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Three Reasons Microsoft Paid So 'Little' For Facebook

Zonk posted more than 6 years ago | from the i-guess-it's-all-relative dept.

Microsoft 155

An anonymous reader writes "Microsoft's $240 million investment is much smaller than the rumored $750 million that Facebook sought. Why the difference? Wired Epicenter's Terrence Russell analyzes the deal, and points out three good reasons why Microsoft got a 'bargain'. 'Microsoft Only Needs an Entrenched Position - Ballmer's plan to acquire 100 startups in 5 years is still sketchy, but we got the point -- Microsoft wants momentum. If the company is to go forward as planned then taking a small, strategic piece of Facebook makes sense. Microsoft's financial interests in Facebook's ad platform already exist, so it only makes sense to strengthen that tie as the hype builds.'"

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155 comments

Smart Move? Maybe... (4, Interesting)

gbulmash (688770) | more than 6 years ago | (#21117195)

This was more sneaky than some people think. They only had to spend $240 million to create such a stratospheric valuation that no one else would be stupid enough to buy at that price.

If people say "Facebook's the flavor of the month and it's never going to warrant a $15 billion value because the next flavor of the month will come along and steal its thunder," then Microsoft wins because Facebook can never find other investors at that valuation. That creates a cascade effect of investor avoidance, forcing Facebook's actual value down to where it's reasonable and Microsoft can snatch it up at a bargain.

If, on the other hand, people drink the Kool Aid and start pumping up the price of Facebook, Microsoft can sell out its interest at a profit.

I'm thinking the answer is the first possibility... they put Facebook's value at $15 billion to discourage others from investing in Facebook and make Facebook beholden to them.

Re:Smart Move? Maybe... (2, Interesting)

davidsyes (765062) | more than 6 years ago | (#21117309)

Well, if they do THAT, then I think Google's owners will DEFINITELY buy F/B at $500MM, JUST to make sure they have controlling interest. Then, they even FURTHER drive down the valuation, then buy out mshaft's share.

Y/N/M?

Re:Smart Move? Maybe... (-1, Offtopic)

davidsyes (765062) | more than 6 years ago | (#21118437)

What the HELL?

What kind of moderation systems allows nuts to down-mod a comment like the one I posted. I purposely AVOID rating people's comments because I don't in this forum want to bash someone's opinion or knowledge.

What the hell is so wrong with my assumption? Is it off-base, that Google could still walk in and try to become a co-investor? Google, voicing "do no evil" could see such a move as a counteraction against letting microsoft hijack Facebook. Ahh, I suppose it was an mshaft FANBOY who took issue with my calling mshaft mshaft. Any reasonable, intelligent person could figure out which part was a stab ("mshaft") and which parts might make sense (the stuff less the word "mshaft").

Some people are so goddamn petty, picky, or bored around here...

Re:Smart Move? Maybe... (0)

Anonymous Coward | more than 6 years ago | (#21118887)

A good one. Your ORIGINAL post was slightly INCOHERENT and it took ME a FEW goes to UNDERSTAND what you were RAMBLING about. It just read badly and it wasnt of the quality to be a +2 post. While personally I would have modded it overrated (although I tend not to down mod if I can help it) rather than troll to knock it to +1, I would definately slapped a troll on your next post if I had mod points. Just take it like a man and next time hit the preview button and give it a little read through before you submit.

Also if everybody avoided rating peoples comments, well that would kinda screw any mod system :)
 

Re:Smart Move? Maybe... (0, Funny)

Anonymous Coward | more than 6 years ago | (#21120303)

davidyes=pwned

Facebook == Shot at Adobe's Flash (4, Insightful)

dsginter (104154) | more than 6 years ago | (#21117373)

Microsoft needs to get Silverlight out there. $240 million to Facebook is the cheapest method of getting hundreds of millions to install and use it, willingly.

Re:Facebook == Shot at Adobe's Flash (4, Interesting)

cyberjessy (444290) | more than 6 years ago | (#21118731)

You are probably right. Microsoft should be worried that if Flash actually went Open (as in real open), innovative companies would start delivering really compelling, desktop-grade applications over the browser. There would be nothing stopping Google from putting up a better Microsoft Office. Or countless other innovative companies from killing the Windows platform.

Well .... if Flash went open that is. I have a feeling it might happen soon.

Re:Facebook == Shot at Adobe's Flash (5, Interesting)

Crazy Taco (1083423) | more than 6 years ago | (#21120493)

There would be nothing stopping Google from putting up a better Microsoft Office.

That makes no sense. There are five things stopping Google from just throwing out a better Office.

  1. The amount of sheer work involved. Microsoft Office has been developing for well over a decade now, and even just cloning it would take a huge amount of labor and financial investment. And then making it actually better than Microsoft takes even more time, planning, strategizing, and investment. Google is big, but they have bought so many companies and have so many projects going I question whether they would have the manpower for such an investment.
  2. Infrastructure is stopping Google. Animations, eye candy, processing power... all of those are subpar when you are talking about the Internet. Yes, you have flash which looks good, but the downloading of the swf files embeded in the pages can be quite slow, and it would get even slower if lots of people started using it (unless Google made some more monstrous server farms, and that would be another huge economic investment). Some things are simply resource intensive enough that they are just better done on the desktop. (And yes, wordprocessing seems simple, but when you start packing in lots and lots of features, animations, etc, you generate a large memory and resource footprint)
  3. Security is stopping Google. Corporations are not going to start editing their sensative files over the Internet. They aren't going to transmit that data all over the web, and they aren't going to store it on Google's servers. They just won't, regardless of whether encryption is used. It will be viewed as too big a risk.
  4. Entrenchment is stopping Google. Microsoft Office is entrenched. I'm not just talking about users being comfortable and used to it (and therefore not wanting to change), I'm talking about being entrenched corporately. Most corporations have built innumerable applications that integrate and work with office, and you can't just rip out one suite and replace it with another without causing the majority of enterprise processes and applications to break. Very few corporations are going to be willing to switch unless Google somehow comes up with some undeniable, overwhelming reason that they must use the Google product. And I can't think of any scenario that would fit that bill (this very issue, btw, is why Open Office is not, and probably never will be, adopted at the corporate level).
  5. Lack of financial gain is therefore stopping Google. Unless Google can think of ways to overcome all of these issues, they are not going to recoup their investment (and make no mistake, developing an Internet Office application that is better than MS Office is an incredibly large investment). There are many other areas less dominated by competitors where the pickings are easier and the return on investment is higher. They may make simple spreadsheet apps that may drive a few private users to their site (and generate some advertising dollars from the extra traffic), but trying to truly trying to take dominance from Microsoft in the Office arena simply isn't going to be in their gameplan. It just isn't worth it.

