You might have heard of what is said to be the biggest tech IPO in history. Well consider it official: Facebook has filed its IPO.
Much has been said about its intention to go public. Bigger question is, whether or not the IPO will mark the beginning of a new era of growth or the end of Facebook’s growth cycle.
Why go public?
While Facebook managed not go public in 2008- even thought it went beyond 500 Shareholders- the question is why does Facebook have the intention to go public now?
Taking into consideration that it controls a massive chunk of the online display advertising market and that revenues are estimated to be in the $4-billion range, is going public really needed?
Well, it seems that this IPO is a necessary step on the road to scaling the business, moving into new markets, hiring staff, etc. More than anything, what it seems to represent is an opportunity for all of those initial backers.
After all it looks like Facebook doesn’t really need to go public at all. It generates significant revenues already, and even more significant profits. Anyway, how much bigger can Facebook possibly get? Actually, Facebook should worry more about its future mobile strategy.
They call that a “risk” …
As highlighted by TechCrunch, the most interesting part of the S-1 form is the “Risk Factor”, which focuses on the mobile products, by stating the following:“Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results.”
it seems that Facebook is underestimating the future of mobile Internet. Talking of mobiles products as a “possible” risk factor for the future appears to be a little strange to hear from the world’s largest social network. Let’s face it, it is inevitable!
“The global mobile advertising market was $1.5 billion in 2010 and is expected to grow at a 64% compound annual rate to $17.6 billion in 2015.”
With almost 425 million mobile monthly active Facebook users, the future of mobile growth is obviously not a threat but a certainty.
Google Vs Facebook
Funny fact is that Google, which already has a massive advertising base, is running into the same issue. Unfortunately for both of the biggest web companies, in mobile devices ad clicks are fewer and ad rates are lower. Indeed, mobile growth impacts web advertising revenues. There’s obviously more space for ads on an iPad than an iPhone.
Now the biggest challenge is to find out new ways to monetize the use of mobile minutes that are cannibalizing desktop minutes and develop new advertising and marketing products to meet these challenges.
Looks like continued competition with Google has just started. The battle for the future of the mobile web is on!
So which one will crash? Who wants to bet on Facebook ?