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Success and Pitfalls of facebookINFM 612 - Fall 2009Prof. Ping WangWritten by:Ekta BadiyaniYen-Chi ChenYingying ChenJack O'BannonPrashant ShettarSheetal TripathiExecutive SummarySocial networking websites have become very popular communication tools in recent years. The market is very competitive. Facebook is the current market leader in terms of unique visitors and total monthly visits. It was established in 2004 by Mark Zuckerberg. It began by focusing on only University students, but over a few years opened to High School students and finally to the general public. It has received investments from venture capitalists and a $240 million investment from Microsoft. It remains a privately held company.Social networking websites have to attract users to leverage network externality effects. Each site faces competition from other social networking sites, as well as the threat of new entrants and close substitutes such as e-mail and cell phones. Success strategies include differentiation or focusing on a market segment or geographic area. Facebook has done an excellent job in creating useful applications for its users. The most used application, FarmVille, has more total users than all of the users of the facebook competitor Twitter. Facebook has applications for organization, productivity, money management, communication and social interaction. Facebook is also useful for non-profits, as it is free, and for businesses as they can establish a free presence and find users who self-identify as interested in their products and services.Facebook's nearest competitor, and the market leader until early 2009, is MySpace. MySpace was founded in 2003 and is a subsidiary of News Corp. They two are very similar in terms of the demographics of their users and the services and applications they provide. A noticeable difference is that MySpace participates in OpenSocial, a consortium allowing applications developed on one social networking website to be used on other social networking websites. Facebook's platform is unique to its website.In China facebook faces additional difficulties. The Chinese government blocked facebook entirely as of July, 2009, following the Xinjiang riots. Even prior to being blocked, facebook was not a major player in the social networking market in China. Domestic players Kaixin and Renren dominate the market. Kaixin focuses on games, while Renren is a near doppelganger of facebook. Facebook had harmed its chances by not adapting to the Chinese culture and not having a physical presence in China.Facebook has made several wise management decisions recently. Facebook platform was the first to market before OpenSocial. Twitter was taken seriously by facebook and it introduced a streamlined version of its interface called facebook lite. Also, facebook began offering Memorial Profiles for the recently deceased. This was a creative way to deal with the issue of how to end a profile when the user passes away.Facebook faces many challenges resulting from the nature of social networking. Bandwidth is always a limiting factor when users expect to be able to share large multimedia files. Malware appears on facebook often. Employees at work can use facebook inappropriately. They may harass other workers, waste time unproductively, or accidentally release corporate secrets. Companies can also make use of facebook to screen potential job candidates. Finally, facebook addiction is a social problem that is only beginning to appear and be recognized for the impact it may have.The paper contains an original survey. 102 individuals were surveyed regarding their use of facebook and other social networking websites. Among respondents, the single largest cohort was students. A few respondents (6%) didn't use facebook at all. Most were new to facebook (75%) using it for less than 2 years. 56% were between the ages of 18 to 25. The majority spent less than 30 minutes on facebook each time they used it, but a majority also used it more than once a day. 67% use it primarily for communicating with friends. 92% would not be willing to pay to access facebook. Among the users of facebook, Youtube was the next most popular social networking website.The conclusions that can be drawn from the research include an emphasis on more useful applications, a simplification of the interface and for facebook to remain free to users. There is a dearth of useful professional networking tools. Tools available to small businesses could be improved. To return to China, facebook will need to negotiate with the government, establish a local presence, emphasize entertainment and better acclimate to the Chinese culture.Although facebook has many management challenges ahead of it, as long as it maintains its track record of mostly wise management decisions, including implementing these suggestions, we feel its future possibilities are very positive.IntroductionHumans have been forming social networks for as long as we have been a species. Social networking websites have blasted onto the scene in the last few years. The speed with which the public has accepted and begun to embrace these websites is truly astounding. The social networking market that has resulted is extremely large and competitive with many diverse companies. The timeline below depicts the introduction of many of the more popular, or formerly popular social networking websites from 1997 to 2006.Boyd & Ellison, 2008At the beginning of 2009, first among these websites, in terms of unique visitors and total monthly visits, is facebook. In this paper we will explore the success and pitfalls of facebook. How it reached its current position, the management challenges it faces in the future and what it can do to ensure continued success. We begin with a brief history of the brief existence of facebook. Next we will discuss the management issues we will address. We present many of the applications that have made facebook so popular. We follow this with a comparison of facebook to its nearest competitor MySpace. We then explain facebook’s difficult situation in China. That is followed by a presentation of some of facebook’s successful management decisions. Then we discuss the pitfalls confronting facebook including facebook addiction. Our most significant contribution is our survey regarding