Facebook. Calling it a fad is a bit crass, but it has the ring of truth.
Zing*
Rodney,
Trust me, Steve gets Facebook. I know he uses Facebook for both work and personal stuff because he is my friend on Facebook. He also “GOT” facebook more than 2 years ago when he cut the first ad deal with Facebook.
>
This recent “fad” reference is just posturing and is probably the best indicator that a serious deal is being negotiated. The ebay write-down of Skype also plays nicely into Microsoft’s desire to get the best deal possible for their 5% of Facebook.
I’ve known Steve for almost 25 years and he wants to increase his bet on Facebook in a big way. However, he and Bill have been playing poker together much longer than that (and therefore longer than Mark Zuckerberg has been alive). So, one can expect a little bluffing and standing up from the table and preparing to walk away on both sides.
My firm bet is that the deal will happen at north of $10 billion, it will involve $500 million in cash and Microsoft will get a guarantee that Facebook won’t sell to Google and Microsoft will get the right to handle CPC ad sales when Facebook opens up their search box to returning more than just people/events/groups/apps. The big question in the deal is the degree to which Microsoft commits to grow facebook’s business users by weaving facebook sign-ups into their Microsoft Office install process.
The reason I can be so sure about this is because Steve also said that in 2 to 3 years 25% of Microsoft’s revenue would come from ads. To make this come true Steve needs a deal with Facebook. When it does happen, color Google green with envy.
Thanks,
Lee
Lee,
I actually thought this might just be posturing for negotiations. And since he is a poker player this makes even more sense. Not to mention that he IS a VERY smart guy.
“Steve also said that in 2 to 3 years 25% of Microsoft’s revenue would come from ads. To make this come true Steve needs a deal with Facebook.”
You are right that this greatly increases the likelihood that they will come to some sort of agreement. Thanks for sharing your insights here.