Or countless other innovative companies from killing the Windows platform.

This is even less likely to be true than what you said about Google and Office. How is having access to an open version of Flash going to kill the Windows platform? Because you are talking about Flash, that implies that you are talking about web development. The Windows Platform is an operating system. Therefore you are attempting to make the claim that open Flash will allow a third party company (which, by the way, will almost certainly have less manpower and money than Microsoft) to develop some sort of web OS that will render a mature, entrenched desktop OS like Windows obsolete. Actually, lets leave out the mature and entrenched parts of the argument for a moment (although they alone are enough to kill the new OS, see argument above about Office). Saying that a web OS is going to replace a desktop OS is just a bunch of pie in the sky. We don't have the infrastructure required for that, and furthermore we aren't even close to having such infrastructure available. It isn't even on the drawing board. WAN (think Internet) performance isn't even in the same league as the performance of internal chips and the buses between them, nor is it even closing the gap. You cannot have a web OS with the kind of features users are accustomed to today and expect reasonable performance. In fact, it won't perform at all and will simply grind to a halt. You won't be able to get data fast enough over the Internet to make it usable, no matter how much you do on the client side. You still have to download the files, and if everyone is trying to stream their OSs over the Internet, the entire thing would go down.

I have no idea why people modded you interesting, because none of your conclusions make any sense. Would open Flash be interesting? Yes. Would it threaten some Microsoft products? Possibly... Would it even come enabling the things you are talking about? No is too weak a word to describe how unlikely you conclusions are.

Re:Smart Move? Maybe... (0)

Anonymous Coward | more than 6 years ago | (#21117607)

Absolutely correct. Not only will others potentially stay away, but it poisons Facebook themselves and creates a strong risk of complete implosion, which MS can use for leverage. Once a line is drawn in the sand, it engages the ego and creates strong psychological need to hold it, and if it starts slipping, it could exacerbate a dramatic downward spiral.

I don't think MS is that interested in Facebook beyond making sure that it has control over some "uppety" talk about platforms and OSes. It has its hands full with Google on the platform side of things, and I think they aren't intimidated by Facebook because they can basically manipulate them.

That said, Facebook is a toy. There is nothing about it that has anything to do with productive work. It's *maybe* 3-10 times more valuable than Hot or Not, that's about it.

MS got a huge bargain, getting a tremendous amount of influence for practically nothing for them. It's an extremely cheap hedge.

Re:Smart Move? Maybe... (5, Funny)

iced_tea (588173) | more than 6 years ago | (#21117657)


Balmer: $750 million dollars?? ****Agrrrrahhahahhahahah***** (throws chair)

Facebook: Ok $240 million could do nicely as well.

Re:Smart Move? Maybe... (2, Insightful)

neoform (551705) | more than 6 years ago | (#21117837)

Err.. as soon as the value drops down, people will grab it up. I seriously doubt overpaying for a slice of the pie is somehow going to make people *less* interested in facebook.

Re:Smart Move? Maybe... (1)

Wanado (908085) | more than 6 years ago | (#21117957)

That creates a cascade effect of investor avoidance, forcing Facebook's actual value down to where it's reasonable and Microsoft can snatch it up at a bargain.
You can't just wait until Facebook's advertised price comes down. Lot's of companies would buy Facebook if they would accept a lower bargain offer. That's supply and demand. Microsoft isn't the only one that could buy at a lower price. So Microsoft buying at a premium now doesn't give them any advantage over anyone else to buy more later.

Re:Smart Move? Maybe... (3, Insightful)

gbulmash (688770) | more than 6 years ago | (#21119229)

Yes, but how much do you want to bet that Microsoft has some sneaky stuff in the sale contract that prevents FaceBook from selling at a lower price without Microsoft's permission because said sale would diminish the value of Microsoft's investment?

Social Networking Has Topped (1)

broward (416376) | more than 6 years ago | (#21120007)

I've posted this before and I suppose few people believe it but rate of growth in the social networking sites has TOPPED OUT. Growth is declining. Once a product passes through its growth inflection point, its potential changes from "infinite" to "bounded".

The boundaries for $$$ in social networking have been roughly established over the past 18 months. Maybe somebody at Microsoft actually has MBA knowledge, did the numbers and figured this out instead buying into hype.

http://www.realmeme.com/roller/page/realmeme/?entry=social_networking_meme_verified [realmeme.com]

Of course, what do I know? I'm just an old guy that doesn't bother memorizing java syntax anymore.

Re:Smart Move? Maybe... (1)

Stuntmonkey (557875) | more than 6 years ago | (#21121381)

then Microsoft wins because Facebook can never find other investors at that valuation. That creates a cascade effect of investor avoidance, forcing Facebook's actual value down to where it's reasonable and Microsoft can snatch it up at a bargain.