facebook’s use. We present our survey results and discuss them in detail. Finally, we have management recommendations we draw from our research and our survey.History of facebookFacebook was taken live February 4, 2004. Mark Zuckerberg wrote the code for facebook while in his Sophomore year at Harvard. However, there is a great deal of controversy as to whether the original idea for the website is really his. Two other groups at Harvard were working on very similar social networking websites prior to the creation of facebook. One of those was even called "facebook". Soon after the establishment of the website, Zuckerberg cut out his early partner and dorm roommate who was one of his friends. TheFacebook, Inc. as a corporation was founded by Zuckerberg, Sean Parker, a cofounder of Napster, and Dustin Moskovitz in July of 2004. In a sign of how controlling and cutthroat Zuckerberg could be, within a year Sean Parker had been forced out of the company. In the light of facebook’s sudden and rapid success, there were several lawsuits filed against facebook, and Zuckerberg in particular, and in one case he filed a countersuit. Early on some of his Harvard classmates claimed the concept was their idea. Zuckerberg had worked with some of these classmates on the social networking concept first called HarvardConnection. In fact, at various points he had agreed to provide code for them but had not produced anything. This website was later renamed ConnectU and those classmates sued Zuckerberg with the belief that he had stolen their intellectual property. A settlement was reached out of court.One of the early defining elements of facebook was that access to the website was only granted to individuals, mostly students, who had a university e-mail address. By December 2004, facebook had one million active users. In May, 2005, Zuckerberg acquired venture capitalist funding from Accel Partners in the amount of $12.7 million. Facebook made the decision allow High school students in September, 2005. At that time it had 5.5 million active users. The decision to open facebook to everyone with an e-mail address was made in September, 2006. While this would prove to be a wise management decision, not everyone was happy with the choice. In particular, many students liked the insulated atmosphere of the restricted website. Users could be assured they were dealing with peers. On other websites there was no way to know who the other users were.The largest financial step in the evolution of facebook occurred in October of 2007. Microsoft invested $240 million in the company for a 1.6% share. Facebook was still private, but this investment gave it a paper valuation of $15 billion.One of facebook’s major management blunders occurred when it introduced Beacon. Beacon was intended to connect purchases by facebook users on other websites, such as or , with targeted advertising on their facebook page. Privacy advocates were outraged and filed a class-action lawsuit. Facebook settled the lawsuit and in September of 2009 closed down Beacon entirely.As a private company, facebook does not have to report official sales figures. Fiscal Year 2008 sales have been estimated at anywhere from $51.5 million to $250 million, a wide range. In January, 2009 facebook overtook MySpace as the number one social networking website. For the third quarter of 2009 facebook has claimed to be profitable, with over 300 million users worldwide.Management Issues to AddressThe primary purpose of social networking websites is to attract users and have them spend time on the website in order to sell the users’ attention to advertisers. The difference between social networking websites and other content driven websites is that a good portion of the content on social networking websites is provided by the users themselves. Posts and conversations between users become the information consumed by other users.It isn’t just new advertising opportunities that attract businesses to social networking websites. Businesses, politicians, celebrities, and other entities can create a presence on these websites. This allows ordinary users to associate themselves with the business directly by choice. The business then has a direct link to customers who are known to be interested in the product or service provided. This is a captive audience and presents a terrific marketing opportunity.The single largest initial challenge for any social networking website is generating a presence in the minds of users. A new social networking website has to try to leverage the network externality effect. Similar to the adoption of the telephone, the first people to join a particular social networking website will find the experience nearly useless. However, as more people join, the benefits of being a user of that site increase in a non-linear fashion. As the site reaches a critical mass, new users are drawn in by current users and find the experience rewarding.Defining the social networking market on the internet can be very challenging. Facebook competes with other websites along several dimensions. Consider Porter’s five forces affecting industry competition. There is fierce competition among rivals in the social networking market. MySpace has been facebook’s top competitor for years, but there are literally dozens of other competitors. The “buyers” or users of the site pay with their time and have a good deal of power to make a site successful. Costs of entry are extremely low, recall that Zuckerberg had facebook up in only a few weeks. The threat of substitute products is high, as users have many ways to keep in contact with one another, e-mail and instant messaging are just two examples. The bargaining power of suppliers could be seen as the opposite side of the bargaining power of users. They are both the consumers and the suppliers of the good provided by the social networking websites.Therefore, facebook and other social networking websites should try to find ways to attract and keep the attention of users beyond the content that users provide themselves. Porter suggested three ways to do this, and many social networking websites attempt to leverage one or more of them. The differentiation strategy is most commonly implemented. MySpace has a look and feel that is significantly different from facebook. The various social networking sites function