Facebook needs to show it is a ‘real business’, says Gartner research boss

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peter sondergaard

There is a lot of talk around the future of social, what Facebook’s plummeting stock means and what Apple’s win against Samsung will mean for innovators. A few people have pontificated about these questions and come with phrases such as “post-social” and “social bubble”. There’s even talk about Apple and Samsung and the death of innovation.

We spoke to Gartner‘s global head of research, Peter Sondergaard, to get the get the skinny on some of these issues. Gartner is a New York Exchange-listed information technology research and advisory firm based in United States. Gartner knows everything. It has predicted the future of pretty much all devices and all web experiences.

Sondergaard is responsible for the management and direction of the global research organisation, which includes Hardware and Semiconductors, as well as Software and Communications. Prior to joining Gartner, he was Research Director at the International Data Corporation in Europe, where he concentrated his efforts on PC analysis and consulting projects for large European users and vendors. Sondergaard also worked for Scandinavian Airlines System (SAS), where he was responsible for the integration of PCs between hotels and SAS Data.

He reckons we have reached a level of “exhaustion” when it comes to social media platforms and sharing information with friends. Sondergaard also says that Facebook’s IPO was “over-hyped” but concedes that there is “still value in the information about the individual Facebook user”, although he questions if the social network has the “depth in its management” to actually productise this value.

Speaking to the question of Apple’s continued dominance on innovation, Sondergaard argues that the company needs developers to build on its platform (which it has now) but worries that developers are like “bumble bees that can actually fly somewhere else” if something better and more innovative comes along.

Memeburn: Is the whole social-local-mobile “revolution” over-hyped or are we just in the beginning stages?
Peter Sondergaard: From the perspective of the device, mobile is where most of the evolution has moved right now in social networking-based environments. If you’re not on the mobile device, then you’re not really relevant. The usage profile has shifted from what it was when the first wave of social networking environments came out, which was a stationary PC, to now something that’s mobile. You still see an expansion of the social media environments and part of it is that you’re obviously getting it on devices that people have everywhere.

The integration with environments that use contextual information or information that is related to other activities (desires, people’s interests of some sort) — that’s probably the area that’s moving slower because that’s more complex than just putting out these environments. I think what’s happened with social media is that the initial euphoria of people getting up on the basic platforms has passed. We had another s-curve when we moved from the desk-based environments to real mobile platforms. But in essence, now things evolve slower because it’s more difficult from an application development perspective to actually get these things out.

I also think that we have gotten into a situation where the demands of the user have become more sophisticated, and so we’re seeing a series of other environments appear. We have exhausted the first wave of potential users of social media environments or the locations around the world of social media environments, and we’re now sort of seeing the next wave of new environments appear (most prevalent in countries such as Japan or China, where sharing information is not something people commonly do). Facebook is not very prevalent in Japan.

I think that’s what’s happening: it’s an evolution that is now at a next phase, which is why we think it’s going to be more turned into “how can we use the principles of this?”. So you’re probably going to see a slow-down with the external consumer-based social media… but how can we use the principles in how we design applications inside an organisation.

The fundamental component of what’s happening with mobility — it has been fundamental to what we’ve said has been the evolution towards context aware computing. So predicting that contextual information isn’t important is a complete flaw. Part of the fundamental design principles of why we move to these environments is that we can get contextualised information, of which location is one of the more simple aspects. Whether a particular software provider can evolve with what’s happening in context based computing… you can debate that.

The main question is how we are seeing the evolution from simple mobile platforms in which you can operate your existing social network environment, to location (and other aspects) of information that now allow you to evolve a more user-friendly, and more sophisticated, user aware based environment, into the next wave which is about using external information services that integrate with your basic platform and allow you to have a completely different experience. That’s the evolution of context aware computing.

MB: The Forrester boss predicted that there will be a “post social era” and that trendy social networks like Foursquare will be swept away… you agree?
PS: There are some natural steps in the evolution of how we go from the simple systems to more sophisticated environments that use location information, geographic placement information, relative placement to other things, into integrating it with your personal information and information about friends and colleagues, into then integrating information-based services that you buy in that gets plugged into the platform that you have.

It is on top of that that you develop the social-interaction experience. These are fundamental services upon which we build a more and more sophisticated experience, which I believe will lead to a level of predictability in terms of what your dreams and desires and behaviours are and then linking it to how we behave as human beings, not just as consumers but also in our working life.

MB: What do projects like Google Glass mean for the future of social networks? Should these networks begin to innovate around augmented reality?
PS: I think that’s the evolution we are moving towards in terms of what we call context-aware computing. I think that’s just a natural step in what’s happening.

