Facebook deserve its astronomical valuation or not?

A day after Facebook opened its books to support its $5 billion IPO, there is still some debate over whether the social network lives up to its astronomical valuation.
In its filing with the Securities and Exchange Commission yesterday, Facebook revealed that it had 845 million monthly users and was rapidly closing in on 1 billion. As many have noted, the key will be leveraging that massive user base to generate more revenue through its display ads and its app platform.
However, some have suggested the historic offering is overblown, characterizing Facebook as a "badly overpriced photo-sharing and gaming site."
Besides making a lot of people rich, Tech Republic's Jason Hiner makes the case that while Facebook's photo sharing is nice, it's not very lucrative. And that while gaming is "very lucrative," it's also "faddish," and Facebook's stake is dependent on third parties such as Farmville creator Zynga. (Twelve percent of its revenue comes from Zynga.)
But Bill Gurley of Benchmark Capital sees promise in the IPO (Benchmark Capital has a minority position in the social network as a result of the acquisition of FriendFeed) and has created a report card of sorts to explain why he believes the company belongs in the "10x forward price/revenue multiple club." Gurley grades Facebook based on 10 metrics that investors consider when deciding whether a company deserves a high valuation.

According to Gurley, the company registers an outstanding score for sustainable competitive advantage and presence of network effects. ("All current non-U.S. Facebook users have immediate connections if they log in," he points out.)
He also gives Facebook high marks for customer lock-in, saying that "leaving Facebook is possible, but finding an alternative with all your friends on it is not really possible." Some fans of Google+ might disagree with him, along with his assertion that the "inclusion of Timeline works to increase this even more by creating a permanent dependence on past content."
Facebook falls short on marginal profitability calculation, noting that its peak profitability was in the fourth quarter of 2010 and that spending has kept pace with revenue growth since then. "Top line" growth is also a sore spot for Facebook; while it had a growth rate of 88 percent for 2011, its fourth-quarter rate was 55 percent.
"If growth rate hurts the company, then it's a direct result of waiting too long to go public--past peak growth," Gurley said.

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Is Facebook run by sociopaths?

In Europe, they view looking down from a cultural perch as exclusively their own domain, given that they believe history will always be on Europe's side.

It was, therefore, less than deft of Facebook COO Sheryl Sandberg to muse last week in Munich that, as The New York Times put it, privacy issues shouldn't occupy European minds when their economies are wafting into the can marked "compost."

This, quite naturally, caused European eyebrows to rise and European mouths to open. Indeed,in today's Guardian, commentator John Naughton says that "companies such as Facebook are the corporate world's equivalent of sociopaths."

(Credit: Chris Matyszczyk/CNET)

He describes how risibly Facebook tried to justify its supposed creation of 232,000 jobs in Europe, with a report from Deloitte that was more replete with caveats than an insurance policy. (Sample: Deloitte reportedly worked with information obtained from Facebook and "neither sought to corroborate this information nor to review its overall reasonableness.")

While I wouldn't wish to wallow in a definition of sociopathy, I did happen to ask a couple of Facebook's advertising clients how they found dealing with the world's most powerful brain child.

"They breathe their own fumes," one executive told me. And he is someone who gives Facebook rather large sums of money.

It is in this, surely, that Facebook has its power. It tells us all that in tomorrow's world, everything will be social. If you're not riding in the social Ferrari, you will be but a mere cipher in the commerce of life. Worse, you will be a mere individual, someone with absolutely no friends in the playground.

And who would want to be an isolated individual or part of an isolated company? It's tempting, then to view Facebook's world picture as expressing the mindset of a sociopath--or even a con man.

The driving force of both is that their world is the only one that matters. Their own personal joy lies in dragging everyone else into their vortex and watching as everyone stares rapt in an excitement they can't quite define. There's a lot of fun in that.

Is there some ultimate meaning and spiritual uplift in the proceedings? Not so much. Rather, it's the power of the game and the protagonist's power in the game that matter.

The gullible--that would be us--play along because the game seems to offer something that we will enjoy: success or approbation, perhaps.