differently with different applications available to users. As users don’t pay anything, except their time, to use social networking websites the cost leadership strategy must be implemented indirectly. Facebook and other social networking websites have made their application API’s open source. The idea is that anyone can create new applications, which relieves some of the burden on facebook for the cost of developing new applications. Finally, the focus strategy is often employed. Facebook began with this strategy, when it was available only to students. However, choosing too narrow a focus can confound the positive network externality effect. Other social networking sites have chosen to focus on a particular delivery method or technology. In the case of Twitter, this would be a segment of the market only interested in shorter messages. This can be dangerous as well, as Twitter hasn’t yet found a reliable way to generate advertising revenue.It is also critical to note that one of the strengths of the internet is that it is available worldwide by default. Successful social networking websites will take actions to encourage adoption in other countries and other languages to take advantage of these marketing opportunities. We found that facebook has had some success internationally, but faces particular problems in China. Recently facebook has been banned in China and blocked by the Chinese authorities. There are particular issues that facebook must address to compete again in China.Facebook Applications and ExtensibilityOne of the primary things that facebook does well, is create and deploy applications for users. Recently, Barb Dybwad of reported that FarmVille has more users than Twitter and the number of FarmVille users is double the number of users of the next most popular application. Such reports show how people extensively use facebook applications and are addicted to them. But it is not only Farmville, applications like Poker, Horoscope, Fortune Cookie and Mafia Wars are equally popular.What makes these applications so successful, famous and addictive? The answer would simply be that they are on facebook. Had they been on any other social networking site, these applications may have gone unnoticed. It’s the large number of users of facebook who are constantly trying out new applications on their favorite social site which makes these applications a trend. With such applications, facebook has developed a symbiotic relationship. Had it not been for these applications facebook users may have gotten bored and given up on this site, as they did for other social networking sites. Hence facebook generates a competitive advantage by including these applications.Facebook established itself serving university students. It's only understandable that it has developed the best applications for serving them. These applications help students with organization, productivity, money management, communication and their social anization applications include "Box files", free online storage space, "Calendar", and two "Courses" programs for displaying, sharing and organizing the student's courses. Productivity applications include "To Do List", "Docs" for course assignment management, and "College Tips and Advice". Financial applications include "Jobster" for posting your resume online and searching for jobs across other websites. "Roomster" is a housing locator for students, and "CarPool" helps students find others going to the same munication applications include "Text Me" linking facebook to cell phone text messaging, "Meebo" merges the capabilities of Meebo with a facebook profile, and "SkypeMe" which allows the user to conduct Skype calls. Social applications include "I am Hungry" for matching up dinner plans, "Bar Book", "Bar Tour", "Superwall" which is a wall that an entire College or University can see (Ex: The Great Wall of Stanford) and "What's Going on Tonight" which lets your friends know what you are doing this evening. Finally, entertainment applications include "Trips" used for planning Spring Break travel, "College Football" to follow your team's schedule and see if your friends are attending a particular game, and "CollegeHumor" presenting content from the popular humor website.But facebook is useful beyond applications for students. Non-profit organizations and other businesses also find it useful. Non-profits find facebook useful because it provides an outlet for free publicity. BAVC was an early adopter of facebook. They appreciate that facebook allows them to keep people aware of events they host, which increases awareness and the number of participants and volunteers they have. Businesses also like the free marketing that having a facebook page provides. But there is a downside in that there are fake facebook pages created from time to time. A business has to be vigilant and watch for these. Facebook does make an effort to promptly take down pages misrepresenting themselves.Facebook is also useful as a mechanism for businesses to locate and judge potential employees. recently conducted a survey that found that nearly half of all employers screen candidates by searching social networking websites. The leader in websites searched was facebook, but LinkedIn and MySpace were searched as well. The survey found that social networking sites allowed managers to get a good idea of a candidate's personality, qualifications, creativity, communication skills and references. Clearly social networking sites provide more to businesses than just a means of promoting themselves.Facebook vs. MySpace Facebook competes with many other social networking websites, but for several years its main competitor has been MySpace. In order to illustrate how close the competition is between these two sites, we present the following table and figures:FacebookMySpaceCompany StatisticsType: Private.Founder: Mark Elliot Zuckerberg.Launched: February 4, 2004.No. of Employees: 900+.Goals, Mission and ObjectivesGiving people the power to share and make the world more open and connected.Main FeaturesWall: Where users can post messages.Pokes: Allows users to send virtual pokes.Photos: Where users can upload albums & photos.Status: Allow users to inform about their current whereabouts.News Feed: Highlights latest updates on users homepage.facebook notes: To create blogs.Chat: To send instant