This is such a lame theory, it's not even wrong. Explain to me why these other investors -- who you say are turned off by FB's high valuation -- won't become interested again when the valuation falls?

And exactly what do you mean when you say "forcing Facebook's actual value down". You do understand they are a private company? Their valuation is nothing more than what is implied by the investments they (a majority of their equity holders) negotiate and agree to. If they decide they need more capital to finance growth, they can always solicit future investment that values their company at $2B, or any other number. There is no sense in which they're beholden to Microsoft as a result of this. There are many, many players who can invest these quantities of cash.

The real truth here is that Microsoft was willing to stomach an overvalued investment in order to buy the pageviews they desperately need if they are to ever catch up to Google in advertising. When your own web properties suck and don't deliver enough eyeballs, this is what you resort to.

Buy low... (1)

AltGrendel (175092) | more than 6 years ago | (#21117217)

..., sell high.

Simple really.

Re:Buy low... (5, Funny)

sm62704 (957197) | more than 6 years ago | (#21117399)

Buy low? I figured out who all you slashdot people are. Mr. Gates, Mr. Ellison, Mr. Trump, Mr. Carmak...

$240,000,000 and you folks say that's a bargain? If I had $240,000,000 I sure wouldn't blow it on a website! I'd blow it on fast cars and expensive booze and hookers. Hell, I'd stick it in the bank at 5% interest and blow the $12,000,000 interest on fast cars and expensive booze and hookers every single year and leave the whole $240,000,000 to my kids. Come to think of it, if I had that kind of money I wouldn't NEED hookers!

I might even buy an iPhone, too. ;)

-mcgrew

Re:Buy low... (0)

Anonymous Coward | more than 6 years ago | (#21118559)

If you had that kind of money, hookers are cheaper than wives. Hookers work for a pre-negotiated flat-rate. Wives on the other hand are both salaried and on commission. Their payment structure does not in any way foster good QoS.

Re:Buy low... (1)

Lord Ender (156273) | more than 6 years ago | (#21118591)

This money doesn't belong to the execs of Microsoft. It belongs to the shareholders of MSFT. Corvettes don't appreciate and don't pay dividends, so unless every shareholder gets to take it for a spin, they can't spend that money on sports cars.

Re:Buy low... (3, Funny)

Anonymous Coward | more than 6 years ago | (#21118987)

Facebook? I'm gonna make my own! With hookers! And blackjack!

Re:Buy low... (1)

OctoberSky (888619) | more than 6 years ago | (#21117407)

During the early 90's I did alot of selling high, I can't recommend it. I sold all my Microsoft stock at $36 while listening to Huey Lewis wearing a rain slicker and doing lines off the back of the hooker I just killed.

-Bateman

p.s. At least I got a reservation at Dorsia.

Facebook has already "jumped the shark" (1, Insightful)

TooMuchToDo (882796) | more than 6 years ago | (#21117227)

Facebook is close to reaching "jumped the shark" status. I worry that Microsoft dumped a ton of cash into Facebook just like News Corp did for MySpace. As News Corp ramped up ads on the MySpace platform, people defected in droves to Facebook. What happens if history repeats themselves? That's right. People end up on Twitter (owned by Google), and Google didn't have to shell out a quarter of a billion dollars in the end.

Re:Facebook has already "jumped the shark" (1)

TooMuchToDo (882796) | more than 6 years ago | (#21117275)

Have to correct myself. Twitter is not owned by Google. But the theory still holds true. There's no "stickyness" (god I hate that word) with social networking sites. Everyone can pick up and move to the next one, therefore their valuation is a snapshot of the estimated value of their membership at that point.

Re:Facebook has already "jumped the shark" (0)

Anonymous Coward | more than 6 years ago | (#21117387)

maybe you meant Jaiku, a twitter-like service

Re:Facebook has already "jumped the shark" (5, Insightful)

geddes (533463) | more than 6 years ago | (#21117497)

I think you are wrong about that. Social networking sites have a huge amount of "stickyness" because of the network. In the end, the value of a social networking site to the user is the size of the network. Social Networks are tricky things, there is no way that me and all of my facebook friends will collectively decide that facebook isn't doing it anymore and we'll move to twitter. For example, I signed up for twitter cause the concept and feature set seemed cool, but I never went back after more than two times because I only had two friends on it. On the other hand, I think maybe one example of a social networking app falling is AOL Instant Messenger. AIM used to be the way everyone I knew IMed. around 1998 it exploded. However, in the past two years I have noticed that more and more of my friends are depending on GChat, and aren't signing on to IM anymore. About 25% of my friends now have abandoned AIM and moved onto GChat. I think the two reasons this happened are 1) the horribly bloated AIM software that is just unpleasent to use. 2) GChat sort of snuck in as an automatically activated feature of GMail and people started seeing their friends just showing up on their list. Remarkably though, AIM still, after 9 years, has three quarters of my IM contacts.

Re:Facebook has already "jumped the shark" (1)

TooMuchToDo (882796) | more than 6 years ago | (#21117697)

Personally, I use Facebook, and know roughly 200 people who are "friends" with me through the service. A fair majority have shared their displeasure at Facebook slowly eroding into a MySpace equivalent with the drivel applications everyone pushes.

From a business perspective, the company I consult/work for has over 500 employees. Almost all have AIM (some have Microsoft messenger, some have Yahoo) and most of us use Trillian (as it's lightweight and integrates with several different IM networks).

Don't treat my anecdotes as scientific in nature, as they're only anecdotes.

Re:Facebook has already "jumped the shark" (1)

hansamurai (907719) | more than 6 years ago | (#21118365)

If your friends are complaining that Facebook is being ruined by the applications, they only have their own friends to blame for that. The only profiles you can generally see are your own friends and people in your network. If the apps are ruining your Facebook experience, stop going to people's profiles who overload on apps? Stop becoming friends with so many people that you're constantly getting app invites? I have about 50 friends and I'm barely ever bothered by the new applications. Most of the time it is my own wife that bothers me with crap and it's a simple click of the X button on the Ajax popup to never see anything related to this app ever again.

