This week's swirling rumors that Microsoft and Google are battling it out to buy a minority stake in Facebook have pushed the social networking site's profile up even further into its stratosphere, and its potential financial worth nearly as high: any investment in Facebook is likely to value the company in the billions. But solutions providers who have kicked Facebook's tires say its value to businesses, as either a networking venue or an application development platform, remains speculative and unproven.
Facebook tries to stand out in the crowded "Web 2.0" social media field by playing to both enterprise and consumer audiences. Created in 2004 by and for students at Harvard, Facebook opened to the public in 2006 and now claims 43 million active users. Web traffic measurement service ComScore put Facebook at #14 on its August list of the most-visited Web destinations by U.S. users.
The company's boldest bid to differentiate itself for business users came in May, when it held a kickoff developer event in San Francisco to formally launch the Facebook Platform, a custom markup language and a set of open APIs (application programming interfaces). The platform push's goal is to position Facebook as the best foundation for incorporating social features into a wide variety of applications, including those aimed at business users.
So far, though, Facebook's enterprise campaign is off to a slow start. Four months later, Facebook's application roster is still comprised almost entirely of consumer toys and widgets. Of the site's current top-25 most active applications, the closest thing on the list to a business application is a tool for integrating Windows Live Messenger with Facebook.
Facebook's value as a business tool for networking and recruiting is also uncertain. Many channel executives grumble about it being yet another profile to manage. Between LinkedIn, Friendster, MySpace, Twitter and smaller competitors like Tribe, Orkut and Ryze, it's easy to succumb to networking fatigue.
Tim Huckaby, CEO of Microsoft services firm InterKnowlogy in Carlsbad, Calif., said he fends off a steady stream of Facebook friending requests. "It just kills me because it's so simplistic and looks so much like a chat room for pre-teens," he said. Still, he can't ignore the building buzz. At a meeting in Redmond last week, a Microsoft friend passed on the rumor that Bill Gates, Steve Ballmer and Ray Ozzie all use Facebook.
Microsoft's primary reason for eying a Facebook investment or acquisition is to boost its presence in the consumer-facing, ad-revenue generating Web 2.0 field, where it lags behind early movers like Google and Yahoo. Last year, Microsoft struck a deal (financial terms undisclosed) to be the exclusive seller of Facebook banner ads and sponsored links, a coup for its efforts to rival Google's powerhouse online-advertising business.
But Microsoft partners also see potential upside in Facebook for accelerating adoption of Microsoft's Web technologies, a key developer battleground over the next few years.
"Java vs .Net is over. Silverlight is where the next battle is going to be fought," said Scott Stanfield, CEO of Vertigo Software, a Microsoft Gold partner in Point Richmond, Calif. "Microsoft has a stated goal of getting the Silverlight runtime everywhere. Adobe has a 10-year head start with Flash. Microsoft can buy their way into a better position with an acquisition of Facebook. Being a developer, that would bode well for us, even if we have nothing to do with Facebook development."
Next: Can Facebook make its vast user base pay off?