messages.Gifts: Lets user send virtual gifts to others.Marketplace: Which lets user post free classified ads.General GrowthMore than 300 million active users 50% of our active users log on to facebook in any given day The fastest growing demographic is those 35 years old and older User EngagementAverage user has 130 friends on the site. More than 8 billion minutes are spent on facebook each day worldwide (fig 1.2). billion photos uploaded each month.14 million videos.More than 2 billion pieces of content shared each week. million developers and entrepreneurs.Every month, more than 70% of facebook users engage with Platform applications. More than 350,000 active applications (fig 1.3)15,000 applications on facebook. Difficult to rapidly grow user base due to saturated market (fig 1.4). InternationalMore than 70 translations available on the site. About 70% of facebook users are outside the United States. Company StatisticsType: Subsidiary.Founders: Tom Anderson, Chris DeWolfe.Launched: Aug, 2003.No. of employees: 1,000 employees, after laying off 30% of its workforce in June 2009.Goals, Mission and ObjectivesConnecting people through personal expression, content, and culture.Main FeaturesMoods: Small emoticons that are used to depict the current mood of the ments: Allows users and their friends to leave comments for everyone to see.Bulletins: Bulletins are posts posted on bulletin board for everyone on friends’ list to see.Groups: Allows group of users to share a common page or message board.MySpaceIM: Instant Messanger.MySpaceTV: Service similar to youTube video sharing.Applications: API with which users could create applications for other users to post on their profiles.General GrowthMySpace has nearly 125 million monthly active users around the globe. MySpace has nearly 66 million total unique users in the US. EngagementThe average MySpace user visits for 266 minutes per month.Remains the most trafficked site in the world (fig 1.2) million images being uploaded per day.60,000 new videos being uploaded to MySpace TV each day. along with 13 other social sites participate in the OpenSocial platform developed by google (fig 1.3)OpenSocial is a set of common APIs for building social applications across many websites (fig 1.5). InternationalMySpace is localized and translated in more than 20 international territories. Figure 1.1 User Demographics, Source: 1.2 User Engagement, Sources: and 1.3 Platform, Sources: ? and 1.4 Sources: and 1.5 Sources: and in ChinaWebsites on the internet can be seen globally. However, international issues that social networking websites face go well beyond competition. Facebook has found operating in China particularly difficult. It currently endures censorship by the government. It has been the target of direct competition by a locally founded social networking site that does a better job serving the Chinese market. In simplest terms, facebook has not adapted well to the local customs and culture of China.In China, the government controls all access to the internet, within the country and contacts to the outside world via the “Great Firewall of China”. The Chinese authorities blocked access to facebook a few days after the Xinjiang riot on July 5, 2009. The government believes that facebook could be utilized as a medium for communication amongst protestors CITATION Gle09 \l 1033 (Loveland, Poll: Most Chinese support Facebook block, 2009). Even now, facebook remains blocked, and the government has not announced plans to restore access. Below we present a screenshot of a facebook group created by protestors as evidence that they used facebook to gain worldwide attention and support.Snapshot of facebookThe opinion of the internet population within China tends to agree with the government’s action in blocking facebook. The Chinese web portal reported that over 80 percent of its netizens agree China should punish facebook for being a medium for "Xinjiang independence" forces. CITATION Peo09 \l 1033 (People's Daily Online, 2009).However, some of the foreigners who live in China expressed their dissatisfaction of feeling disconnected from their friends and families CITATION Gle091 \l 1033 (Loveland, Facebook, Twitter inaccessibility makes China expats feel disconnected, 2009). Many Chinese students who had previously studied abroad and were spending their summer vacation in China also complained about the inability to log on to facebook, feeling cut off from the outside world and their classmates in other countries.Prior to being blocked, facebook was not even on the list of the top 100 social networking sites in China. Kaixin and Renren are ranked #1 and #2 respectively in terms of traffic flow among the social networking websites within China CITATION Ale09 \l 1033 (Alexa, 2009). Kaixin focuses on online games for on-the-job young people, whereas Renren targeted only college students at first, but then opened to all types of people, a similar business strategy to facebook. Renren, previously named Xiaonei, was launched in December of 2005. It is obviously a facebook replica. Even its originator calls Renren “the facebook of China”. Renren not only imitates the interface style of facebook, but also initially most of facebook’s functions. By better addressing the cultural and social needs of the Chinese people, and imitating some of the best features of facebook, Renren established itself as the most influential social networking website in China. The screenshots below illustrate the similarity between the homepages of facebook and Renren. Facebook and Renren screenshot comparison, note the extreme similarities in color and in the use of the personal network iconography.The following table summarizes the direct comparison between Renren and facebook.RenrenfacebookLanguageChineseEnglishLoading speedFastIntolerably slowPersonalizationHighLowLocalizationEmbedded with cultureNone, other than languageRenren is a Chinese-based social networking website. However, facebook didn’t have a Chinese version until 2008. And the blatant translation lacks accuracy CITATION BAN09 \l 1033 (BAND, 2009). Although Chinese students begin to learn English at an early age, they still don’t have many opportunities to use it on a communicating basis regularly. Therefore, most of them would avoid using English on social networking websites.The loading speed of facebook prior