At least in Facebook the backgrounds aren't flashing and there aren't music videos clogging my tubes.

Re:Facebook has already "jumped the shark" (2, Funny)

dsanfte (443781) | more than 6 years ago | (#21119217)

If your friends are complaining that Facebook is being ruined by the applications, they only have their own friends to blame for that.


That's right, blame the users.

Re:Facebook has already "jumped the shark" (1)

ergo98 (9391) | more than 6 years ago | (#21117791)

There's no "stickyness" (god I hate that word) with social networking sites

???

Social networking sites are pretty much the perfect example of stickiness...

Re:Facebook has already "jumped the shark" (1)

TooMuchToDo (882796) | more than 6 years ago | (#21117981)

As individuals, yes. But as groups of people interacting, no. If a group of "friends" says, "Hey, this new networking site popped up, let's try it out" and people slowly migrate, there's nothing to stop people from leaving the old site.

Social networking sites are easy. Let people join, let them interconnect with each other, and then let them interact with each other. The rest is just code.

Re:Facebook has already "jumped the shark" (1)

businessnerd (1009815) | more than 6 years ago | (#21119689)

Facebook has ALREADY jumped the shark, just as your subject claims. It all happened when they opened their doors to anyone and everyone. While I'm a conscientious objector to social networking sites (waste of time), I was in the middle of my college education when Facebook hit the scene. Facebook was the shit. Everyone in college used it as it was a way for people to communicate with others that were on campus, or long lost high school friends. It was easy to send out party notices and great for posting all of the drunken pictures from said party. It was also much more secure than MySpace in the sense that you could set proper access controls, and the interface was much more usable. It was identified as a "College Thing" which made all of the MySpace using high schoolers to desperately want in. Then the doors opened, all of the wannabe's were suddenly "cool enough to be allowed in" and the massive switch began. Market share rises, advertisers and spammers flock accordingly. Stupid meaningless variations on the "poke" appear like "sending drinks" and now my fiance's Facebook wall has a video of Shrek and Donkey gangbanging princess fiona and Firefox is throwing up red flags on half the links. Facebook is now just like MySpace. Just wait. The next "exclusive" social network will appear offering a cleaner interface, no spam, better access controls and a more useful network of users. It will then gain traction within that exclusive group and then sell out to the rest of the world, then die like the rest. Lather, Rinse, Repeat.

Title is misleading (5, Informative)

ShiningSomething (1097589) | more than 6 years ago | (#21117235)

No-one in TFA is claiming that Microsoft should have paid more for the 1.6% share it bought. It's suggested that it could've sticked to the same overall valuation and paid $750 million for a 5% stake. It's still the same price, it's just that they bought too little. And that seems a fair question that does not deserve the scare quotes.

Re:Title is misleading (3, Informative)

moderatorrater (1095745) | more than 6 years ago | (#21119275)

I maintain that they didn't buy the share of the company, they bought the advertising rights and the ability to push silverlight. The advertising lets them get more people to push advertisements through them instead/in addition to google. If they do nothing but break even on all the publishing on the site, $250 million is a bargain for the kind of exposure they'll be getting.

Re:Title is misleading (1)

Phurge (1112105) | more than 6 years ago | (#21120715)

totally agree. Its a commercial deal dressed up as an equity stake. good for both parties as now Zuckerberg can claim he's worth $5bn "on paper".

Plans... (3, Interesting)

pubjames (468013) | more than 6 years ago | (#21117239)

Ballmer's plan to acquire 100 startups in 5 years is still sketchy

What kind of a plan is that? No wonder Microsoft is losing its way.

Compare and contrast with the business plan of Steve Jobs, which I think can be summed up as "make great products"...

Re:Plans... (0)

Anonymous Coward | more than 6 years ago | (#21117343)

Well, it is Ballmer after all. He's not exactly noted for being entirely... stable, or indeed with all the lights on upstairs

Re:Plans... (1, Insightful)

Anonymous Coward | more than 6 years ago | (#21117357)

lets compare, microsoft make great products (Visual Studio, Sql Server, Office, Windows XP, Xbox, Windows Mobile, .NET, etc) AND is buying 100 startups in 5 years... hmmm, i don't think it's losing its way.

Re:Plans... (0, Flamebait)

MightyMartian (840721) | more than 6 years ago | (#21117835)

Go back to Redmond, you pathetic shill.

Re:Plans... (0)

Anonymous Coward | more than 6 years ago | (#21118569)

i was only pointing the fallacy of the GP, he said that Microsoft don't have a business plan, and they don't make great products, a company this big is necessary evil i know, but why point apple to contrast them?, they want to be evil, and make crap products too.

Re:Plans... (1)

davidsyes (765062) | more than 6 years ago | (#21117363)

Maybe they think "100 new companies" is like "100 new hookers". Think "Pump n' Dump" (pick the pumps and dumps of your choice, device, action or biomatter...)

Re:Plans... (0)

Anonymous Coward | more than 6 years ago | (#21117599)

Compare the profits of Apple and MS and then try to say that again with a straight face.

Apple is good at marketing. MS is good at making money. The latter is the goal of any business.

Re:Plans... (1)

Jason Earl (1894) | more than 6 years ago | (#21117971)

Profits are good, don't get me wrong, but what investors want is growth. Over the last year AAPL has been a very good investment. MSFT, not so much.

Re:Plans... (1)

everphilski (877346) | more than 6 years ago | (#21118355)

Since going public, Microsoft's stock has increased by 31,848%. Apple's increased, in the same time period, by 5,500%.

