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Potential Facebook-Instagram impact April 16, 2012

Posted by David Card in Uncategorized.
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It’s been a week since Facebook announced its blockbuster $1 billion planned acquisition of Instagram, plenty of time to sketch out what it means for Facebook and the mobile social media environment. Don’t be too quick to assume that Facebook is abandoning its HTML5 mobile strategy in favor of apps. As a defensive move, the acquisition would lock down Facebook’s strong position in photo-sharing, leaving little room for would-be competitors, but it gives Facebook few new weapons and no new revenue opportunities.

What it means

It’s too easy to say Facebook will steer its mobile strategy towards apps and away from mobile access to HTML5 websites. Letting Instagram thrive as an app still fulfills the three strategic objectives I said Facebook needed from mobile: ubiquitous access and high frequency usage, a common cross-platform user experience, and distributed technologies that reinforce its platform. Facebook is still counting on HTML5 to minimize development fragmentation across mobile operating systems and the web. Especially since such a framework would better allow it to apply its Credits virtual currency and payments system broadly, without giving Apple, Google or Amazon a cut. Facebook is trying to encourage app and web integration with discovery services, test suites and streamlined payments. Instagram’s limited use of its own APIs could tie into Facebook’s own social services.

Instagram’s app is simple and elegant, two things you don’t hear about Facebook’s app or its mobile website. But Instagram also uses core social networking techniques that shouldn’t be overlooked. In his post on the announcement, Facebook CEO Mark Zuckerberg differentiates between sharing photos with friends and family versus sharing based on interest. And Instagram uses asymmetric following as Twitter does, rather than Facebook’s primarily two-way following system. Over time, those social networking technologies could add more to Facebook’s social graph than additional location data.

My initial reaction to the announcement was that Instagram might be worth a billion dollars to someone, but not to Facebook. I thought the two companies’ customer base probably had a lot of overlap – so that Facebook wouldn’t necessarily be gaining 30 million new users – and that thousands of Instagram photos were already stored on Facebook pages. Recent figures from AppData suggest that 22 percent of Instagram users connected their app to Facebook. That overlap will increase as Instagram gains more mainstream users: Contrary to potential backlash fears, Instagram received an additional growth spurt from the Facebook announcement on top of its first Android app. Already 96 percent of U.S. social network users, ages 18 to 34, uses Facebook, according to our GigaOM Pro 1Q2012 consumer survey, so there’s minimal Instagram headroom.

Instagram doesn’t have any revenue streams itself, so it won’t solve Facebook’s lack of mobile monetization. Facebook has resisted showing ads on its mobile app or mobile website, and seems more likely to show in-stream promotions than mobile display ads or interstitials between photos. What Instagram does give Facebook is a near dominant position in photo-sharing, both mobile and online. Both Om and investor and Hunch co-founder Chris Dixon saw Instagram as Facebook’s biggest competitive threat.

Whom it affects

Google missed out on a chance to gain social media customers and attack a core Facebook stronghold. But Instagram won’t add enough user data to Facebook’s interest graph to weaken Google’s.

Twitter reportedly tried to buy Instagram, and it would have welcomed the user growth and bulked up its own nascent ambitions in photo sharing and storage.

Apple doesn’t make many apps, but desktop photo manipulation and management is one of them. Instagram would have been an easy fit, offering lots of integration opportunities and bringing much-needed social DNA to Apple.

Yahoo’s Flickr is still a huge web repository for photos – including ones taken with Instagram – that could have benefited from a mobile user base.

Other smartphone photo apps like Hipstamatic and Eyeem don’t have the size or growth rates that Instagram has. There’s very little reason for any of the previous group of companies to buy any of them rather than building their own app.

Other social startups might now be in play if the bigger companies above decide they need social media users. But Pinterest is really the only one with size, growth and potential ease-of-monetization. And Facebook still has plenty of money and stock.

Key Takeaway

Although Facebook is still committed to an HTML5-based mobile web strategy, keep an eye on whether it shifts towards a series of single-function mobile apps as a medium-term bridge tactic.

Question of the week

Who is the biggest loser from a Facebook-Instagram match?
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Why Color Is More Than “Yet Another Photo-Sharing App” March 28, 2011

Posted by David Card in Uncategorized.
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Much of last week’s buzz surrounding the launch of Color was justifiably skeptical. The startup, after all, raised $41 million to enter a crowded space without a business model or customers, and many wonder whether the world really needs another mobile photo-sharing app. But two components of Color’s vision — implicit networks (connections created without user effort) and place/time tagging — extend far beyond photo-sharing, and make the company worth watching as a potential indicator of social media and data-mining trends.

The Color app for iPhones and Android lets users share photos in real time with other nearby photo-snappers. The sharing network is determined by proximity rather than by a user explicitly specifying who his friends are. Users are anonymous and all content is public.

Early reviews are pretty negative. Om writes that Color is attracting more attention from pundits than users because the app may not deliver obvious fun or utility. Matthew Ingram wonders if the big funding bet is on Color’s all-star team — which includes Bill Nguyen (Lala), Peter Pham (BillShrink) and former LinkedIn chief scientist DJ Patil — rather than its product or ideas.

But some of those ideas matter.