to being blocked was intolerably slow compared to that of Renren. The main reason is that Chinese netizens had to cross the firewall to gain access to facebook thus lowering the loading speed. Furthermore, on Renren users can change the style of their personal pages for a fee. However, users cannot do that on facebook.Localization is the most important reason that Renren is succeeding over facebook. Renren exhibited a fast response to social events such as the 2008 Olympic Games, the Sichuan earthquakes and China’s National Day to fulfill its social responsibilities. The screenshot below is an example in which Renren changed its homepage to red in honor of the Olympic Games.Screenshot of Renren during the 2008 Olympic GamesIn China, the development of the internet is still immature. Internet fees are much higher than in developed countries CITATION AFA09 \l 1033 (AFAR, 2009). China's internet users do not enjoy the same standard of internet service as is available in developed countries. Additionally, wireless coverage is very limited.The Chinese people value personal relationships and “face”. Therefore, they avoid social networking online, preferring instead face-to-face communication. And when they do use social networking websites, they are less likely to add someone they don’t know as a friend. Combining those facts above, social networking websites in China are mainly used for entertainment. This explains why Kaixin is ranked first among the social networking websites in China, as it focuses on online games.Facebook’s successful decisionsWhile facebook has many challenges before it in order to maintain its lead in the social networking market, we also wanted to briefly describe some of facebook’s recent technical and management decisions that have directly benefited it in the market. In general, facebook is quick to make rapid adjustments in light of changes in the market environment it faces.In May, 2007, facebook launched facebook platform. Facebook was the first social networking website to provide a platform for users to create their own applications. This strategic decision helped facebook attract and maintain a lot of users around that time. Figure 1.2 above shows the upward trend in visits to facebook from May to August of 2007, just after the release of facebook platform.Google adapted the facebook platform concept and created another application building tool called OpenSocial. The primary difference between facebook platform and OpenSocial is that OpenSocial allows applications to work on any social network that joins Google’s consortium. Besides Google’s Orkut social network website, MySpace, LinkedIn, Friendster, and Ning have joined the party. In light of this challenge, facebook strategically decided to take facebook platform open-source. This means that users can easily take their facebook applications to other social networks. Fortunately, due to facebook’s rapid response and decisiveness, the advent of OpenSocial didn’t cause large defections of users from facebook.Another recent competitor that appeared on the social networking scene with great fanfare was the aforementioned Twitter. Facebook took Twitter very seriously and made significant adjustments to its structure compete effectively. Facebook announced facebook lite. The screenshot below illustrates facebook lite. Facebook lite presents a very Twitter-like experience. Facebook lite has comment threading, more features than Twitter and no word count limits. Facebook lite offers users faster load times and a simpler version of facebook. Screenshot of facebook liteFacebook began offering Memorial Profiles for the deceased last month. This decision by Facebook came after there were a number of complaints about people who received updates about deceased relatives. For a Memorial Profile facebook will remove all features like status updates and contacts from the profile of the deceased person and will in essence freeze the profile. This is truly an innovation in social networking websites to deal with a very difficult situation. Facebook was the first social networking website to provide a place for users to memorialize their friends and relatives who have passed away. The Memorial Profiles, along with facebook platform being taken open source and the introduction of facebook lite, illustrate how quickly facebook can adjust to changes in the social networking market.Facebook's Challenges and PitfallsWhile facebook is currently the number one social networking website, it faces several possible pitfalls and challenges. These include bandwidth issues, malware, legal liability, employee productivity, disclosure of personal information, leaking of corporate secrets and limited use by executives. It is also critical to note that facebook addiction is a very present and real issue that society is just beginning to address.Every day the internet is moving towards higher rates of bandwidth consumption. Multimedia applications and their use predominate. Social networking sites are no different, as users expect to be able to post images, videos, music, and other high bandwidth, and high storage use content. Facebook has to plan for this continued infrastructure need. Malware is prevalent on facebook. Software, facebook applications and malicious links appear often and trap many unsuspecting users. These users may tend to blame facebook for their own mistakes or imprudent behavior.Inappropriate use of facebook includes several aspects of the website. If employees use the site to harass someone while at work, the corporation could be held responsible. Of course, simply using facebook too often while at work can have a direct impact on employee productivity. Finally, there is a clear danger of employees accidentally releasing proprietary information onto facebook and thus leaking corporate secrets. Companies should understand and make clear that anything posted on facebook should be considered public. The disclosure of personal information on facebook is a severe problem. Not only do companies judge potential new hires, but they could also discover something unsavory about a current employee. Certain types of behavior may be enough to dismiss an employee, when that information would not have been discovered prior to the existence of facebook. Pair this with the infrequent use of social networking