Yes, the past few years have not been that good to be an investor in Microsoft stock, but for the long term investor Apple has a long way to go to catch up.

Re:Plans... (3, Informative)

DECS (891519) | more than 6 years ago | (#21119317)

In the past year, Apple stock has been +115%, vs Microsoft +7%.

But over the last five years, Apple stock has been +2270%, vs Microsoft +21%.

An in the last ten years, Apple stock has been +4314%, vs Microsoft +89%.

What "long term investors" would prefer to have been sitting on MSFT?

Microsoft has 80,000 employees, +95% market share, and competes in businesses outside of Apple, which only has 18,000 employees and ~3% worldwide market share. However, Apple is bringing in more than a third of Microsoft's revenues and making more than a quarter of Microsoft's profits, and is selling new Macs--which eat up direct sales of Windows PCs--four times faster than the industry.

So Apple is doing good.

Microsoft exploded in the 90s, reached supernova in 2000, and has been flat as a pancake ever since. Apple exploded in the early 80s and ran into problems in the mid 90s, but recovered during the dotcom years and has been among few tech companies to wildly outperform its 2000-era peak. Microsoft certainly hasn't.

Apple doesn't have any catching up to do; it was already a high flying major company when Microsoft went public in 1986. Seriously, what "long term investors" have been holding Microsoft stock since 1986 apart from Bill Gates?

What has Microsoft done for you lately?

How Microsoft Got Its Office Monopoly [roughlydrafted.com]

What You Expected, What You Got: Windows Vista Vs Mac OS X Leopard [roughlydrafted.com]

Re:Plans... (1)

Jason Earl (1894) | more than 6 years ago | (#21119345)

We could do this all day, but the fact of the matter is that Microsoft hasn't grown in five years, nor is it likely to grow any time soon. If you want to keep your money in MSFT, that's fine, but the glory days are long gone.

Re:Plans... (1)

iamnothere900 (1098065) | more than 6 years ago | (#21117881)

Ballmer's plan to acquire 100 startups in 5 years is still sketchy What kind of a plan is that? No wonder Microsoft is losing its way. Compare and contrast with the business plan of Steve Jobs, which I think can be summed up as "make great products"...
... and sell them at premium prices

Re:Plans... (4, Informative)

lantastik (877247) | more than 6 years ago | (#21118241)

Compare and contrast with the business plan of Steve Jobs, which I think can be summed up as "make great products"...

Since when? I was always under the impression it was "sell over priced gadgets to trend whores", or "hire a great marketing dept".

It's premature to claim Apple's strategy superior (1)

AHumbleOpinion (546848) | more than 6 years ago | (#21119457)

"Ballmer's plan to acquire 100 startups in 5 years is still sketchy"

What kind of a plan is that? No wonder Microsoft is losing its way. Compare and contrast with the business plan of Steve Jobs, which I think can be summed up as "make great products"...


Microsoft has been buying things for decades and has about 90% marketshare. Apple has made great products for decades and has around 5% marketshare. Apple has had great success with new products in the past (Apple II, Mac) only to eventually lose the market to inferior products (IBM PC, Windows). It's premature to claim Apple's strategy superior, history shows otherwise.

Plan to acquire 100 start ups (1)

ackthpt (218170) | more than 6 years ago | (#21117279)

I'm reminded of an editorial comic where someone creates a personal website for his cat and gets 10 million dollars in investment because he's visionary -- in effect, it's a parody of the .com bubble -- which Microsoft will fund.

I need to get cracking if I'm to get my $240 million...

Re:Plan to acquire 100 start ups (1)

gbulmash (688770) | more than 6 years ago | (#21117365)

Yeah, the guys who registered facewiki, facecatalog, facepedia, and bacefook are all sittin' pretty now!

Re:Plan to acquire 100 start ups (1)

sm62704 (957197) | more than 6 years ago | (#21117541)

I need to get cracking if I'm to get my $240 million...

Damn, I need to update my blagh! [mcgrew.info]

-mcgrew

facebook my ass (1, Interesting)

tomstdenis (446163) | more than 6 years ago | (#21117321)

I was on facebook for kicks and I quickly realized it's full of little kids and their horrible grammar. In every group I joined [from singles groups to music/piano player groups] there was a continual barrage of horribly misspelled postings, lots of retarded "lols" and all that jazz. Nobody takes any of the serious chatter serious, and the fun chatter is just asinine like "join this group to keep facebook alive!" or whatever.

Frankly, if you're not a moron, or some attention whoring pre-schooler, I don't see why people would care about it. Not like the "friends" you have online map to anything realistic in the "real world." And no, joining the "let's keep facebook!" group won't influence whether facebook is alive and kicking or not.

Tom

Re:facebook my ass (0)

Anonymous Coward | more than 6 years ago | (#21117433)

money.

Re:facebook my ass (1, Interesting)

Elendil (11919) | more than 6 years ago | (#21117687)

> there was a continual barrage of horribly misspelled postings, lots of retarded "lols" and all that jazz

So you came back to ./ instead? Your logic escapes me.

Re:facebook my ass (1)

BlueCodeWarrior (638065) | more than 6 years ago | (#21117705)

Facebook is an amazing way to keep track of all of the people that I see at college. I take a class with someone, then never have a class with them again. But I can still keep up with how they're doing, and get a hold of them if I need to ask them about something that they're good at. It's much less creepy than, "Can I have your phone number?" too.

Re:facebook my ass (2, Insightful)

MightyMartian (840721) | more than 6 years ago | (#21117877)

Facebook is an amazing way to keep track of all of the people that I see at college. I take a class with someone, then never have a class with them again. But I can still keep up with how they're doing, and get a hold of them if I need to ask them about something that they're good at. It's much less creepy than, "Can I have your phone number?" too.


