While the world’s most popular social media network, Facebook, can boast a user base of 1-billion users and revenues of $508-billion, there are disturbing signs that the platform may run the risk of losing users in the future.
Research conducted by Pew Internet Project points out that 61% of adult Facebook users are planning to take a break from the platform, with another 27% saying that they plan to spend less time on the platform in the future.
This is all normal considering the pressures of daily life and that some of these users might be going through some serious changes in their lives. Of more concern is that the research points out that 10% of the survey group said that they are taking a break from the site because it was a waste of time or becoming irrelevant.
This is of some concern as Facebook has always prided itself on the quality of its content and its ability to engage users on its site. Chairman of the Information Systems Department at the Boston University School of Management Venkat Venkatraman points out that there is time spent on Facebook and there is quality time spent on the social network. “It is inevitable that people will feel tired after an initial euphoria. Even if people spend less time on the platform, [but] find the time spent to be useful and valuable, Facebook can monetize it,” he said.
Therefore, Facebook needs to ensure that the content on its site is engaging enough to captivate users and keep them there for sustained periods of time. I would like to hear your thoughts below.
The Pew Internet Project based on a sample of 1 006 American adults aged 18 and over. The Pew Research Center is a non-partisan think tank based in Washington.
One of the saddest stories of 2012 was the sudden fall from grace of online gaming giant Zynga who developed popular online games CityVille and FarmVille. Despite beating all analysts’ expectations when it recorded a profit of 1c/share in Q4 of 2012, the company expects more turbulent times ahead.
Technology website ndvgadgets.com reports that Zynga’s revenue was virtually flat from a year ago, but was down from the prior quarter. And Zynga’s underlying business appeared to be continuing its downward slide, as the maker of “CityVille 2″ and other games projected revenue could shrink for a third sequential quarter.
Zynga is struggling to come to terms with the changing nature of the market where the public is moving towards mobile technology such as smartphones and tablets over PC’s. During the fourth quarter of 2012, Zynga saw daily active users drop to 56-million users; down from a high of 72-million users in the second quarter of 2012. The basis of Zynga’s business was developing socially interactive games which were made available over Facebook.
While the world thought that 2012 was going to be the year where the writing was on the wall for some of the world’s largest phone manufacturers, Zynga looks like one of the year’s biggest losers. Although the company’s fourth-quarter revenues were $311 million, they remained virtually unchanged from a year ago. Zynga forecasted revenue for the first quarter of 2013 of between $255 million and $265 million, a roughly 20 percent drop from the same quarter in 2012.
This sets the scene for a year where the company is really going to struggle to maintain its market relevance. However, all is not lost for the company. Zynga was at one time the world’s biggest producer of online games and could boast a healthy cash reserve. The success of Zynga’s online games is undeniable and the games were popular because of their simplicity and the interactive nature of their game play.
One of the biggest winners of 2012 was Imangi Studio’s Temple Run which was an instant hit with iPad users. The company has just released Temple Run 2 and it reports that the response has been overwhelming. “Temple Run 2 has already been downloaded over 20 million times in the first four days it was available on the App Store,” says the company. Perhaps it is this success that Zynga should aim to replicate. I would like to hear your thoughts below.
After overcoming a challenging 2012, Facebook has started off 2013 very positively, by announcing significant mobile growth and introducing Facebook Gift Cards, a new edition to its Facebook Gifts service.
When purchasing a gift for a friend via Facebook Gifts, users will be given the option to purchase a gift or to purchase a card which can be used at Target, Jamba Juice, Sephora and The Olive Garden. Facebook has said it will be expanding the service to other stores in the near future.
Facebook is entering a flooded market. However, there are a few features which makes Facebook’s product unique. The card purchaser can assign a specific cash value to a specific store, the recipient can monitor the card’s balance through the Facebook mobile app and any future amounts can be added to the same card.
Facebook has been looking for ways to diversify its monetization policy since the beginning of 2012. In a previously published article I pointed out that Facebook Gifts has up to now been the company’s best step to move away from its heavy reliance on advertising revenue. Facebook started the service with a handful of stores but demand has grown so much that the service has expanded to include both physical and virtual gifts.