sites by upper management and they often don't see the value in these tools.Image: There are no statistics to quantify the number of people who are becoming addicted to social networking websites like facebook. However, it certainly is a well known topic of discussion and under investigation by many researchers that "Facebook addiction" is a reality. It isn't an actual medical diagnosis, but rather similar to other types of addiction. Scholars say that the number of people who have crossed the line of limiting social networking to an extent are increasing and this problem is causing social dysfunction. Students are compromising on their study time, while professionals spend significant portions of their work time and individuals spend less time with their family to be on facebook.Some of the reasons postulated for facebook addiction are that people consider facebook to be a fun, pleasant, happy, and beautiful world. Within facebook people mostly represent the good side of their lives which can attract others and create problems. CNN reports the five steps to tell if a person is addicted to facebook: the individual loses sleep over facebook; the individual spends more than an hour a day on facebook; the individual becomes obsessed with old loves; the individual ignores work in favor of facebook; the thought of getting off facebook leaves you in a cold sweat.The experts offer a series of steps to help alleviate or end the individual’s facebook addiction. First, admit you have a problem and keep track of what you actually do on facebook. Precisely define your goals on facebook. Make and follow a facebook schedule. Think of other things you could be doing with the time you’re spending on facebook. Turn your profile into a pile of useless data, to discourage yourself from using facebook. Find substitutes in your life for facebook. And of course the most drastic but perhaps final step would be to delete your facebook account entirely. Survey, Analysis and ResultsAs a part of this team project we have conducted a survey with the intent of understanding the factors contributing to facebook’s success and pitfalls. Also in an effort to understand the management decisions which might have contributed to facebook's success, things that are going right, things which can be improved in the future, facebook’s competitors and the dynamic social networking marketplace overall. During the span of approximately two weeks we have collected one hundred and two responses from a very diverse group of people. The participants not only differ in their ages and gender but also in their professions. The intent was to understand if there is any age group who are reluctant to use facebook and if anything can be done to increase facebook’s utility to such a group. Simultaneously we also wanted to study if there is any group of professionals who prefer facebook or if there is anything that draws users away.The screenshots of the survey are attached to the report as Appendix A, while the various graphs along with their findings are discussed in the following section. Figure 2.1 below shows the results of our survey question regarding the participant’s profession. Their profession ranges from Student, Lawyer, Professor, Homemaker, Engineer, Management Consulting, Software Professional, Geologist, Sales & Marketing, HR, Business Service Specialist, IT, Graphic Designer, Content Writer, Doctor and Accounting & Finance and others. The student comprises the principal users of facebook as per our survey.Figure 2.1Our survey included a question regarding whether participants used facebook at all. We found that 94% of the participants surveyed said they use facebook while 6% do not. The various reasons they mentioned for not using facebook are: Time constraints - “No additional time or attention for facebook, I enjoy my work, life, and family; facebook would be a distraction”.Privacy – “Joining facebook would potentially lead to a big mess: loss of privacy, unnecessary harassment or social obligations”.Marginal benefits – “not worth the marginal benefits facebook may or may not bring”.Lack of interest – “I do not believe in online social networking”.Accessibility – “Would not access it while working and after spending 8 hours a day on the computer do not use it at home”.Figure 2.2 below illustrates that 44% of the participants surveyed are fairly new to facebook and have been using it for the last 1-2 years, while only 9% have used facebook for more than 4 years. The higher user rate could be an outcome of opening facebook’s access to public. Prior to 2006, facebook was accessible only to university students. Figure 2.2Figure 2.3 below shows that there was almost an equal distribution of male and female participants in the survey, 52% male users while 48% female users.Figure 2.3Figure 2.4 below shows that 56% of the participants are in the age group of 18-25 years old while only 2% and 5% in the age group of 41-50 years old and over 50 years old respectively. The lower user rate in the older age groups should be a focus of facebook for the future growth.Figure 2.4Figure 2.5 illustrates participants highest level of education completed. 49% of participants reported a bachelor’s degree as their highest level of education while 3% reported a high school diploma. Figure 2.5To understand the effect of household income on facebook usage we have collected responses on this question and have found that 45% of the participants have an annual household income less than $25,000 while only 4% have a household income between $50,000 and $60,000. This could be an important indicator to facebook in deciding its future strategies. Principally it indicates the possible incapability of users to pay for accessing facebook in the future. Figure 2.6 shows this information.Figure 2.6Figure 2.7 reveals that our survey found an average facebook user spends less than 30 minutes every time they access their account while a lower number of users spend at least 1-2 hours every time they login. Figure 2.7Our survey found that face book users use these features regularly: News feed, Farmville, Interactive games, Quizzes, Follow what my friends are doing, Wall, Chat, Live Feed, Photos, Wall, Videos, Links, Status Updates, Gifts, Market place, Events, Pokes, Game (Bubble Shooter), Some groups, Inbox, VideoChat, Movies application, Posting