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Ballmer Thinks Facebook At Risk For Being A Fad, We Think Not

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Microsoft (MSFT) CEO Steve Ballmer, following rumors last week that the software giant is considering an investment that would value the social networking company at $10 billion, is saying the craze for social networks such as Facebook risks being exposed as a “fad.”

I think these things [social networks] are going to have some legs, and yet there’s a faddishness, a faddish nature about anything that basically appeals to younger people.

Facebook is also built on technology that “dozens of people could write in a couple of years,” he told Times Online. On the other hand, he suggested that the combination of the well-known brand and the community of more than 40 million users has some value.

But is Facebook destined to become a fad? I don’t think so.

Facebook’s biggest problem right now is its escalating legal issues regarding the safety of minors on its site, not whether or not it’s a fad. As of August, the number of unique users on Facebook had soared 117 percent year-over-year, to 19 million, according to Nielsen/NetRatings. Originally open to college students only, the growth over the last year was first fueled, in September of 2006, by Facebook opening its doors to all interested users, then by its announcement in May that external technology companies could develop advertising-supported mini applications for the site.

Ballmer compares the potential faddishness of Facebook to Geocities (which was bought by Yahoo for $3.6 billion in 1999). But Facebook is different. Encouraging outside developers to create applications for Facebook enables the site to constantly add new content for its users without having to spend any money in-house. New, easy-to-find content, whether created by friends or outside developers, drives the growth of social networking sites.

Additionally, Facebook is a mix of personal and professional social networking. And it’s about to be an even better mix, as the site will soon add the ability to separate work “friends” from social ones. Lindsay Blakely of Fortune asserts that this “seemingly innocuous change… could pose a threat to business networking site LinkedIn.”

Ultimately, though, social networkers aren’t as fickle as some would like to believe. Sure, there’s always the possibility that something bigger and better will come along, but anyone who has actively belonged to a social networking for a significant length of time knows that it’s difficult to just pack up and move from one community to the next.

25 Responses to “Ballmer Thinks Facebook At Risk For Being A Fad, We Think Not”

  1. I think Facebook is popular in America. It can be expanded to Aisa market such as Google. In Aisa, there is few sacial networking or websites which contains all kinds of tools to connect and communicate.
    Therefore, it is a potential international market.


  2. The reason that Facebook is a fad is that there is inherently a superior model. It hasn’t been introduced yet, but it will. For now, those who know about it aren’t talking.

  3. jccodez

    This is more about getting a decent value/market cap to make an investment. You see, the big boys (yahoo, microsoft, ebay/skype) all play hard ball. They all feel the need to “level” the web 2.0 wunderkind and bring in more sensible market caps for startups (firstly facebook, secondly jaja and all the rest…). This is an old school game and the players know the plays quite well.

  4. There is a new generation of kids growing up who will do their own thing, just as they do for music, fashion, etc. At the same time, many in the current generation of FB users will leave it behind as they transition to new phases in life focused on career and family. It’s a fad.

  5. Ballmer may be right as he seen fad like Mac OS, SUN, Lotus, Open office etc, which most of them went into vain and Facebook is coming back from debacle like AOL and Skype/Yahoo, may be he has point?

  6. facebook is not a fad in the traditional sense, what worries me after the skype/ebay debacle is how MS or Google would integrate this service. Facebook tech is actually done pretty well….the only downside is the amount of new facebook apps that have sprouted up. It could turn the pages into a mess like the typical myspace page is now.

  7. Reality Check: It doesn’t matter what GigaOm thinks compared to Steve Balmer because opinion is just opinion. Money talks, everyone else just walks. So keep on walking GigaOM (now its time to take a nap after this boring news about GigaOm thinking its a hipster blog because it can express an opinion different than that of Steve Balmer’s).

  8. Seadragon was technology that MS acquired, not developed.

    My bet is that FB will not go the distance in its present form. It will be bought for the users, and the technology thrown away like a gum wrapper.

  9. Fad: History is not on the side of those who claim these sites are not fadish — anything that involves humans in a such a core way is intrinsically fadish.

    Value: There is no Overture or AdWords in this product — without this all you got is a big expensive party and no capital to create sustainable competitive advantage like Google is doing on the infrastructure side.