With its one billion-strong user base, Facebook has realized that it has the opportunity to turn Facebook Gifts into a potential gold mine. Key to this would be offering unique products and services which appeal to users’ tastes, and the introduction of a gift card is the perfect way for a user to cover their bases when they don’t know which gift to purchase. I would like to hear your thoughts below.
The Amazon website is up and running again after being out for almost an hour on January 31 2013. This is not a good advert for a company that wants to make a push to establish itself as a major player in the online entertainment industry.
CNN.com reports that at around 2:30 pm eastern time, users began complaining that they weren’t able to access Amazon.com’s homepage. Other parts of Amazon’s site, as well as the mobile app, appeared to be unscathed. Amazon-owned properties like Zappos and IMDB were also unaffected.
Although the outage was short, it is very rare that Amazon crashes and in fact, by all accounts the site should not crash at all. Amazon has mega servers which drive its site. This server produces so much extra capacity that the company established Amazon Web Services (AWS), a cloud-based service which hosts and offers administrative services to other websites.
The outage will damage the reputation of the company, which prides itself on the fact that it has so much capacity that it offers the surplus to other companies. It also places Amazon’s claims that it is a technologically advanced company into question.
Experiencing outages such as this will also damage Amazon’s Kindle Fire marketing strategy. The company manufactures and sells the Kindle Fire fairly cheaply, preferring to make up profits selling online content – a continuous revenue source for the company. In a previously published article I pointed out that a large part of this depends on offering a video streaming service similar to that of Netflix. Outages would push users to competitors, something that the company needs to avoid.
Reports indicate that AWS was not affected by the outage, which begs the question as to why Amazon does not use AWS as a contingency plan should the main site experience the threat of an outage. This then does question the company’s technological capabilities and ability to fulfill its ambition of establishing itself as a force in the online entertainment market. I would like to hear your thoughts below.
Google has been able to gain a small advantage over its long-time rival Apple, when the technology giant’s stock soared as confidence in Apple is at an all time low. Is this the opportunity Google needs to push ahead with its Android platform and make the market share disparity between the two companies even greater?
Google’s stock soared after reports that the technology giant has reached a settlement with European authorities became widely publicized. This marks a significant turning point in Google’s ambitions to dominate the market. If it was found guilty of violating European antitrust laws, it would have been fined $4-billion.
Antitrust concerns aside, Google reported better than expected results for the fourth quarter after a good performance over the festive season, buoyed mainly by the fact that Samsung (which runs on Google’s Android operating system) was able to sell 500 phones a minute over the period.
By contrast Apple is floundering. In a previously published article I pointed out how negative public sentiment contributes to Apple losing its accolade as the world’s most valuable company to energy giant Exxon. Analysts and investors are concerned with Apple’s pipeline of products and the company’s ability to produce market changing products beyond rehashed versions of the company’s popular iPhone and iPad.
This adds a bit of flavor to the market as consumers are eager to see what Apple’s next move is in relation to manufacturers that operate off the Android operating platform. There are already rumors of a Samsung Galaxy S4 and considering the popularity of the Galaxy SIII, Apple needs to come up with a revolutionary product in order to gain back some of the ground it has lost to Android. I would like to hear your thoughts below.
Facebook has had to once again come out publicly to defend its new Graph Search product. The company has even gone so far as to post a blog and record an instructional video explaining the product and how it won’t infringe on the privacy of its users. However a practical example of the product suggests, otherwise which may inadvertently compromise it.
Graph Search, which is still in beta testing, was launched recently and is a new service which offers users a new and unique way to search for information. The service uses status updates, photos and likes in order to generate a holistic result. Unlike conventional search engines such as Google, Graph Search searches information according to your whole query and not just key words in your query.
In a previously published article, I highlighted Mark Zuckerberg’s comments at the launch of the product where he assured the public of their privacy. Subsequently, in another article,I discussed the topic of Facebook’s decision to unmask previously masked profiles as they would compromise the essence of Graph Search.