articles, Poker, Couple of the day, HoroscopeFigure 2.8 shows how often users check their facebook account. The majority of users check their facebook account several times in a day while some users access it only once per day or once in a week. Figure 2.8Figure 2.9 shows the result of our survey question regarding the main reason participants gave for using facebook. They selected different reasons for using facebook but the primary reason with 67% selection is connecting with old and new friends. For 16% the main reason was using facebook’s applications. For 14% it was primarily used for professional networking and 3% for accessing self and friend’s picture. Figure 2.9A short while ago it was rumored that facebook is considering charging each user some minimal fee for access. In the same spirit we included this question to get an opinion from the users if they would consider paying for accessing facebook. The findings (Figure 2.10) suggest that 92% of the participants in our survey are not ready to pay for accessing facebook while 8% would be willing to pay for it. This could be an important indicator for facebook’s future strategies.Figure 2.10The means of accessing facebook was the subject of one of our survey questions and Figure 2.11. 48% of the participants mentioned that they access facebook via their home computer while only 1% via mobile devices. This implies that facebook should try to capitalize on the opportunity of designing applications to increase facebook usage on mobile devices. Facebook does have applications for iPhone and facebook lite which are gaining popularity slowly.Figure 2.11Our survey found that the favorite applications of participants were (in no particular order): Farmville, Pictures, Wall, Word Challenge, Events, News Feed, Videos, Flixter's movie application, Poker, Games, Chat, Groups, Mindbolt/Applications, Birthday and Status updates.Our survey found the list of features or functions currently missing from facebook which should be included in future versions of facebook were: Video Chat, Testimonials, No Explicit Jobs/Career Notice Board, Videos on Facebook mobile application, Better and more user friendly display, More Puzzle/games, A Dislike button, Better news feed filtering and Rich chat.As per the survey, the things which participants learn about their friends through facebook are: Details about friend's lives that we would otherwise not talk aboutwhat goes on in their lives, major life events like deaths, births, birthdays, anniversariesGroups they're a part of indicate their likes and dislikes which people don't explicitly mention, political views, marital status, jobthere social life at times when we not in contact we get to know aboutWe had several questions asking participants to rate facebook along certain dimensions and the results are reported in Figure 2.12. Participants rated facebook highest on popularity while lowest on ease of use and availability of features. This can be an important indicator for facebook to move to a more simplified interface and continuously innovating with new and user friendly features.Figure 2.12We asked a question in order to understand other competing social applications (not necessarily social networking applications) which are heavily used by individuals and whose features could be incorporated by facebook in future versions. The survey finding presented in Figure 2.13 indicates that YouTube is the most popular social application while MySpace is least.Figure 2.13Other social networking sites which participants are using currently include (in no particular order): Orkut, Twitter, LinkedIn, MSN City Guides, UMi and MySpace.Some of the reasons for preferring facebook over other social networking applications are: New and better applicationsLarge number of friends/network users know are on facebookBetter privacy and extensivenessBetter spam control (compared to Orkut)Combination of everything on the Internet into a sort of tailored "one-stop shop" for users interestsEase of useRich interfacePopularityNew innovationsRecommendations for ManagementGiven our research and survey results we have composed several recommendations for the management of facebook. These are ideas intended to keep facebook at the front of the social networking market. We suggest that facebook develop more useful applications, simplify its interfaces and remain free to users. We also have recommendations intended to assist facebook in reentering the Chinese market. The competitive nature of the social networking market means that facebook will necessarily be constantly developing new applications and adjusting its interface. In keeping with Porter’s recommendations, we suggest that facebook continue to focus on high school and university students. They were its original focus and our survey showed that they are still a significant percentage of current users. Developing more serious learning tools would encourage additional use of facebook even on school time. As students already spend a significant portion of their time using facebook, they may be willing to incorporate it into other aspects of their life.We suggest that facebook should provide more serious professional networking tools. Linkedin has focused on this portion of the market and done well. Allowing users to separate their friends from their work associates, and not allow one group to see the other, would encourage businesses to take facebook more seriously. Also, facebook should provide better job search capabilities. Currently it does not have employment classified or similar types of job boards. This focus would allow it to compete with websites such as .We believe that facebook should provide additional tools for small businesses to promote themselves. Currently businesses are simply another entity nearly equal to individuals. Startups and other small businesses could certainly use more exposure. Applications that help small businesses promote themselves, perhaps even at a cost, would be welcome by these businesses. Not only would this encourage additional participation by businesses and the individuals who work at them, but it may provide an additional source of advertising revenue.Our final management recommendation is to simplify the interfaces to complex applications. Our survey found that older individuals represent a very small portion