No, it's not less creepy.

Re:facebook my ass (1)

hodet (620484) | more than 6 years ago | (#21117707)

I agree that there is a tonne of crap on facebook that is stupid. When I see someone with 496 friends I have to laugh. On the other hand its a good site for keeping in touch with your circle of friends and co-workers and for getting in touch with long lost friends. I generally ignore all application requests and silly shit. But for keeping in touch it does what it does very well.

Example: My wife signed up a few weeks ago because she saw that I had been talking to old high school friends. Within days an old friend of hers sent her a message and happens she lives in the same city as us. Now they are back in touch offline after many years. If facebook only ever does this one thing it will have been priceless to her.

Re:facebook my ass (0)

Anonymous Coward | more than 6 years ago | (#21117915)

I found it amazing to be able to trace people on my family tree in other countries on facebook. There's also a story about a mother/daughter I think that were reunited through facebook. This is extremely common, but I've never once heard of it on myspace.

Re:facebook my ass (5, Insightful)

Oliver Defacszio (550941) | more than 6 years ago | (#21118653)

Here's my question, and it's sincere, because I'm not a Facebook member:

Why is any of that desirable? Honestly. I graduated from high-school in 1993, and I have a current e-mail address and phone number for the dozen-or-so people who still matter to me from those days. When we move, change contact information, or whatever, we send our little group a quick notification, and life moves on. Why on Earth would I want to be contacted out of the blue fifteen years later by someone who probably hasn't crossed my mind since graduation night (or insert whatever non-school equivalent event suits your purpose)?

An example: my sister is a member. Perhaps six months ago, one of my first real girlfriends from the ninth grade in 1989 sent her a message asking how to find me on Facebook, so that we could catch up. Catch up with what? We haven't spoken in *at least* ten years, and she's apparently churned out a few kids in her mining-town trailer park about a thousand miles from here. We're total strangers by this point with utterly nothing in common, and yet people find it scintillating to imagine this kind of scenario through the magic of Facebook? "So, how have the last ten years of your life been? Oh, fifty pounds you've put on... isn't that something? Four kids? Fantastic." Is that what they call a "reconnection?" No thanks.

Maybe I'm just not much of a sentimental, but if a friendship hasn't stood the tests of time organically, why should I suddenly be excited to drag the corpse up out of its well-deserved grave with Facebook? Some of my closest friends live hundreds of miles away, yet we stay close because of things in common and, you know, other friendship qualities. The most important of these is a willingness to put a little, tiny bit of work into actually being a friend. Maybe that means visiting every couple years, or maybe it's even something as small as keeping my phone number and e-mail information written down somewhere and using either or both from time to time. I do those things for them. Relationships that don't have those qualities are about the last things I want to pursue, and Facebook seems to make it way too easy to be a "friend" without being a friend.

Re:facebook my ass (1)

tomstdenis (446163) | more than 6 years ago | (#21120877)

This.

I've "met" a half dozen people from my high school days. And beyond the initial "hey!" messages on Facebook we haven't spoken or written a word since. We weren't really friends then, and we're not now. Just because we went through the same schools and happen to know each others names and faces, doesn't make us "friends."

And the couple of friends I did make in college and since, I'm in touch with outside of "the net." If I want to know what my friends are up to I just call them and drop by.

Re:facebook my ass (5, Insightful)

lb746 (721699) | more than 6 years ago | (#21117845)

I don't understand people that post comments like this. You joined facebook, then went off to join music/piano player groups on there. Needless to say facebook doesn't work for people looking to meet 42,000 new friends that may or may not be real. That's what myspace is great at. I'm a new musician in a new city, I want to find other bands/muscians/etc, i would go to myspace and see who has a half billion friends and realize they spend more time on myfacespace then playing music, so join them and play music together. Problem solved.

As for Facebook, if you join it, to socialize with your friends, it's completely different. Make an account, find people you actually know on it, add them as friends and login maybe once a week or so. Suddenly your actually able to keep up to date on those 10-15 people without having to call them weekly to find out whats going on. Sure some people freak out about this vast amount of stuff I can find out that your doing, but I only know about it because you posted it on there for the world to see.

I rarely join the groups on facebook, and when I do, I do so with a grain of salt realizing a digital group like that that is rather pointless in the first place. However the ability to add a study group or other real life type groups and post discussions, share meeting times and plans, as well as see everyones class schedule on there. That's what makes facebook useful.

This is why we need to stop putting myspace and facebook into the same group. They really aren't as similar as people keep saying they are. Facebook is for people already with friends that want to keep in touch easier, MySpace is a network for meeting new people and getting new connections.

Re:facebook my ass (1)

jmkaza (173878) | more than 6 years ago | (#21118059)

I agree, almost. I got pretty entrenched in MySpace before Facebook opened up to non-collegiates, and learned early on (thanks to a psycho ex girlfriend creating a fake profile) to only allow friends I knew in real life. Since then it's been a great way to keep track of a ton of people I'd have probably lost touch with without it. Facebook may be better suited, I don't know, I've only recently started using it, but Myspace works great.

Re:facebook my ass (1)

lb746 (721699) | more than 6 years ago | (#21118203)

They both have their strong points for different uses. As a company, or a new band, I wouldn't waste my time trying with facebook. Myspace is perfect for this type of stuff. However, trying to find my old roommate from my freshman year of college before I transfered schools, myspace would never be of any help.

When it comes to making new friends, I'm not going to go on facebook and poke every random person in my city/school/work place network. It's too creepy, plus people actually see how I might know them and such. It's more like a, "Hey I noticed you also do a lot of the same things as me, go to the same events, were at the same last 3 parties, etc." type network.

Myspace lets me just signup and meet random people from anywhere I want with unlimited freedom about how creepy or polite I want to be with no worries.