But, in the end, it's rather hard to believe that every move Facebook makes is the move of a benevolent association or a social revolutionary, instead of a move by an advertising company.

Who might suspect, in their private hearts, that privacy is not something that enjoys too much philosophical debate at Facebook HQ? Rather, it's simply something that stands in the way of selling more adverts. It's an inconvenience that gets in the way of economic progress.

Because economic progress is far more important than any individual's right to keep herself to herself. That's not Facebook's fault, some might say. That's just the world we live in. We've all come to believe that economic progress matters more than anything.

Naturally, this might all change a little should one of the Facebook management run into some sort of personal bother that becomes public. But, until then, let's knock down those privacy walls and make some money.

It is wrong, of course, to suggest that Facebook's management might be isolated in their apparent views. Google, too, would surely prefer it if you gave it more and more information so that it can sell more and more--and, cute phrase this, "better"--adverts.

For Naughton, sociopaths are "individuals who are completely lacking in conscience and respect for others."

I have a feeling that the people who run Facebook and Google aren't sociopaths in their private lives--should they have them. It's just that when they create one of those social networks we call companies, a strange group-think takes over.

That strange group-think doesn't so much distort reality as try to create a new one.

We are now living in the new reality. It's one in which it all has to start with people. People are products, products are money, and money is power.

Once you have the power, you can even try to tell governments what to do and what to think. And that's so much fun.

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NEC to cut 10,000 jobs as iPhone continues assault on Japan

The company said this week that recent poor performance stemmed from the popularity of the Apple iPhone in Japan, an increase in the number of foreign rivals it faces in the IT infrastructure market, and trouble expanding beyond its home country, Reuters reported.

NEC forecast a loss of $1.3 billion (100 billion yen) for the year ending March 31, and said about 7,000 of the 10,000 eliminated jobs will be in Japan, with the company taking a $520 billion restructuring charge.

In the three months ended Dec. 31, NEC said, the company's loss widened to $1.13 billion, from $345.43 million a year ago, with sales dropping 6.7 percent to $8.76 billion.Most of the cuts, which may begin March 31, will be from NEC's mobile phone business and will include both full- and part-time positions, Bloomberg reported. The company had 115,840 workers at the end of March, meaning the cuts equal about 8.6 percent of NEC's workforce.

Despite a slow start in Japan, Apple's iPhone picked up steam there in 2010, increasingly winning the hearts of people in a country that had long produced dominant devices in the market for cutting-edge consumer electronics.

Apple was the top smartphone vendor worldwide in the fourth quarter of 2011, according to Strategy Analytics, though Samsung was tops for the year

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the most powerful ultracompact eve is Sony's Cyber-shot TX200V r?

The new Sony Cyber-shot TX200V's photo and movie capabilities will make any smartphone camera look like a toy.

At just barely more than half an inch thick, the TX200V features an 18-megapixel (18!) Exmor Rbackside-illuminated sensor, a 5x f3.5-4.8 26-130mm Carl Zeiss lens, and a 3.3-inch 1.2-million-dot-resolution touch-screen OLED display. It's also waterproof to 16 feet as well as dustproof and freezeproof to 14 degrees Fahrenheit. It's not shockproof, though, and the front is covered in reinforced glass.

Among its many shooting options is the capability to capture movies in AVCHD format at 1080p at 60 frames per second and nine picture effects like miniature and toy camera filters. Sony's also claiming that it has an improved autofocus system that'll focus in approximately 0.13 seconds in bright conditions and 0.25 seconds in low-light situations, which if true, is more than twice as fast as the fastest point-and-shoots I've tested. Also, Sony's developed a new extra-high-sensitivity technology that minimizes unwanted noise in low-light shooting conditions.

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Antiphishing standard in the works from Google, Facebook, others

The 15 companies will be announcing on Monday DMARC.org, which stands for Domain-based Message Authentication, Reporting, and Conformance--a system for verifying that e-mails are coming from legitimate companies and not imposters trying to trick people into clicking a phishing link. Basically, the system offers a common way for companies to authenticate their legitimate communications with customers.