of facebook’s users. This is a large untapped market, but one of the complaints in our survey was that some applications were too complicated or confusing. In order to appeal to older users, who sometimes have initial difficulties using new technology, it is important to make the initial tools presented to users as simple as possible. Experienced users would be able to add or access more complex applications as they continued to use and explore facebook.To reemerge in the Chinese market facebook will have to make a serious effort there. We suggest that facebook first negotiate with the government. It will likely have to make concessions similar to how Google allows censorship of its results. Facebook may have to block certain pages or applications within China. In order to improve performance, facebook should establish a physical presence in China, perhaps partnering with a web service provider inside China. We suggest that facebook make a concerted effort to better localize its interface to match the local culture and customs of China. And finally, it has been demonstrated that the Chinese prefer entertainment to blunt conversation on the web. Facebook should provide applications that appeal to the entertainment tastes of Chinese users.ConclusionWe believe that if facebook follows our suggestions they will be able to maintain their lead in the competitive social networking market. Their history shows that aside from lawsuits and personality clashes their management record is very good. The only obvious blunder facebook has made was with Beacon. Some of their other decisions, such as facebook platform, facebook lite and Memorial Pages have been wise.In fact, we don’t recommend that facebook worry about Google’s OpenSocial consortium. While it is true that Google is working with a number of prominent social networking websites that have all adopted OpenSocial, we believe that facebook as the current market leader can take an approach similar to that which Microsoft takes to competitors. As the clear leader in the Operating System market Microsoft has the ability to simply ignore a good deal of what its competition does. One fine line that facebook needs to walk carefully is the competing goals of driving more traffic in terms of users and their time to its website. While many facebook applications are useful, there is also a portion of the population that could become addicted, and the negative publicity this would bring is undesirable. Our survey also revealed that the vast majority of facebook’s users would not be willing to pay for the service. It is our strong recommendation that facebook continue to look for other sources of revenue rather than charging for access. Facebook has many challenges before it, but it also has a number of significant opportunities for success. Simply put, we believe facebook’s future is very bright indeed. Traditional References:Boyd, D. M., & Ellison, N. B. (2008). Social network sites: Definition, history, and scholarship. Journal of Computer-Mediated Communication, 13(1), 210-230. doi:10.1111/j.10836101.2007.00393.xCasteleyn, J., Mottart, A., & Rutten, K. (2009). How to use Facebook in your market research. International Journal of Market Research, 51(4), 439-447. doi:10.2501/S1470785309200669Chuk, T. R. (2009). Developer perspectives on third-parts applications: An exploratory study on the creation of applications for social networking sites and cellular phones (Master's thesis, University of Hawaii, Honolulu, HI). Retrieved from Proquest Dissertations and Theses database. (UMI No. 1468493)Daft, R. L. (2010). Management (9th ed.). Mason, OH: South-Western Cengage Learning. Fichera, D. M. (2009). Media richness, uncertainty reduction, and anticipated future interaction on social media sites (Master's thesis, Villanova University, Philadelphia, PA). Retrieved from Proquest Dissertations and Theses database. (UMI No. 1467435)Hargittai, E. (2008). Whose space? Differences among users and non-users of social network sites. Journal of Computer-Mediated Information, 13(1), 276-297. doi:10.1111/j.10836101.2007.00396.xJoinson, A. N. (2008). Looking at, looking up or keeping up with people?: motives and use of facebook. In Proceeding of the Twenty-Sixth Annual SIGCHI Conference on Human Factors in Computing Systems. Conference on Human Factors in Computing Systems (pp. 1027-1036). doi:10.1145/1357054.1357213Lampe, C., Ellison, N. B., & Steinfield, C. (2008). Changes in use and perception of facebook. In Proceedings of the ACM 2008 Conference on Computer Supported Cooperative Work. Computer Supported Cooperative Work (pp. 721-730). doi:10.1145/1460563.1460675Sas, C., Dix, A., Hart, J., & Su, R. (2009). Emotional experience on facebook site. In Proceedings of the 27th international conference extended abstracts on Human factors in computing systems. Conference on Human Factors in Computing Systems (pp. 4345-4350). doi:10.1145/1520340.1520664Sledgianowski, D., & Kulviwat, S. (2009, Summer). Using social network sites: The effects of playfulness, critical mass and trust in a hedonic context . Journal of Computer Information Systems, 49(4), 74-83.Valenzuela, S., Park, N., & Kee, K. F. (2009). Is there social capital in a social network site?: Facebook use and college students' life satisfaction, trust, and participation. Journal of Computer-Mediated Communication, 14(4), 875-901. doi:10.1111/j.10836101.2009.01474.xDirect Web References: BIBLIOGRAPHY AFAR. (2009, May 9). Chinese Internet Fees Higher Than Developed Countries. Retrieved December 6, 2009, from Association for Asian Research: . (2009, December 1). Top Sites in China. Retrieved Decomber 6, 2009, from Alexa: . (2009, May 12). China Social Media; Xiaonei: China’s Facebook Replica. Retrieved December 6, 2009, from littleredbook: , G. (2009, July 8). Facebook, Twitter inaccessibility makes China expats feel disconnected. Retrieved December 6, 2009, from Examiner: , G. (2009, July 8). Poll: Most Chinese support Facebook block. Retrieved December 6, 2009, from Examiner: 's Daily Online. (2009, July 10). People's Daily Online. Retrieved December 6, 2009, from 80 pct of netizens agree China should punish Facebook: Web Links: A: Screenshots of facebook SurveyThe survey is located at: it is closed to new participants. ................
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