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Speculation on Microsoft Investment in Facebook

Posted by Brian Kelly on 29 September 2007

A Techcrunch article on Microsoft May Invest in Facebook At $10 Billion Valuation was published on 24 September 2007.

James Brown on the RIN Team blog has provided some interesting thoughtson the reasons why Microsoft are willing to invest $300-$500 million for a 5% stake in the company – which would place a valuation on the company of $10 billion.

I was interested in one of the statistics James provided: Facebook has 42 million active users and, in comparison, Spain has a population of 45 million. Is Facebook really, as some have suggested, really a passing fad. Perhaps Spain is, as well :-) And I wonder if, on 4 April 1975, anyone would have predicted the growth in Microsoft and when it stopped being dismissed as a fad?

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11 Responses to “Speculation on Microsoft Investment in Facebook”

  1. James Clay said

    I am pretty sure it is a fad.

    First we had Friendster then we had MySpace, now we have Facebook.

    In the UK a lot of young people are moving from MySpace to Bebo, whilst oldies are moving to Facebook.

    Give it a year and I am sure something else will be flavour of the month.

  2. [...] You can read the rest of this blog post by going to the original source, here [...]

  3. AJ Cann said

    This is all about Microsoft and Google’s struggle to the death, which I wrote about last week:
    http://tinyurl.com/3693ok

  4. i am worried about that what happen when the microsft will buy it ,

  5. Many thanks for the link, Brian. The statistics are mind-boggling!

    @JamesClay (btw your blog is down?): that’s such a massive simplification that I’m not sure where to start!
    Whilst it’s true that an awful lot of people migrated from Friendster to Myspace a few years ago, users are not as fickle now because they’ve been given sophisticated tools to invest more time and content into their profiles. In the UK it’s actually the case that young people – who have more time to invest and as such are getting much more out of it – are joining bebo and facebook in addition to myspace. Although the fastest growing demographic for facebook is currently 23-35, that’s mostly because they’re choosing it as the first social network to join, rather than moving over to it from another. Do you really think anyone would consider spending half a billion dollars on a fad that might be over in a year?

    @AJ: absolutely love that graph. I’m not sure if it’s really a struggle to the death.. google are never going to really compete with Microsoft’s Office, OS, and .Net stuff. Maybe we should be saying “this is all about Facebook and Google’s stuggle to the death??

    @Return on Effort: don’t worry, it’s extremely unlikely Facebook would let Microsoft have more than a 49% share.

  6. I’m having trouble finding a source for that 42 million active users figure (although it is probably broadly accurate).

    James, half a billion dollars is absolute pocket change to Microsoft, the amount itself is probably irrelevant in these terms. The fact that Facebook allowed MS in and not Google is probably more important, and probably more to do with, as in your blog post, the advertising tie-ins. Everyone knows MS is struggling hard in this market against Google and renewed competition from Y!.

  7. I gave a talk at lunchtime in which I gave a figure of over 30 million users, which I got from the Wikipedia entry for Facebook:

    As of July 2007, the website had the largest number of registered users among college-focused sites with over 34 million active members worldwide

  8. ajcann said

    “Google are never going to really compete with Microsoft’s Office, OS, and .Net stuff”

    Well let’s revisit that statement in a few years time shall we? Sounds an awful lot like what was said about IBM when Microsloth came along …

  9. Brian, is that what you were doing in the room next door? Very interesting :)

  10. @Aj: you’re absolutely right actually. I’m just bitter that the current webOffice/webOS offerings from google/adobe/others aren’t as good as I’d like them to be!

    @Phil: statistics on facebook from their press room – actually as of today they’re now saying 43m active users!

  11. James Clay said

    @James Brown

    The link for my blog was wrong, it should be working now.

    Here is the “real” link.

    http://elearningstuff.wordpress.com

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