Social Web or Business Web: where is the money?

Social Web or Business Web: where is the money?

Summary: What do MySpace and Microsoft have in common?

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TOPICS: Browser
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What do MySpace and Microsoft have in common? One has been anointed the “#1” player in the Social Web and the other has announced its intentions to be the “#1” player in the Business Web.

MySpace has been honored by Hitwise as being in the “#1 position for all Internet sites,” while Microsoft has honored itself as the “worldwide leader in software, services and solutions.”

What does leadership in the Social and Business Webs return to investors?

DMM6606MS.jpgMySpace may have “surpassed Yahoo! Mail as the most visited domain on the Internet for US Internet users,” but Yahoo is the company that is making its shareholders money from its Internet traffic.

The New York Times noted “For MySpace, Making Friends Was Easy. Big Profit Is Tougher” in April:

MySpace now displays more pages each month than any other Web site except Yahoo. More pages, of course, means more room for ads. And, in theory, those ads can be narrowly focused on each member's personal passions, which they conveniently display on their profiles. As an added bonus for advertisers, the music, photos and video clips that members place on their profiles constitutes a real-time barometer of what is hot.

For now, MySpace is charging bargain-basement rates to attract enough advertisers for the nearly one billion pages it displays each day. The company will have revenue of about $200 million this year, estimated Richard Greenfield of Pali Capital, a brokerage firm in New York. That is less than one-twentieth of Yahoo's revenue.

DMM71206MS.gifThe new Microsoft Dynamics CRM Live software-as-a-service offering carries the outsized Microsoft brand, but not necessarily the outsized Microsoft profits.

Microsoft indicates its Business Web offering will begin as a “cost-effective” small business service:

Microsoft Dynamics CRM Live is planned for introduction in North America in the second quarter of 2007, and will be offered as a range of service offerings on a monthly subscription basis. There is no limit to the number of users that the system can support, but it will initially be targeted primarily at small businesses, a segment that has traditionally been underserved by the lack of flexible and cost-effective CRM solutions.

An “established” player in the Business Web, Salesforce.com, has yet to provide satisfactory shareholder returns. VARBusiness asked in May, “Does Salesforce.com Have The Chops To Become A Billion-Dollar Company?”:

Salesforce last week reported that first-quarter revenue grew 63% to $104.7 million, the company's first quarter with more than $100 million in sales. But the company posted a $229,000 net loss as a hiring blitz increased costs.

Salesforce added 45,000 new subscribers, down from 48,000 the previous quarter… Salesforce must prove it can sustain its current growth pace and keep the customers it lands. The net number of new Salesforce subscribers is slowing. Goldman Sachs analyst Rick Sherlund says the slowdown explains an 18% drop in the price of Salesforce shares since early April: "They've had outages, and it makes you wonder if the churn's increasing."

SEE ALSO: Web 2.0 Social Web: who is in control?

Web 2.0 financial success: Easy as 'two weeks and $700 bucks'?

Social freeloaders: Is there a collective wisdom and can the Web obtain it?

Topic: Browser

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  • Good call

    I wrote about one of these items today and thought about covering the other one - but you've hit on where the story is in both places. I'd add though that even Yahoo! is considered acquisition bait, the dark horse, etc. and thus traffic is apparently only worth so much. Or in the case of Salesforce, name recognition and Web 2.0 coolness is only worth so much! Good post.
    marshallkirkpatrick
  • trackback

    Comment here : http://platformwars.blogspot.com/2006/07/tcpip-vs-dollar.html
    interstar