Facebook, Microsoft, Google, Yahoo!, Apple

October 30, 2007

I haven’t written much about Web 2.0 stuff recently, but I think it was worth waiting until earnings were out in order to consider the leading technology companies at once.

Probably the biggest recent news was Microsoft finally committing to a stake in Facebook, and as the rumors suggested, it pushed Facebook’s valuation into the stratosphere – somewhere around $15 billion. Microsoft also announced great earnings showing that despite the general feeling that they’re clueless (Vista), they still have a continual money-minting business due to complacent market share.

But Google and Apple also announced awesome earnings. While Google was a given, Apple seemed to surprise most. I’m still having a hard time comprehending the stock over $100 and closing in on $200. And I will shake my head in disbelief as Google passes $700 and eventually $1000 a share (but I have a feeling an ounce of gold will achieve that feat first). Of course, what’s a few hundred bucks in the face of a perpetually falling dollar. $15 billion ain’t what it used to be.
Then note Yahoo! which sadly is looking more and more aimless by the week. More executives are leaving, there’s no sense that the Yang 100 day plan is bearing fruit, and their earnings, while decent, were nothing on the level of Apple or Google’s. I didn’t think they had a prayer at making a run for Facebook and there was hardly a mention of them even getting a foot in the door.

But back to this Facebook valuation thing – while there is definitely a lot of value in Facebook, I don’t think the $15 billion is justified (500 times earnings?). I will grant that at this stage in the game, Facebook seems to have pretty much wrapped up this whole social networking thing – many Web 2.0 social sites are effectively competing with Facebook.

But that said, do I think Microsoft is the right company to monetize Facebook? Are they the right company to give rise to this fuzzy, feel good dream of fostering the “social graph” and perhaps turn Facebook into the “operating system of the future?

No – I don’t think so at all. I think Google has a much better shot at making it work – or Facebook themselves. I stand by my earlier thoughts on this matter:

So despite the moves of the past month, I still have a lot of interest in Google’s social networking plans – now it’s called Maka-maka or something similarly Web 2.0 friendly (non-sensical). But what I think has been revealed in the past weeks is this web battle is between Microsoft and Google. Yahoo! seems lost in space, and Apple is busy creating the operating system of the future – and most notably, it’s not online. That’s a safe bet if I ever saw one.