I recently stumbled upon a physical copy of the Economist that had the following chart:
I found it so striking to see these companies all stacked up together, and was surprised that my first thought was “Who would want to be Facebook in this scenario?”
In fact, I wondered, if you through Microsoft into this mix, with nearly $70B in cash (more than Facebook’s market cap), and a significant foothold in homes through Xbox, where you would place them? You would at least have to ask the question. I might not want to be Microsoft because it seems that tanker is too big to turn, but they're certainly operating from a far superior asset base.
But it’s not just about financials and size. Think about each set of products from a competitive perspective. Facebook has no major revenue stream outside of web based, desktop computing. They’re dependent on other people’s hardware. I don’t buy anything through them—it’s all just clicks and views. Even when you consider their main asset—my data about who I’m connected to and what I want, it’s not totally clear that either a) really knows more about me than Google or Amazon or b) whether they’ve effectively leveraged that into any kind of a superior business model. It’s not as if any app I connect to on Facebook is that much more of a groundbreaking personalized experience purely based on my Facebook data. I could just as easily connect with my e-mail account to find friends from other networks. And it’s not as if all ad campaigns in Facebook are, by far and away, light years ahead of the ROI of other platforms.
When you stack up Facebook against these other players in terms of it’s interaction with you in your life—what is it? For most people, Apple or Google provide their phone. Apple sells you music and digital content. Amazon sells you books and just about everything else. You run your business on either Microsoft or Google applications. You use Amazon’s technology in most of the apps you use.
And Facebook? Well, you waste a bunch of time there when you have it—and it’s an address book. Am I missing something?
Moreover, Facebook seems like it’s on a course to continuously fight fires when other apps garner huge attention. They *had* to buy Instagram and probably should have bought Zynga. Now they’re getting flanked by Snapchat for teen attention. If teens want to create content that disappears after a while and have their data be ephemeral, good luck getting them to like anything or have their permanent content get monetized on Facebook.
What’s also somewhat concerning is Facebook’s lack of ambitiousness. Apple reinvented the phone as we know it. Now they’re aiming at TVs and watches, and computerized assistants. Amazon wants to get you any product you want, digital or analog, as quickly as possible. Google is going to drive you around and feed you data through a pair of glasses, in addition to being your phone and totally connected life.
So… what does a Facebook future look like? What is Facebook in 30 years? Or even 10?
Facebook has a lot of smart people working for it, but I wonder if it has the boldness and vision to compete with companies that are building hardware as we walk away from the desktop, building logistics networks to deliver anything anywhere, or fiber to the home. If anything, the prospects of a company with a billion global users seem, well, startlingly underwhelming if all they ever become is a pool of data that powers some other stuff in a world where lots of other devices and services are going to be collecting a lot of other data on me.
Compared to these other tech giants, will Facebook be in a better or worse position 5 years from now, 10 years from now, and beyond?