I was involved in an entertaining discussion with a group of individuals this week where someone stated that the battle for the internet is over, Facebook has won.
It made me laugh and think of an article that John Naughton wrote in The Guardian recently titled, “Why the Facebook and Apple empires are bound to fail.” It makes a bunch of great points.
“Nothing Lasts Forever”
Unfortunately, as in the real world, while companies are built to last forever, they don’t. Markets and technologies change, and the favorites of today eventually become forgotten tomorrow, only to be remembered through case studies and business school discussions. It’s hard for us to imagine a world where Microsoft, Apple, Facebook, Google, Intel and Cisco aren’t the dominant technology companies, but a time of decline will come for all of them.
“…Facebook’s latest attempt to become the AOL de nos jours…will fail for the same reason that AOL’s attempt to corral users within its walled garden failed: the wider internet is just too diverse, innovative and interesting.”
I don’t bet against the web. Naughton’s spot on when he says the internet is “too diverse, innovative and interesting.” There is only so much that Facebook can do to keep users captive on its site. There’s too much innovation and interesting content being created on the web for Facebook to keep up and stop users from leaving the comfort of their environment for greener pastures.
“…because Facebook looms so large in the public consciousness at the moment, it’s difficult to keep it in perspective.”
We tend to get so caught up in the moment that we lose historical perspective. Sure, people will say that it’s different this time. We heard that before the internet, telecom and real estate bubbles popped. There’s no such thing as different this time. Eventually, fundamentals (and reason) take over, allowing us to gain perspective and realize the errors in our previous ways of thinking.
“Although the eclipsing of Apple and Facebook is inevitable, the timing and causes of their eventual declines will differ….What will determine its [Apple’s] future is whether it can come up with new, market-creating products such as the iPod, iPhone and iPad.”
The hardware business is a brutally competitive business characterized by compressed product cycles and thin margins. Apple has managed to buck the trend temporarily, but it won’t last. They are one, maybe two, bad product decisions away from losing their status as a category defining company and becoming just another face in the crowd. Don’t think it’s possible, just take a look at Sony’s rise and subsequent fall as a consumer electronics giant.
“Facebook, on the other hand, makes nothing. It just provides an online service that, for the moment, people seem to value. But in order to make money out of those users and satisfy the denizens of Wall Street, it has to become ever more intrusive and manipulative It’s condemned, in other words, to intrusive overstretch.”
If not already, Facebook will become a slave to its investors. Having a billion users means nothing if you’re not making money off of them. Facebook has been lucky thus far that its user base has tolerated so many of its over reaching privacy intrusions. At some point, Facebook’s need to satisfy its investors will force it to go too far, driving users away.
The moral or the story: history is doomed to repeat itself. When we’re engrossed in the moment, we lose perspective. It’s hard to see how the companies we hold in such high esteem today will fail. Unfortunately, nothing lasts forever, and the cyclical nature of technology only reinforces that tired cliché.