Re:facebook my ass (1)

adamofgreyskull (640712) | more than 6 years ago | (#21118163)

I was on facebook for kicks and I quickly realized it's full of little kids and their horrible grammar. In every group I joined [from singles groups to music/piano player groups] there was a continual barrage of horribly misspelled postings, lots of retarded "lols" and all that jazz.
So you came back to /. ?

Re:facebook my ass (1)

PinkPanther (42194) | more than 6 years ago | (#21118423)

I don't see why people would care about it.

The demographics of Facebook has changed quite dramatically in the past few months. I have met a large number of people with whom I have lost touch over the years, people I wouldn't drive many hours to go visit with for a 3 hours "reunion", but I'd gladly swap 30 second synopses of the 20 years since our last conversation. Facebook is pretty cool for that. The fact that you didn't find groups that you can associate with either means that you were there a long time ago (1/2 year ago the site was as you describe it), or that your offline network hasn't migrated to Facebook yet; check nntp:// [nntp] or gopher:// [gopher] instead :-)

Re:facebook my ass (0, Troll)

larry bagina (561269) | more than 6 years ago | (#21118845)

I was on facebook for kicks and I quickly realized it's full of little kids and their horrible grammar. In every group I joined [from singles groups to music/piano player groups] there was a continual barrage of horribly misspelled postings, lots of retarded "lols" and all that jazz. Nobody takes any of the serious chatter serious, and the fun chatter is just asinine like "join this group to keep facebook alive!" or whatever.

slashdot much?

Re:facebook my ass (0)

Anonymous Coward | more than 6 years ago | (#21120573)

Okay, we get it. There are even younger people than you on the internet.

Re:facebook my ass (1)

tomstdenis (446163) | more than 6 years ago | (#21120829)

Not younger, stupider. I've seen 30-something people type like "u r having a good times lolz? sees you at the pubs" and all that shit. Let's face it, 90% of the world is full of really stupid people, a good 9% of the remainder are moderately smart, and the last 1% are the genius academic monkey type. I'm in the 9% group or so. So while I'm not a brainer, I do appreciate an occasional well constructed sentence, properly spelled words, and maybe a conversation beyond the level of "let's get us some drank!"

And yeah, I've hit the crossing point where most people in "movies of the summer" are younger than me, which is sad given I'm only 25 ...

Re:facebook my ass (1)

Ansoni-San (955052) | more than 6 years ago | (#21121175)

Nobody takes any of the serious chatter serious
For someone with such a huge stick up their ass, I find it funny that you have such an obvious grammar mistake in the very same post. One that even an 8 year old would have no trouble pointing out.

Frankly, if you're not a moron, or some attention whoring pre-schooler, I don't see why people would care about it.
If you lack the capacity to find a single reason why anyone, anywhere that isn't a "moron, or some attention whoring pre-schooler" may find value in a site such a Facebook, I'm afraid you're the moron.

Not like the "friends" you have online map to anything realistic in the "real world."
You sound suspiciously like you're talking about yourself here. You need to get some friends buddy. The image I get of you from your flamebait doesn't anger me, it just makes me pity you.

240 mil is not a serious ownership (1)

140Mandak262Jamuna (970587) | more than 6 years ago | (#21117479)

This is just a bribe to make sure Facebook does not use any portable technology or make it easy for competition to write applications/search on top of Facebook. Like the money it paid to large domain registrars to get them to switch away from Apache.

Microsoft (5, Funny)

king-manic (409855) | more than 6 years ago | (#21117507)

Never ascribe to malice what can adequately be explained by incompetence.

Microsoft corollary: Unless it's Microsoft then never ascribed to incompetence or bad management what can adequately explained by pure unrelenting evil.

They paid and inflated number (0)

Anonymous Coward | more than 6 years ago | (#21117525)

To create a fake value for Facebook, thereby making them a less attractive company to try and buy and at the same time prep'ing them for a market listing and an SEC criminal investigation.

It cost Microsoft nothing, they would just trade a % of the ad sales in exchange for the flat fee. Facebook got their ridiculous valuation and SEC watches and waits for them to try a listing on the back of it.

Where do you want to go today? Jail?

The man on the street says.... (4, Funny)

zappepcs (820751) | more than 6 years ago | (#21117545)

Man #1 - MS wants to buy 100 startups? Maybe they will buy a couple that can show them how an OS is supposed to work?

Man #2 - Redacted, turned out to actually be a woman

Man #3 - Wasn't this the MS business plan since way back in the early 90s? This is news?

Man #4 - (claiming to be spouse of man #2) Is there really 100 startups worth buying? I thought the venture capitalists were becoming a bit put off on the whole tech thing?

Man #5 - (throws a chair) MS will buy 100 startups if they have to secretly pay those companies to start up... MS will kill the competition in the buying startups sector!!

Man #6 - Will they support iTunes?

Man #7 - (dubiously wearing a /. shirt) Imagine a beawolf cluster of 100 companies........

Man #8 - Shouts "Sorry, have to run and go start a company......"

Seriously, 100 startups? Why not 49? Why not 'as many as it takes'... what is the deal with 100? Microsoft begins with an M, why not 1000 startups?

wise investment (1)

ringdangdu (1179665) | more than 6 years ago | (#21117741)

240 million should be more then enough to 1) make sure they only us M$ software 2) Cause mass confusion. reducing company productivity employee satisfaction and management decision making. (this reduces value and allows a higher percentage to be purchased for less in 1 year) 3) at some later date make the site slightly incompatible with competing products. 4) start charging users to essentially view M$ ads

Little amount? why do u think its worth 15*10^9 (1)

zukinux (1094199) | more than 6 years ago | (#21117849)

Microsoft paid for its part, as if facebook worth 15 Billion DOLLARS!! Do you really think they worth more then that?
If so, you should wake up from your dreams, and the internet bubble is growing and growing again, it might explode again, be careful.

