Does the recent IPO of Facebook tell us anything?

Usually the price of a new stock goes quickly up or down as the market evaluates it.  The jury is still out on Facebook, but with nearly one billion users it’s hard to imagine Facebook fading away soon.

Perhaps this is the start of the end of social networking as an engine of high tech growth.  LinkedIn.com went public a year ago and that leaves Twitter as the last of the big three social networks to remain private.

Reports have shown that nearly two-thirds of mobile data usage is for social networking, so the big social network sites are hugely popular with people on-the-go.  Social networking, a form of communication, is heavily used on mobile devices.  Consider that if users are already spending two-thirds of their time on mobile devices for social networking, then how much room for growth is there?

Certainly social network usage will increase as smartphones increase their numbers, since there is high usage of social networks on mobile phones.  This does not mean there is a case for new social networks however.  User growth may be trending towards mobile subscriber growth and that means much slower growth for social networks as a category of high technology.

This is also good news for the entrenched players: Facebook, Twitter and LinkedIn.  The winner-take-all marketplace for your attention is especially amplified by social networks that require the presence of your friends.  If your friends aren’t subscribers, why join yourself?  This virtuous feedback loop of wanting to be in the network your friends are in will keep the big sites big.

While the big three are likely to remain so, I don’t see prospects for their growth over the current rate of smartphone growth which is actually slowing now as most people have a smartphone.  So if the big sites aren’t going to be picking up lots of new users, then is this the end of the social network bubble?

I think so, I believe we are at the end of a great run of technical innovation for communication.  We’re going to keep that innovation and in fact expect apps for those social sites to be pre-loaded on phones we buy.  Our smartphone is truly a communication device with not just voice calls, but also texting, email, Facebook, Twitter and even LinkedIn apps.  That is the new floor of functionality we expect for a mobile device.

But do we want more?  If we do, we have to give up time we are already spending on social networking sites or shopping sites.  I just don’t see that happening.  I also don’t see any smaller player displacing the big three.  Of the small fries, Google+ has the best shot because (1) it does have a great mobile experience, certainly better than Facebook’s as of this writing and (2) Google has the related popular web properties to integrate with Google+, think of the link in the upper right corner of your Gmail page.  Still it’s only a shot, not a certainty.

There will be new social networks popping up as people, sometimes smart people, try to duplicate the magic yellow brick road of Facebook.  I don’t expect any of them to strike it big, but I do expect future growth of the big three to come by picking up smaller social sites through acquisition.  The same forces that combined Internet ISPs will also combine social networks.

We’re at the peak.  The future of social networking is now a long slog of typical business acquisition and tepid growth.  Get online, get your accounts, don’t worry, they won’t be changing for years to come.

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