A couple of months ago I posted Real Numbers That Show Why Facebook’s Ad Model Means Google Will Put It Out Of Business, wherein I shared the opinions of a social media expert extolling the virtues of Google’s newest social media thingy, Google Plus Communities. I created a sample community that I will use as an interactive research distribution and learning platform and started playing with some of the features. I can sum it up in less than a sentence. Facebook is in some very serious trouble! What Google has done was to create an extremely rich, extremely interactive, highly social multimedia publishing and sharing platform accessible from any connected device. It can broadcast video/audio/apps/presentations live and automatically post both the live stream and an automated archive on its ubiquitous YouTube site.
I started drawing traffic and comments within 4 minutes of starting my impromptu test of the platform sitting in my car after dropping my daughter off from school, the very same car seat that I’m sitting at typing this post ten minutes later. One can simply imagine what corporates can do with a small budget, a studio and some real determination. Click here to view the post on Google+ complete with screen scrapes of my client’s Apple profit margin models, video and sharing. The auto-generated YouTube video is below.
Note: I will be hosting a more organized (as opposed to this impromptu, informal and disorganized) Google+ Hangout at 9:30 AM tomorrow (Friday) morning. I invite all to come by, participate, and assist me in picking apart Apple’s margins, and potentially Facebook and Google, time permitting. Click here to join the learning community and my Circle.
These facts should not have been a surprise, and blog subscribers were made aware nearly a 2 years ago, as excerpted from our 2nd most recent forensic analysis.
Now, Facebook can afford a drop in subscriber growth if it can monetize its current base without a material amount of attrition. This appears to be the crux of the massive spike in its share price.
Now, those who are bidding up the FB share price should be cognizant of the level and quality of competition that the company faces. Most importantly, Google offers a superior version of much of what Facebook offers through its Groups apps, for free (Facebook charges good money). Ask Google’s other competitors how easy it is to compete with a free product, particularly a free product that is better. Back to the excerpt:
Google, with the introduction of Google+ communities, has essentially matched or surpassed every level of functionality available on Facebook for a Business to develop its brand, and attract a growing number of followers to its audience. The additional features of SEO, Authority, and Trust associated with a Google+ presence is a difficult thing to pass up, and I predict that the steady stream of Businesses building a Brand Presence on Google+ will soon, with the addition of Google+ Communities will soon become a flood.
Because Facebook has no public search engine, all content is confined within its forums. Facebook will not be able anytime soon to emulate what Google has done with SEO, Authorship or even Hangouts. You see, the video performance of Hangouts cannot be duplicated without an associated fiber-network between datacenters like those Google has built.
Google+ users connect through this network, away from all of the latency adding routers, switches, repeaters that connect together the rest of the internet. Creating desktop video conferencing for up to 10, or (15 users with a paid Google Apps account) is basically impossible given today’s video compression standards. Google has promised HD Hangouts in the not too distant future. I would expect to see those first along Google’s Fiber rollout for users in Kansas City, MO.
By effectively combining search with social media (which Google is doing) Google can convert Plus into a push versus pull scenario. Now for the most important point: Google Plus has just been launched, and it is now just launching new aspects of the platform. All of these platform aspects from Google are absolutely free. If you factor in the cost of paid advertising on LinkedIn, Twitter, or Facebook and cost per page visit, Google Plus shoots way up to the top. WAAAAYYYYYYY UPPPP!!!! Try ti for yourself. Divide the cost of advertising on these platforms plus the cost of content creation and management by the net visitor or engagment session or purchase (or however you measure success) and you will find Google Plus to end up at the top of the list – and that is despite its highly nascent state! Imagine what happens once Google actually gets the ball rolling!!!
Google is able to disintermediate these industries through a process known as cost shifting – basically offering a competitors cash cow product for free to the end user by shifting the cost of making and delivering said product to a natural producer who must incur said costs anyway, thereby totally disrupting the business models and crushing the margins of the established status quo. With the newness of Facebook et. al., it may be hard for old timers to consider them status quo, but in Internet Time, Facebook is old school and faces disintermediation through cost shifting if they don’t figure something out, and figure it out fast!
Here I break down Google Cost Shifting on the Max Keiser (who, after being broadcast on China TV, may very well be the most seen independent newscaster in the world) Show
Here’s where I broke it down on Capital Account
I also happened to do the same on the Max Kesier show…
I discussed Facebook on the Peter Schiff radio show, the Facebook excerpt is below…
Additional Facebook analysis, valuation and commentary.
On Max Keiser, go to the 13:55 marker for more on Facebook…
Double your money by shorting the Street’s advice! Once Again!
How the Facebook story got started…
Facebook started its institutional investment life as a very popular, very well known company. Goldman took this story (private) stock and went bananas with it, as meticulously illustrated in the following blog posts:
Here is a full year of free blog posts and paid research material warning that ANYBODY following the lead of Goldman, Morgan Stanley and JP Morgan on the Facebook offering would get their Face(book)s RIPPED!!! Could you imagine me on a reality TV show based on this stuff??? Well, it’s coming…
The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as valuation for each business line.
Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.
Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts to uncover truths, seldom if, ever published in the mainstream media or Wall Street analysts reports. Since the inception of his BoomBustBlog, he has established an outstanding track record