Facebook Goes Public
Facebook's IPO and the drama that followed has been this week's biggest news. The world's largest social networking service, which is quickly approaching its billionth registered member milestone, saw its shares debut at $38 before going through what can only be described as a fairly rocky journey over the next four days.
Facebook's shares currently trade at $31.80, a whopping 16.67 per cent off the top value, and according to Google Finance is on a downward trend. The company is currently valued at $68.11 billion, significantly less than the $104 billion figure quoted just before it went public.
After all the pre-IPO excitement, what happened afterwards has raised a few questions about Facebook as a business overall.
First, there are signs that advertising on Facebook is not performing as well as initially thought. US car giant GM pulled out of a $10 million deal with Facebook because, as the global CMO told the Wall Street Journal, paid ads on Facebook simply don't work (although the company still spends close to $90,000 a day - around £50,000 - on content produced for the site). Other companies seem to agree too. GM's rivals like Hyundai, Kia, Nissan all but echoed GM's concerns about the return on investment associated with Facebook advertising. Ryan Holiday, an online media buyer for American Apparel, all but pulled out of the Facebook advertising programme, cutting his spending on the site from nearly $1 million per year to "a few thousand dollars a month".
Then, there are the rather humbling steps that Facebook had to take as it settled claims in a lawsuit over sponsored stories, where the social network used the names, photos and identities of users to advertise products without their express permission. Given that there are nearly 157 million registered Facebook users in the US (about half the total population), a class action lawsuit could have proved to be devastating for Facebook's attempts to challenge Google in the advertising market.
And last but not least, Morgan Stanley, the lead underwriting financial institution in Facebook's IPO has been hit by a subpoena "in connection with the analyst's discussion with certain institutional investors about the revenue prospects for Facebook". It looks like Morgan Stanley abruptly cut its revenue forecasts for Facebook just days before the company went public. This follows calls by the Securities and Exchange Commission and the Financial Industry Regulatory Authority for a review of the IPO.
Xbox 720 arriving in November 2013?
For the second time in three months, a rumour has surfaced that puts the release of the Xbox 720 otherwise nicknamed Durango, at the end of 2013, most possibly November. The latest rumour revolves around a contract that was leaked online by the LA Times that showed a developing contract between Activision, Blizzard and Bungie for a new MMO (massively multiplayer online) product called Destiny and refers to the Xbox 720 by name.
The interesting bit is that Destiny is set to launch in November 2013, which suggests that Microsoft's next generation console could be out at the same time. The Xbox 360 was launched in November 2005 and the original Xbox hit the streets in November 2001. So it is likely that 2013 will be the year of the Xbox with potential key dates being the Game Developers Conference (in March), E3 (in June) and the few weeks following Black Friday, which marks the beginning of the lucrative Christmas shopping season in the US.
There has been a slew of wild rumours from unnamed sources claiming that the Xbox 720 will sport a 16-core CPU, two GPUs, a new version of Microsoft Kinect, will be six times faster than the Xbox 360 and will ship without any optical drive and with a Nintendo Wii-U-like tablet style controller.
My take on it is that the Xbox 720 will be the last dedicated gaming console that Microsoft will bring to market. The years ahead are likely to confirm the hegemony of mobile hardware technology and the rise of cloud-based gaming which requires no physical media, while being permanently locked in a stop/start mode, means that a 16-core smartphone in 2015 could be just as powerful as an Xbox 720 and replace it as a gamer's only gaming platform (it still won't have a decent controller though - ed.).