  10. Facebook as it stands right now is a really well done piece of software , I think ballmer is stating from a technical innovation stand point its not really impressive and he is definitely right. What they HAVE done that Microsoft hasn’t is capitalize on a social need with basic technology and a little style.

    But comparing facebook to some of the technical innovations MS has been doing lately SeaDragon , F# , etc its not even close. The people who ride MS for not innovating are clueless.

  11. Ballmer is being disingenuous at best. Microsoft has been trying to do software as a service for eight years now; if something like Facebook was so easy to do, why didn’t Microsoft pull it off back in 2000?

  12. there is a huge faddish nature to all this , those who say there isn’t simply are new to the social networking ‘game’ last year all the college kids who had facebook accounts were busy migrating and making myspace accounts.

  13. Ballmer is dismissive, to explain away the fact that Microsoft has not responded adequately to the social media trend that began in 1992 and is gaining that critical mass that is making it totally mainstream.

    Microsoft hates missing a mainstream technology. Ballmer is sour grapesing it, and poo-pooing specific services.

    Popularity of services waxes and wanes, but is that a reason to not jump in with a version like almost everyone else is?

    Microsoft is backing Yippykaya. Does Ballmer consider that socnet a silly “fad”? What happened to Microsoft Spaces blogging thingamajig?

    Microsoft is caught with it’s pants down, asleep at the switch. That’s all. And Ballmer is putting a positive spin on it.

  14. “We Think Not”
    Specify “We” :-)

    Let’s see, NavTeq $8.1B With a hard (costly) to duplicate technology and data. Which can be used to build location based mobile social networking.

    FB $??B. With the equivalent of some php scripts and data which belongs to users, which doesn’t have to be moved. Just not maintained will do.

    I hope “we” excludes me.

  15. Friendster was a fad until Myspace came along who was a fad until Facebook came along. All of them are still around and going strong although not as strong as a fad might make you think.

    Their growth is a fad but their utility isn’t so they won’t go away anytime soon.

  16. I am big fan of Facebook, personally. I was one of their first few thousand users, having gone to Stanford during their initial push. But I do think Ballmer has a decent point, and I’m not so sure you have any direct counterpoints to it.

    You counter that Facebook can beat “faddishness” by opening up the platform and develop content “without having to spend money in-house”. And yes, it certainly “drives the growth of social networking sites”. But neither point says anything about faddishness itself. Because really, these apps can just as easily plug similar apps in the next, “faddish” social network that opens its platforms.

    Also, you point out that “anyone who has actively belonged to a social networking for a significant length of time knows that it’s difficult to just pack up and move from one community to the next.” I think the opposite is true. I can almost guarantee that a majority of current Facebok users have a rotting Friendster or Myspace account floating out there, including yours truly. In fact, I argue that the quick succession of social network switching represents generational shift of an individual identity. The “identity baggage” of the old social network can be cleaned out in the construction of a new social network identity.

    Now, most older people (ahem, who write for blogs), tend to be attached to their history. The youth? Just like Ballmer suggests, they’re always switching and playing with these new “identity markers” like music, fashion, movies, and dare we include, social networks?

    Honestly, most of the population that encompass these social networks could care less about the technology, so far as the next new, cool social network where all the cool kids hang out can offer something similar, if not better. The app developers will follow where the youth eyeballs will take them.

    Hmm, maybe I should just continue my blabbering in my own blog. Thanks for the inspiration! In the meantime, my friend Dan has a great piece written about this exact topic: .

  17. Skeptic

    MyBeboBooKut is definitely not a fad. But that doesn’t mean it’s worth $10 billion either. Let’s all take a breath and a little bit of a lesson from the Skype debacle that was finally exposed this week…after 2 years.

  18. Eduardo

    I don’t think Facebook is a fas in the sense that it could crumble and go away in a matter of months (not saying that couldn’t happen though) but I do believe these social networking sites are very risky. From the amount of people I know that jumped from Friendster to Myspace and now many to Facebook gives me the feeling that everyone is just following the next person.
    And who knows what the next social networking site will be or which one will take people away from that one.

    I don’t see any rhyme or reason to why Facebook is “worth” anymore than the other big social networkings sites at all.