MB: We use Twitter, we use LinkedIn, we use Facebook, Google+… do we have time for more social networks… and if not, what does this say about social network businesses?
PS: There are only 24 hours in a day, and in that, we’ve got a lot of fundamental things that we as human beings need to do. So no, there is a finite amount of time in which we can use this. If it can be integrated, the value enhanced, save time, make us more effective… both in our social life and our work life — the blending of work and free time is likely where there could be a value proposition.

But by spending more time integrating and sharing information with friends in different ways on added number of platforms, we are at a level of exhaustion, and we don’t have more time to do that. That means that we’ll likely see some level of consolidation among the existing platforms – integration between platforms, so that you can perhaps derive value in the integration of the platforms as opposed to having a multitude of separate ones.

MB: Is Facebook in trouble, like its stock price suggests — or should we separate the opportunity that is Facebook and the crashing stock price?
PS: I think the introduction of Facebook was a mini-bubble in terms of expectations of what would be feasible from a revenue stream perspective short-term. I think that there is value in the information around the Facebook user and that it can be monetised. I think Facebook needs to demonstrate that it actually has the management expertise and the capability to monetise that as they are doing the shift from desk-based to mobile-based because part of it also hinges on the fact that you get less screen space and its more complex on mobile environments than it is on a large screen.

I think the price was over-hyped, I think there is still value in the information about the individual Facebook user and that the individual Facebook user also finds value in the correct level of placement of product alternatives. But I think what Facebook lacks is depth in its management ranks to look at how it productises effectively. Now that they’re a real business, they have to prove that they can operate like a real business.

MB: Will Apple stay ahead of the game or be overtaken like so many other market leaders in history who had superior products?
PS: On the operating system platform, and for that matter, also on the consumer shared-based environments that Apple run, the questions continue to be always: “Do you have enough developers active on the platform? Do you have enough consumers that are in some way or form dependent on the platforms? How easy is migration away from the environment?”

With Apple, they are gathering more and more application developers, but it is also such that those developers are more like bumble bees that can actually fly somewhere else. It’s a little bit difficult doing so, but it is possible. So they will have to continue to innovate, but if they continue to innovate they will continue to gather more and more developers to their platform, and that’s what will make them stay relevant. It is not necessarily the operating system. The operating system just needs to be good enough, as long as you attract developers.

The risk of course is as you get a more aggressive Microsoft, because you cannot dispel the fact that it is actually the dominant platform. I know people talk about Apple, but Microsoft is still the dominant platform and has a far deeper ecosystem from hardware and software and service providers than exists around Apple. So there still is a risk for Apple. But it’s all about the developers and the stickiness with the consumer. If they continue to do what they’ve done so far, I think they will continue to expand the platform over the next couple of years.

MB: What does the Apple and Samsung patent case mean for innovation?
PS: I think it means nothing to innovation because innovation will happen irrespective. The question is whether or not the innovation will happen from Samsung. But what you’re seeing is obviously, is that Apple trying to protect their [intellectual property] IP, no doubt about that… they’re trying to protect a price point that Apple has for its technology, which we all know is higher than what you actually could deliver.

One of the challenges for Apple is that there is a substantial amount of innovation around that can drive the same or better level of functionality at a much cheaper price point than Apple. And that’s Apple’s angle — to obviously want to protect their IP and therefore also help to protect the price point at which they’re selling, so they are protecting their profit margins.

It will change the competitive picture, but we don’t necessarily think that it halts competition from wanting to try to exploit the evolution of the market in terms of where it’s going. The opportunity for profit is too significant and as long as Apple keeps a price point that is on average at the high-end of the market, or the markets, that they operate in, there will always be people that are going to try to come in underneath Apple.

MB: We have two competing ecosystems: closed (like Apple) and open (the open source movement, WordPress, Android). Which is better?
PS: I don’t think the consumer makes a decision on whether or not things are open or closed. The consumer will make a decision on the basis of whether or not the right functionality is available and whether or not they can buy things at a price point that is attractive to the consumer. The challenge with a closed ecosystem is it places fewer options in front of the consumer because it is a managed partner set that has a defined set of alternatives, which is what most people run into when they buy into an Apple environment. There are certain parts in which there is limited choice. Limited choice means that I as a consumer may not be able to buy it at the price point I want because it means that you generally see a higher price point.

Open ecosystems drive often a very high level of innovation, therefore also attractive price points, and I think this is the biggest challenge for Apple. If you become too closed you end up repeating history, you end up repeating what happened in the 1980s with the old Mac platforms. That was also a competition against a completely closed ecosystem (Apple) and a semi-open ecosystem from Microsoft.

Image: Axel Bührmann

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