Feeds

Facebook IPO: Boom or bubble?

We look at the numbers - and what's missing...

Boost IT visibility and business value

Analysis Is Facebook hugely overvalued or a solid business with some reliable growth ahead of it? A great deal of both.

The reason the Facebook flotation is different from yourfunny.co.ck, or anything conceived by a Shoreditch "leisure startup", is that it already has a large and devoted audience. When you can reliably draw a large crowd every day, you should be able to make some money. This is the one constant between the medieval minstrel and the modern media company - it's the same business proposition.

And this is what makes Facebook special and, incidentally, quite different to Google. The Chocolate Factory was an integral part of web life and internet commerce when it floated in 2004, but despite being a global brand, it was a website that people only ever left for other destinations. (Google only realised the importance of this quite belatedly.)

By contrast, Facebook is very sticky, at least for a lot of people. Facebook's S-1 registration statement says it has 845m active users and 483m active daily users. A more important statistic offered is that in December 360m checked in six days out of seven.

Now, I'd be wary of inferring too much from any communication statistic offered for a time period that includes Christmas. It tends to inflate "connection metrics"; many people communicate just once a year and it'll be in December. If every month was like December, it would be Hallmark Cards who'd have the Facebook-sized evaluation this morning. But that's still a pretty decent number.

He also had a cunning plan.
Does Mark Zuckerberg?

So think of Facebook as a new TV channel, with some Facebook users already spending far more time on the site than they do watching TV. But how much time - and what kind of TV channel is Facebook?

As one analyst has noted, the S-1 lacks even the most basic information on how the usage figures were worked out. And where it appears, it's obfuscated. "On average, users in the aggregate spent more than 9.7 billion minutes per day on Facebook on personal computers during December 2011," is all we're told. So we must to do the maths for ourselves.

This is odd.

If you ask us nicely here at El Reg, our commercial department will send you a lovely pack telling you how many people read us, what sort of people are they and how they read us - you can even read the "sticky" story we've put up for advertisers. But it's actually standard practice: every publication must disclose this kind of information if it wants to be taken seriously by advertisers. TV companies obsess about seconds of attention. Facebook's evasiveness is striking - for whatever reason, it doesn't want us to know.

Now many independent monitors work hard figuring out how web visitors spend their surfing time, and although their estimates differ to Facebook's (Nielsen has always estimated a significantly lower number for time-on-site than Facebook itself) nobody is disputing that Facebook consumes far more minutes than anyone else, and is on an impressive upward trajectory. It would have been nice to hear it from the mouth of Zuck.

So where does Facebook see its growth? Let's find out.

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.