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The Second Coming Of Facebook
Facebook's eye-watering IPO has raised some awkward questions for the future of social networking. The record breaking $100 billion valuation was greeted with skepticism from some quarters, which will only have heightened in the wake of a less than stellar trading performance.
Investors and analysts are nervous. Facebook may have almost 900 million users, but the company only makes an average of $5 profit from each of them per year. Finding ways to increase that figure without alienating people is an urgent task.
Cynics might even suggest that Mark Zuckerberg and company are cashing in now precisely because future growth is uncertain, but let's not forget we're talking about a man on a publicly stated mission to change the world, for whom wealth seems to be only a secondary concern.
[ Can Facebook cash in? See Facebook's Advertising Problem. ]
For the moment, Zuckerberg is pointing to mobile platforms as a means of increasing profitability. In order to stay relevant Facebook knows it must follow its users as they migrate to smartphones and tablets. What's not clear is how the company plans to increase the effectiveness of the adverts, which provide the bulk of its revenue on devices with smaller screens. Still, a mobile centric strategy is one that investors can at least understand and appreciate. Mobile is today's hot ticket, and Facebook needs to be there.
But what about tomorrows hot ticket? Many observers are beginning to point to a new platform on the horizon--the smart TV--and Facebook must to do a better job of preparing for it than it managed with smartphones and tablets.
Manufacturers like Samsung are already offering smart TV sets that include online apps along with voice and gesture control. Microsoft has also made moves into this arena by positioning its Xbox games console as a set-top box with Kinect providing the smart interface. A next generation Xbox console, rumored to arrive in late 2013, will no doubt offer more advanced smart TV functionality.
Perhaps most ominous of all, Apple's next big venture is rumored to be a smart TV product, and if there's one company with the pedigree to smash open a blossoming market it's Apple. Just look at iPhone and iPad for evidence of that.
However, it would be more than a little premature for Facebook to highlight smart TV as a driver of growth right now. After all we're talking about a platform that hasn't really arrived yet. Smart TV is still an embryonic concept in the equivalent of the pre-iPhone era of the smart phone market or pre-iPad for tablets. Once again it may not be until Apple shows its hand that the smart TV truly enters most people's consciousness.
Zuckerberg and his colleagues will be more than aware of its imminent arrival and behind the scenes Facebook must surely be preparing for a smart TV revolution.
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