This has opened up many users to unwanted public scrutiny. In a Graph Search experiment carried out by fellow social media platform Tumblr, a user typed in a search query and a comprehensive set of results came up detailing the names and personal profiles.
Under certain circumstances, this may cause significant damage to the personal lives of users. They will be more reluctant when posting information on the social media platform which may compromise them in the future. Does this then not also compromise the effectiveness of Graph Search?
In a previously published article I pointed out that despite generating a lot of hype with its much anticipated IPO, no company generated more criticism over its business practices in 2012 than Facebook. It will be very interesting to see how it fares once users start managing their social profiles with more caution. I would like to hear your thoughts below.
If you have bought a smartphone after January 26, 2013 and are thinking of unlocking it in order to get extended benefits… think again. The US government, after consultation with the US Librarian of Congress, has just passed a law that makes this practice illegal. But does this mean it is impossible? And how will the new law be policed and implemented?
Technology website t3.com reports that the reason for this is that in October 2012, the US Librarian of Congress determined that an exemption to the Digital Millennium Copyright Act (DMCA) no longer applies to smartphones. The DMCA is what makes it illegal for consumers to break region encryption on DVDs so they can watch them on the device of their choice or making binary copies of movies in order to watch them on tablets. Now, it also makes unlocking smartphones illegal.
However, there are also rumors that network carriers put significant pressure on government to implement this law as unlocking smartphones gives users the ability to move between carriers in order to get the best deal.
Although this law technically makes the unlocking of smartphones illegal, it is not impossible as there are a number of loopholes in the system.
- The law only applies to phones which were purchased on or after January 26 2013.
- Users can still unlock their phones provided they have permission to do so by their network provider, in which instance an unlock code will be issued.
- It is also still technically legal for users to unlock their phones due to the fact that they have the right to use legally obtained software on their headsets regardless of whether network providers or manufacturers like it or not.
If the law came about because of pressure put on government by network carriers who are trying to consolidate their position in the market, it would suggest that they have a greater influence in policy decisions than one would care to admit.
Surely there are better ways to achieve this. If network carriers had to offer similar, yet competitive packages, users would naturally be attracted to them.
As t3.com points out, the most bizarre aspect to all of this is that there’s no word yet on what sort of penalties consumers can expect for ignoring this law, or even how the authorities intend on enforcing it. This means that in all likelihood it’s bound to remain a grey area for some time to come. I would like to hear your thoughts below.
After navigating through a turbulent 2012, Facebook’s growth in mobile revenue has proven that the company’s decision to focus a lot on time and energy on the platform was a calculated risk, rather than a gamble. And the company looks to be increasing this focus even further.
Reports show that in the fourth quarter, the company stated its monthly active mobile users jumped 57% year-on-year to 680-million people. For the first time in the company’s history, mobile users eclipsed desktop users. Facebook also pointed out that 23% ($306-million) of its quarterly advertising revenue was generated from mobile platform use.
This is in stark contrast to the company’s mobile performance in the third quarter, where the company had 604-million users per month accessing the platform through mobile devices. Mobile advertising revenue during this time contributed 14% ($152.6-million) to the platform’s ad revenue.
In an article published just after the release of the Q3 results, I pointed out that Facebook was going to become heavily dependent on its mobile platform. I made reference to COO Sheryl Sandberg’s views on this growth, “Our mobile user base is huge, growing and even more engaged than our desktop user base. Our results to date suggest we’re on the right track. We have become one of the largest mobile advertising platforms in less than eight months.”
Apart from the fact that Facebook has been able to improve its mobile interface to attract an increased number of people towards it, a main contributor to revenue growth was rolling out ads in news feeds and the user acceptance towards this.
Speaking at the launch of the Q4 results, CEO Mark Zuckerberg said he was surprised at the low effect that including the ads into the news feed had on users’ browsing habits.
“One of the big drivers of [mobile revenue] was that as we rolled out ads in news feed, we found that it barely affected the level of engagement on Facebook,” Zuckerberg said. “We thought that we could make this work over time without a big impact if we spent a long time tuning the ads, but the numbers turned out even better than we thought without much tuning.”