Implicit Networks

Angel investor and Hunch co-founder Chris Dixon says he’s intrigued by Color because it is pushing the envelope on implicit social graphs. Color’s implicit networks aren’t specified by users, but rather are based on underlying contexts like geography or shared interests. I’ve written before about context-based social networks, and how Facebook Groups is struggling to deliver them. Peter Yared, a VP at WebTrends, writes that Facebook is also experimenting with implicit neworks of friends.

If Color builds on its implict network concept it could deliver instant groups of friends for different occasions or interests, and expose recommendations based on common tastes. Marketers could target advertising or offers within a Color network to real-time groups around an event or location, or aimed by shared interests.

Place and Time Data

Search pundit John Battelle goes a little overboard on how Color could push augmented reality. But he’s right about the importance of geo-tagged data. In a presentation last week at GigaOM’s Structure Big Data 2011 conference, IBM Distinguished Engineer Jeff Jonas showed how adding place and time to data objects can power big data analysis, predicting a person’s likelihood of being at a give location with astounding accuracy, and assisting in identity management. Again, if Color is a leader in gathering this data, it could build out a powerful — yet still privacy-protected — targeted advertising network.

Business Model to Come?

Color chief Nguyen says the company is really about data-mining rather than photo-sharing. He says combining place and time data with implicit networks can help services or marketers parse the difference between entertainment and work activities. That information will affect the elasticity of Color’s networks — how broadly it expands or contracts its sharing range — and power its algorithms for ranking photos and, presumably, other content or advertising elements.

Nguyen also talks about a future news API that could spawn a curated news app for journalists. He describes a pretty dumb restaurant service that would help waitstaff know customers’ first names and interests. Before he sold Lala to Apple, reportedly for $85 million, Nguyen took the service through at least three different business models. Lala started as a CD trading service, morphed to a digital music locker, and then offered Web songs with perpetual streaming rights for ten cents each. With its talent and cash hoard, there’s no doubt Color will evolve as well.

Question of the week

Is Color more than just another photo-sharing app?

Is Quora Worth the Hype? January 17, 2011

Posted by David Card in Uncategorized.
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Around the end of the year, the hype surrounding Quora kicked into overdrive. The Q-and-A site, founded by Charlie Cheever and ex-Facebook talent Adam D’Angelo, first raised eyebrows with a round of financing last March that valued it at $86 million. When it went into public beta last summer, the tech and business press got excited, and lately it’s being called the savior of search and the next Facebook. But is Quora worth all the fuss?

Quora enables anyone to pose and answer questions, and users can “follow” other users and topics. Much of the site’s charm comes from its audience: Famous and influential personalities from tech and VC regularly ask and answer questions. Bloggers and mainstream reporters are using Quora for story content and leads. And as über-blogger Roger Scoble pointed out, Quora has cleverly adopted key social media and real-time innovations to the Q-and-A space.

Search Replacement?

Arguably, Quora’s biggest innovation is “crowd curation.” Lately, the same blogger community that has taken to Quora has been complaining about Google. Google search results are cluttered with spam and links and low-quality posts from content farms like Demand Media, the bloggers charge. The solution? Relevancy enforced by human beings rather than algorithms. But hiring editors doesn’t scale as well as writing software, that is, unless you can crowdsource those editors for free, which is exactly what Quora is doing.

But Quora is also wisely allowing Google to index its content, and practicing SEO well enough that Quora answers are starting to show up in Google results. Google’s own PageRank algorithm has always harnessed some wisdom from the crowd by analyzing link popularity. To add relevance and force out spam, Google engineers are smart enough to create or license other indicators of authority and influence — whether that means baking in to its algorithms something like a Klout Twitter authority score or ratings derived from professional content databases.

Differentiating from the Crowd

Quora is far from alone in the Q-and-A space. Facebook’s barely launched Questions appears aimed at generating status update activity and real-time responses. It feels more like personal expression than knowledge management, and thus may be a bigger threat to a company like Formspring, whose Q-and-A pages Om likened to blog comments without the blog. LinkedIn Answers is geared to its professional audience, but doesn’t have much traction. Yahoo Answers, the granddaddy of them all, generates lots of page views but little in the way of revenues. Yahoo Answers are often cute or funny, rather than useful. To avoid a similar fate, Quora is scrambling — so far quite successfully — to impose protocols on its users for asking, answering, editing and tagging questions and answers in order to preserve their quality and add structure to the Quora data folksonomy.

But for all the talk of its usage “exploding,” Quora’s community and traffic is tiny. It caused a minor scandal over its self-reported registered user count, which remains below half a million. Quora’s traffic is half the size of Formspring’s and dwarfed by Yahoo Answers. True, Quora could grow, and probably maintain at least Wikipedia-like quality, but it has a long way to go.

Of course, Quora has no revenue streams. Advertising or job boards a la programmer site Stack Overflow require scale. Quora’s evolution might take the following paths:

  • Expert network. Gerson Lehrman Group, for instance, has built a multi-hundred million dollar business by brokering paid one-to-one communications between experts and questioners. So far, Quora depends on altruism and self-promotion to incentivize its answers.
  • Interest graph supplier. As with any robust social medium, Quora could collect — and license — information on personal interests. But it still needs scale to build privacy-secure personal info into anonymized segments useful for marketers.
  • Magazine. Quora could indeed survive as an independent, engaging content destination — what it is now — but its model would be that of an online magazine. It could sell brand-oriented or contextually related advertising aimed at a small, but desirable techie audience. But does Quora really want to be Salon?

Question of the week

Is all the hype surrounding Quora merited?