Answer (1)

KeepQuiet (992584) | more than 6 years ago | (#21117909)

"Microsoft's $240 million investment is much smaller than the rumored $750 million that Facebook sought. Why the difference?

Umm. Common sense?

Re:Answer (2, Funny)

Ant P. (974313) | more than 6 years ago | (#21119803)

Yeah, perhaps they realised any price they pay would be far more than this bubble 2.0 site's actually worth.

Math issues?? (1)

tji (74570) | more than 6 years ago | (#21118069)

What the hell is that article talking about? He states it as if MS didn't buy into that junk about a $15Billion valuation.

But, that's exactly what they did do. They paid $250Million for a 1.6% stake in the company. That means it values the whole company at $15.6Billion.

If they had negotiated it down, and got maybe 20% of the company for $500M. Then, they wouldn't have bought into the valuation.. that would have said it's worth $2.5B.

But, the math says MS thinks Facebook is worth $15Billion. I think that's ludicrous. But, then again, the first time I ever went to their site was today. So, I guess I don't really "get" the magic..

Re:Math issues?? (0)

Anonymous Coward | more than 6 years ago | (#21118733)

The point is that Microsoft wanted to only invest 1/4 billion, and probably negotiated DOWN the number of shares they would get in order to artificially drive the valuation of Facebook up. That way no one else can buy it, and they only spent a little.

Re:Math issues?? (1)

moderatorrater (1095745) | more than 6 years ago | (#21119371)

Facebook has always overvalued itself, but Microsoft wanted to get enough of a stake that they'd be able to keep the advertising contract for the foreseeable future. Plus, they'll be able to push silverlight through the affluent population of facebook. When you factor in the value of those two things, $250 million is nothing.

What does 1.6% get MS? (1)

JoeCommodore (567479) | more than 6 years ago | (#21118131)

A significant vote at stockholder meetings?

To me 1.6% does not signify any 'controlling' percentage, maybe gadfly status...

CompuGlobalHyperMegaNet (1, Funny)

Anonymous Coward | more than 6 years ago | (#21118299)

BG: Your Internet ad was brought to my attention, but I can't figure out what, if anything, Compuglobalhypermeganet does, so rather than risk competing with you, I've decided simply to buy you out.

H: I reluctantly accept your proposal!

BG: Well everyone always does. Buy 'em out, boys!

H: Hey, what the hell's going on!

BG: Oh, I didn't get rich by writing a lot of checks!

Enter M$, Let The Suckiness Commence (2, Funny)

curmudgeon99 (1040054) | more than 6 years ago | (#21118657)

Well, we know how this will go. First M$ invests in them, and they start to suck. G'bye Facebook!

Microsoft's 'Innovation' at work (3, Insightful)

Mike Morgan (9565) | more than 6 years ago | (#21118703)

Does anyone remember 8 years ago during United States v. Microsoft [wikipedia.org] when Microsoft proclaimed how innovative they were and how any interference from the government would stifle their innovation? They actually had a website to this effect, I forget the URL.
      I think a perfect settlement would have been for Microsoft to continue business as normal and innovate all they want, the only restriction being that they not be allowed to buy any more companies. If they are this magnificent well of innovation and ideas, go ahead, show us. 8 years later, with effectively no penalties actually imposed on this company, the best they come up with is a plan to buy 100 web companies in the next 5 years.

What innovations have we had from Microsoft in the last 8 years?

Prior to that we have web based email (HotMail), web browsers, ...

</sarcasm> </rant> </bloodpressure>

Re:Microsoft's 'Innovation' at work (2, Interesting)

miffo.swe (547642) | more than 6 years ago | (#21118861)

Microsoft has a bad management issue where money is king and the product just a means to an end. It could just as well be vacuum cleaners they sold. It has never been about innovation and will probably never be. Unlike IBM Microsoft has absolutely nothing to stand on other than their applications barrier to entry. Their research centers is a complete joke where the occasional good stuff very rarely gets into any production. If something goes into production they mess it up like with winfs. They are looking franticly for any means of revenues than Windows/Office which is about all the revenue source they have. Unless they find a new cashcow they are just going to die slowly. This must happen before OS/Office apps becomes commodities or competition forces them to substantially lower their prices to the "unmonopolized" real market value.

Its a fad thats going to go over. (1)

miffo.swe (547642) | more than 6 years ago | (#21118713)

Just as Facebook and Myspace we have had an enormous community here in sweden called Lunarstorm. At the beginning it was like everyone on the net went there but slowly as the kidz started to come people went away doing other more grown up stuff. It wasnt fun anymore when you had 30 people a day only out to make connections for bragging points or attention whores that idd anything to get many hits on their page. In Sweden grownups arent there anymore, just kids with not much money to spend. Not someplace i would want to put ads unless i was targeting young kids and selling very cheap goods like ringtones and music.

Re:Its a fad thats going to go over. (0)

Anonymous Coward | more than 6 years ago | (#21120145)

That's odd one would posit that as the kidz would come, so would the pedophiles.

Surely ... (2, Funny)

AlanS2002 (580378) | more than 6 years ago | (#21118805)

that money would've been much better spent in making their products as good as/better than the competitions to give consumers more incentive to not defect.

This is why I deactivated my Pagebook account (1)

Johannes Rexx (699567) | more than 6 years ago | (#21121343)

When I heard that MS had an interest in Facebook I promptly attempted to delete my account. There is no way to do it. But I can deactivate it and that is what I did. Let me say that I will go out of my way to avoid using anything that Steve Ballmer has his fat chubby little hands into. If there are enough MS haters around this will give Facebook a good kick in the pants. If not I at least have the satisfaction that I am not part of the problem.
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