However, with this new found interest in mobile advertising comes a new concern that Facebook management need to overcome. The platform’s costs and expenses, excluding share based compensation, increased by 67% to $849-million. A good indicator as to whether the company is on the right track or not when it comes to costs is the money spent on research and development.
Typically a company is considered a high research company if it spends over 15% of revenues on R&D; in the fourth quarter Facebook’s spending was as high as 19%. This doesn’t look to be slowing down as Zuckerberg warned that the company would once again embark on a major shopping spree in 2013.
This is a visible sign of the rapid movement of the market towards mobile. This will be the area which offers the greatest potential for growth and if social media companies want to remain relevant in the market, they should focus their attention on building a cutting edge mobile app. I would like to hear your thoughts below.
Facebook has continued its rapid growth in the mobile sector after it was announced that its mobile app outperformed Google Maps to finish as the top app of 2012. This shows that Facebook is getting serious about mobile and gives an indication as to where the company may expand in the future.
Not only has Facebook’s mobile app been downloaded more times than Google Maps, but the social media platform also managed to boast better social engagement than the Maps app.
Reports show that the Facebook app attracted approximately 85-million unique monthly visitors during December 2012. Research carried out in the US shows that nearly one fourth of all the time spent using mobile applications on smartphones and tablets are people accessing their Facebook profiles.
Google Maps came in at number two with 75 million unique monthly visitors during December 2012. This is a significant decrease for the search giant as it was able to boast 82-million users during September 2012. Google Maps took a knock when Apple decided to remove it as its default mapping application when it launched iOS 6 in September last year.
A key feature of applications is that it is not only about the initial profitability that a company gets when an app is downloaded, it has more to do with the fact that apps offer the potential of a continuous revenue stream because of social engagement. Mark Zuckerberg alluded to this in September 2012 when he said that the company will be making a serious push to improving its mobile product.
When addressing the media, he said that mobile will be the key to Facebook’s future success. However, improving its mobile application is not the extent of Facebook’s push towards mobile. The platform has seen what mobile can do for the company so maybe rumors that Facebook is considering manufacturing its own smartphone may not be so farfetched. I would like to hear your thoughts below.
Securing key markets is one of the best ways in which companies can ensure that they establish their dominance and maintain high profit margins. For the first time since the company launched the iPhone in 2007, Apple has become the top selling mobile vendor in the US. However, does this mean that the company can become complacent? Far from it.
Recent statistics from market analyst group Strategy Analytics shows that Apple accounted for 34% of the market in Q4 of 2012, which was helped by a dip in the sale of feature phones.
Feature phones are bottom of the range mobile devices which have basic functionality and are not smartphones. Another market research firm NPD noted that feature phone sales has dropped considerably to a point where 8 out of 10 mobile phones sold in the US, are smartphones. This ration is up considerably from 2011 where smartphones only made up 50% of the market.
This is a clear indication that the market is heading towards technological advancement rather than settling for products which boast basic functionality. It also shows that mobile manufacturers are designing a range of products that appeal to both executives and the general public.
Apple’s Q4 performance is a 25.6% jump on its performance during the same period in 2011. Apple’s main rival Samsung also recorded similar growth when its sales increased by 32.3% from 26.9% in 2011. The only manufacturer that showed a decline in sales was LG, which dropped to 9% from 13.7%. However it is important to note that while Apple only sells smartphones, Samsung and LG sell a variety of feature phones in addition to smartphones.
This is good news for Apple, which has finally been able to gain the advantage over its major rival in the US. Samsung still ended the year as the top mobile phone vendor and Strategy Analytics expects them to be on top of the US market soon, with the rumored release of the Galaxy S4.
It all has to do with timing. Apple may also be eager to release an updated version of its iPhone this year and if Samsung times its release to coincide with the release of the iPhone, the consumer market will be split into two definite camps, with a few consumers that were loyal to brands such as Nokia or Motorola ready for the taking. This will be determined by functionality, pricing and marketing. I would like to hear your thoughts below.