Facebook’s IPO – Major Questions And Consequences

Facebook IPO

Facebook’s IPO is the latest buzz in the market. But along with all the interest that it has generated, it has also raised quite a few questions. How successful will the IPO be? What are the benefits? Who is getting Rich? How do we get a stake in the bid?

Where Is Facebook Today?

Facebook is currently the leading social media networking site, as we are already aware and as per reports, it’s now the one company to file a $5 billion IPO.

Consequences: Based on these developments, the pressures increase. The board of directors is already set; which means the company now has to work towards profits; not just for themselves, but for everyone who has a stake in the company.

How Does Facebook Earn Money?

As per reports, about 12 percent of the revenue in the previous year came from gaming (games like FarmVillie and CityVille and other of course games) while, the remaining 87 percent came from advertising.

Consequences: With the way expectations are going to grow, the main channel for revenue seems to be advertising. Facebook will have to gain more and leverage its advertising domain. This could mean more ads being thrust on the user and commercialisation of the features. You can expect some interesting factors, but mostly, there’re going to be about making the user dig deeper into his pockets.

What Is The Problem With The IPO?

There’s no specific problem with the IPO per say.

It’s just that – Facebook is entirely dependent on a person’s idle time! The basic foundation of the business lies on how much time a person wants to exhaust on things that are not directly constructive.

The problem is, the way ahead for facebook to grow, would mean:

• more people joining facebook
• people wasting more time on facebook (can’t call it investment because it’s well just plain socializing and idle time!)
• more people clicking on the ads

Now, more people will certainly join the network, but with 800 million already, there’s only 4 and half billion to catch up on. More people whiling away time on the network, sure! But the last aspect is what the big question is: As per statistic, most of the people who actually are there on facebook, don’t even click on the ads. And with growing awareness of what’s an ad and what’s not an ad, more people seem less interested to click through. A majority of people who are on the network from its inception have reported to NEVER having clicked an ad. So, how is this problem going to be solved?

Who Is The Competitor?

The unknown is the competitor.

That’s precisely what facebook should be not be over confident about. Simply, about the unknown; there’s nothing absoluteÖ and hence, sooner or later something that engages people better can come around.

The market domain in itself is fragile. We have seen the rise and fall of many competitive social media sites. Facebook could very well fall into the same category.

So, Is Facebook A Fad?

There’s no specific answer to this too. Google survived; its IPO doing great, while linkedIn remained affected.

The winning point for Google is that is has us conditioned to turn to it for our answers. Google’s gone into the dictionary as verb, controlling the way we search on the internet. Now, if Facebook wants to be something that big – what will it or has it, conditioned people to think?

‘Facebook is the best way to spend my time’ – could that be a statement we’d ever make? Except for occasions, this can’t really be true. So, a game changer could be round the corner again.

What Are The Positives? – Good Leadership

At the end of the day, facebook has quite a few bright spots. One is the support of so many people for whom facebook is life! And the other, is Good Leadership.

Zuckerberg himself being a dynamic visionary at 27, has the best minds on board like Sheryl Sandberg as COO and David A. Ebersman as CFO. If they manage attrition and keep the best minds with them they should be able to excel.

What Are Or Could Be The Future Plans?

The future needs to include some more ‘brainwaves’.

For instance, possibly marketing will have more avenues (similar to ‘pages like’ ads, but something more innovative)

The engineers at facebook are some of the brightest people from the industry, like Michael Schroepfer, Vice President of Engineering. They are constantly working hard and facebook is constantly evolving; this is a major plus point because it implies and validates the fact that a competitor shall have to be way smarter.

Not to forget, the world is becoming mobile driven. With 3G and high speed internet, android phones and the many other applications, facebook is only making more inroads into a common man’s life. Simply put, these could make for interesting developments.

Consequences:

Facebook may become the new ‘default’ virtual thing. Something like an e-mail id; the world simply can’t run without people having e-mail ids anymore! A time might come when people might become infrequent, but completely leaving fb, may not really happen. Facebook certainly has the potential to become the virtual ‘address’ for people. In the real world you look at person and decide how he or she is; in the virtual world, you’ll be looking at facebook profiles to create perceptions. And when a world thrives there, we can certainly be optimistic. Who know, fB could be the next to get a ‘planet’ status!

Author is a web design expert and a passionate blogger. He writes on subjects of web development and strategies to deal with e-businesses and e-commerce. She also works in company which offers PSD to HTML5 and PSD to WP Coding service.

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