Also in the DMARC working group are AOL, Bank of America, Fidelity Investments, American Greetings, LinkedIn, and e-mail security providers Agari, Cloudmark, eCert, Return Path, and Trusted Domain Project.

Google, Microsoft, Yahoo, AOL, and Agari announced in November that they were doing this authentication coordination for Facebook, YouSendIt, and a few dozen other e-commerce companies and social networks. Now the effort is being expanded to include more participants. The antiphishing collaboration has been going on for 18 months between various partners, DMARC members said.

"About 15 percent of all e-mail in the Gmail in-boxes comes from these organizations that have published these DMARC records," said Adam Dawes, a Gmail product manager. "That means that these records can not be domain spoofed."

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Apple ponders facial recognition features for iOS

   

That future, which already exists on some devices running Google's latest version of Android, may end up on Apple's mobile software platform too.

A patent application, published today by the U.S. Patent and Trademark Office and picked up by Apple Insider, details a system of using on-board cameras to recognize when faces are in the frame, as well as recognizing whose face it is. It could then set up the device for each particular user's individual profile, or do something as simple as turning the screen back on.

Apple's patent diagram showing off low threshold facial recognition.

(Credit: USPTO)

Apple argues that its proposed solution runs counter to two existing classifications of facial recognition tools: "robust" ones that are "computationally expensive" (read: will grind your phone to a halt), and ones designed with security in mind but that happen to be mighty particular about the ambient lighting conditions.

Apple's system, which it calls "low threshold face recognition" claims to fall into its own category, handling various types of lighting conditions, and without over-taxing the hardware. The patent describes it as being nimble enough to work on "smart phones, tablet computers, laptops and the like."

Tech rival Google introduced facial recognition technology for its Android OS earlier this month with the release of the Galaxy Nexus phone. It uses the front-facing camera on the device to scan a user's face and cross reference it with what it has on file, unlocking the device for use when it finds a match.

The underlying security of the feature was immediately called into question, with users suggesting that it could be tricked with something as simple as a printed photo. That doomsday scenario played out in a video demonstration of such a trick working. Google responded by calling the feature a low security option, and less secure than a pattern, PIN, or password.

What Apple could offer in terms of security beyond what Google has is unclear from the patent, however the company makes mention of tracking skin tones and unique facial features to authorize a given user with access to that device.

The patent is of special interest given its filing near the end of June last year, some five months after a Wall Street Journal story which came just days ahead of the unveiling of the first iPad. In that story, which contained a number of correct details about the device, the Journal made mention of the company putting "significant resources" into making the iPad easy to share, including a feature that would recognize users with a built-in camera.

What ended up happening, of course, was that the first iPad shipped without any built-in cameras, or support for multiple users. While its successor, the iPad 2 came with two separate cameras, facial recognition and multiple user accounts remained out of the picture.

One thing worth pointing out is that Apple is already using face detection (which is not the same thing as recognition) on its latest smartphone, the iPhone 4S. The device is the first from Apple to pick up people's faces and set that as the focus point. Apple says it can handle up to 10 faces, putting the focus on "the most prominent" of the bunch.

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Into consumer appetite Kindle fire cutting for iPad--survey

Five percent of respondents said they have preordered a Kindle Fire or are very likely to purchase soon, according to the survey. That compares favorably with the iPad 2 launch, when 4 percent of respondents said they were very likely to buy the iPad 2.

Among those five percent, 26 percent said they will delay the purchase of Apple's iPad.

The survey also says demand for the Kindle Fire, due to launch on November 15 at a price of $199, exceeds that of the iPad 2.

The ChangeWave results are based on a survey of 2,600 respondents conducted in October.

The Kindle Fire is considered the first viable threat to the iPad because it will cost $300 less than Apple's least expensive model, yet offers many of the attributes of a higher-end tablet. These would include a dual-core processor, a fast Web browser, a relatively high-quality display, and access to lots of Amazon content.

This presents a near-term risk to Apple, said RBC Capital Markets analyst Mike Abramsky, since more than a quarter of those buying Amazon's tablet are indicating they prefer it to the iPad.

Data provided by market researcher eDataSource last month indicated that the preorders for the Kindle Fire are tracking to exceed one million.

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