Stephen Chapman

The second incarnation of my blog

Facebook Will Disappear In The Next 5 Years

Facebook will disappear in the next 5 years – but more importantly, here’s what will replace it…

We speak to the analyst and hedge fund manager, Eric Jackson, who last week proclaimed the demise of Facebook in the next five years – to which we discover how the third generation of the web, which will be dominated by ‘mobile’ will be Facebook’s downfall simply because mobile is not in its ‘DNA’. So we ask – which companies will prevail in the mobile generation, and what does it take for an existing internet company to survive?

Last week, analyst and founder of Ironfire Capital Eric Jackson told CNBC show Squawk on the Street that in “five to eight years Facebook is going to disappear in the way that Yahoo has”. Expanding on these comments writing in Forbes, Jackson predicts that Facebook will be “…not bankrupt gone, but MySpace gone”. Founded in MySpace 2003, MySpace has seen its userbase rapidly decine in recent years as a result of the growth of Facebook combined with its failure to innovate.

In the piece, entitled ‘Here’s why Google and Facebook might completely disappear in the next five years‘, Jackson writes how Facebook will face a tough road ahead as a shift to mobile happen. Common consensus in the industry is that mobile will be the ‘next big thing’ – especially given rapid smartphone uptake in recent years; a study last year by Google revealed that Smartphone uptake is now in excess of 50% in the UK. Jackson went on to say that “… Facebook loses money in mobile, and has rather simple iPhone and iPad versions of its desktop experience. It is just trying to figure out how to make money on the web – as it only had $3.7 billion in revenues in 2011 and its revenues actually decelerated in the first quarter of this year relative to the fourth quarter of last year.” To make matters worse – Jackson also notes how “…it has no idea how it will make money in mobile”. We spoke to Jackson in order to make some more sense of his analysis and predictions with regard to Facebook and its future.

Facebook will ‘disappear by 2020’ says analyst Eric Jackson of Ironfire Capital.  In his analysis, Jackson speaks of three different generations of Internet companies:
•Web 1.0 consisting of companies founded from 1994 – 2001, including Netscape, Yahoo! AOL, Google, Amazon and eBay).
•Web 2.0 or Social (companies founded from 2002 – 2009, including Facebook, LinkedIn, and Groupon).
•…and now mobile (from 2010 – present, including Instagram). This is not referred to as Web 3.0 given that ‘mobile’ is generally differentiated from ‘web’.

Jackson told us that “The Web has been around for a little more than 15 years. The first generation was made up of portals. You build something big with lots of info and get traffic. Yahoo and Google are good examples. In 2002, LinkedIn a social networking website designed for professional networking and recruitment) was founded. Facebook came along in 2004. “

Instagram is a free photo sharing app that allows users to take a photo, apply a digital filter to it, and then share it on a variety of social networking services, including Instagram’s own.

“This was the beginning of what some called Web 2.0 or what most of us would say was the ‘social’ generation. More recently this started with the founding of Instagram (a free photo sharing app that allows users to take a photo, apply a digital filter to it, and then share it on a variety of social networking services, including Instagram’s own) two years ago; we had purely mobile-focused companies who don’t even bother with their websites. They’re entirely focused on their phone/tablet apps. In my view the DNA required to be a successful company in each of these generations is different. “

“Therefore, it’s not surprising that the companies who have risen to the top of their generation when they’re born seem incapable of turning their back on that, and becoming equally successful in another generation to follow. The mobile generation has just started and I think it’s still wide open to see who will win.”

How, and why will mobile be the future?

So in what sense will mobile be this third generation? What kind of companies are on the right path? To that – Jackson told us “Instagram was the leader”. Continuing to say that, “…now that they’ve been acquired, history suggests their growth will be stunted as part of another entity (Editors note: see also, the acquisitions of Dodgeball and Jaiku and more recently Gowalla – incidentally, by Facebook too) rather than left to innovate on their own. “

Twitter is an inherently mobile company. People forget that it started as an SMS messaging service in 2006.

Twitter are in a much stronger position than Facebook to win in the mobile era

“I think Twitter is an inherently mobile company. People forget that it started as an SMS messaging service. That’s in its DNA. Their website came much later and frankly it was pretty poor (in some ways it still is). I think they’re in a much stronger position to win in the mobile era compared to Facebook, whose DNA is as a big website. “

We then asked Jackson – what would it take to be a success in this third generation? …to which he quoted what Mark Zuckerberg said 18 months ago, ”iPad’s Not Mobile…It’s A Computer…Sorry!”” It’s just another way to show a website.” Jackson continued; “I think this is fundamentally wrong. The best phone apps are the ones tailored to that unique form factor. “

“… but take a phone app and blow it up on a tablet and users aren’t satisfied. It’s not maximizing that tablet form factor. We expect better resolution and capabilities that we use with a tablet. The winning apps in this mobile generation will be maximized for our needs with our mobile devices. They’ll be inherently social – look how easy Instagram made it to share photos. They won’t just be replications of the way we used to behave with the PC.”

Reblogged from: Facebook will disappear in the next 5 years – but more importantly, here’s what will replace it

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This entry was posted on January 17, 2013 by in Internet and tagged , .

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