opinion


What’s driving the mobile social networking bandwagon?

 
 
 
 
More crazy money talk was being bandied around in the world of social networking this week as it emerged that Web 2.0 giant Facebook has been eyeing up Twitter as a potential acquisition.

Facebook, much the darling of the mobile space at present, if recent deals are anything to go by, is believed to have considered snapping up the micro blogging tool, but walked away over a high price tag.

How high? Anything up to $500m if some reports are to be believed – which injects a certain irony into the situation as potential suitors for Facebook, like Yahoo, have in the past been driven off by a high price tag themselves.

Around this time last year, Facebook was apparently valued at around $15bn, after Microsoft paid out $240m for a 1.6 per cent stake in the site. But the problem with these valuations is that there is little substance to them, as well as the fact they are tied to services that don’t make any money yet.

Nevertheless, this hasn’t stopped operators and gadget makers alike falling over themselves to add social network to their friends lists.

Vodafone and BlackBerry (RIM) are just two names that spring to mind, which have actively promoted Facebook among their offerings, while Hutchison Whampoa’s 3 unit recently launched a Facebook optimised handset via its INQ unit. Nokia is also reported to have considered buying a chunk in Facebook itself.

Social networking tools are an obvious success in the consumer market, and are becoming a growing part of any enterprise’s unified communications arsenal, which may explain why almost everyone is keen to jump on the bandwagon. But at the valuations bouncing around the web? It strikes me that the bandwagon is running on hot air.


One comment

  1. Richard Gaywood 26/11/2008 @ 2:37 pm

    This isn’t quite correct — I’ve written a rebuttal on my blog: http://tinyurl.com/6dzlxy

    The bottom line is, the deal was valued at $500m but to be paid in Facebook stock, based on the $15bn valuation. Twitter reject that valuation, as indeed do you, meaning that the true value of the deal offered was far below $500m and was not ultimately high enough to sway Twitter.

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