What is social networking's value add?

What is social networking's value add?

Summary: The bottom line here is that Wall Street is valuing too many Internet companies as though they were manufacturers, with rivals facing an immense hurdle before they can compete. In fact they're more like clothing retailers. Or even clothing designers.

SHARE:

Fashion 2007 from iVillage.ComOne of my great frustrations with Wall Street reporters is they tend to treat tech companies like car outfits. (Picture from iVillage.Com, identified as Scarlett Johannson's favored leopard jacquard, whatever that is.)

That is, they see small market advantages like traffic and unpaid memberships as immense financial events, then apply the rule of consolidation (every market consolidates) to pretend these leads are unassailable.

They did it with Yahoo, which was overtaken by Google. So they did it with Google, especially after Google bought Blogger. They did it with MySpace, which was then passed by Facebook. Now they're at it with Facebook.

Microsoft's $240 million purchase of 1% of Facebook means otherwise-smart people are buying this hype. Has anyone yet noticed the growing competition faced by YouTube?

The news peg here is word that you can use open source tools to create your own version of Facebook. Creating an open source architecture for it is not terribly difficult.

Everything depends on execution, as they say. Mark Mullenweg has grown up and beaten Google at its own game, with WordPress. Would it be that hard for him, or someone like him, to develop a social networking site?

The bottom line here is that Wall Street is valuing too many Internet companies as though they were manufacturers, with rivals facing an immense hurdle before they can compete. In fact they're more like clothing retailers. Or even clothing designers.

Thanks to open source what looks like an immense business advantage may just be fashion.

Topics: Collaboration, Google, Microsoft, Networking, Open Source, Social Enterprise

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

3 comments
Log in or register to join the discussion
  • Just another Internet Bubble ready to burst?

    I personally can't relate to all of these social networking sites.

    We'll see who's left over after about a year (or so) of fizzle glitz and glam.

    Only the strong survive and only profit will sustain web concerns who provide true value.

    Fads are Fads.
    D T Schmitz
  • RE: What is social networking's value add?

    OpenId tied to some profile registry|repository and a resume in hr-xml or hResume would take care of most of what goes on in this space...
    Conmergence
    • RE: What is social networking's value add?

      @Conmergence <a href="http://cupu.web.id/pulauweb-web-hosting-murah-indonesia/">Pulauweb Web Hosting Murah Indonesia</a>
      <a href="http://cupu.web.id/blogger-nusantara-blogpreneur-indonesia/">Blogger Nusantara Blogpreneur Indonesia</a>
      upinson