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Microsoft to Pay $240 Million for Stake in Facebook
Nrbelex writes to mention The New York Times is reporting that Microsoft has beat out Google and Yahoo for a 1.6% stake in Facebook. The investment will cost Microsoft $240 million valuing the total site at somewhere around $15 billion. "The astronomical valuation for Facebook is primarily evidence that Microsoft executives believed they could not afford to lose out on the Facebook deal. Google appears to be building a dominant position in the race to serve advertisements online. Fearing it might lose control over the next generation of computer users, Microsoft has been attempting to match and in some cases block Google's plans, even if that effort is costly."
You really have to wonder if the people writing these articles - and this is the NYT as well - have a clue. I mean words can't really describe how flawed it is to suggest a website API (and as the parent points out, a simplistic & fairly inadequate one compared to others) equates to an OS. It seems that the journo's are happy to get caught up in "beliefs" that - when you actually sit down and say "hang on, lets genuinely have a look at the facts here" - sums up to be a big pile of vacuous SFA. Someone needs to fire a bolt of reality into this lot, we (on here) are all happy to point out the basic truth that it is a bubble and it will burst, but it goes beyond that now - even the supposed objective commentators are blowing air into the bubble.
As for MS's purchase - we all know they have more money than sense - but I didn't realise it was that much.
What usually happens is there is a little cash over the table with some other promised cash materializing if the project hits some agreed-upon benchmarks.
Let's say they actually make $150 million this year, since the company is fishing for investors, they are burning through whatever they are making.
Today's lesson: Company seeks investor == Can't grow on it's own capital =~ disfunctional business model.
It will be interesting to watch the flame-out in a couple of years.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
Conspiracy theorists will take note that there is a tag for inserting Silverlight elements into your Facebook app in FB's pseudo-HTML markup language, FBML. The only other formats to receive this support (inserting rich content with a single tag) are Flash and MP3.
Read my blog.
As a guy who has worked in web development for a long time, I can tell you from personal experience those numbers are completely untrustworthy.
An extremely prevalent pattern is for kids/teens/young adults to sign up 2-20 accounts per actual human. They enjoy the "role-play" elements in taking on new identities. At one time, a site I worked with didn't limit "accounts" by email, it was astounding how many accounts per email we had - this was a kid oriented site. I think the average was 4 and a half or something.
So, even assuming they are all human derived (which they're not, but I have no educated guess on percentage), you can safely halve that figure and then you're STILL not accounting for abandoned accounts. I have two on myspace.
There is a real move away from user account stat usage these days, thankfully. I've been mocking it as a statistical tool for years so I feel a certain vindication. More useful now are page views and time per session (this is qualitative generally, but less so than 'account number')
Congrats to MS on purchasing a share in a great product that's clearly jumped the shark. As someone mentioned, the userbase of facebook doesn't have a lot to lose by jumping ship for a better product. Facebook seems like a smarter than the average