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Der Standard, Austria

Why Apple and Facebook Will Fail


Translated By Sandra Alexander

28 January 2013

Edited by Lydia Dallett


Austria - Der Standard - Original Article (German)

Out of the necessity to develop new markets and the pressure to constrain users, Apple and Facebook will fail. That sounds like a risky thesis, when it is a matter of one of the most important electronic companies (and until recently, the stock market’s most valuable firm in the world) and the largest social network, with over a billion members.

Nothing Lasts Forever

Yet, nothing lasts forever. History teaches us that, explains The Guardian editor John Naughton, who prophesies the downfall of both giants. Classical empires like Rome and Napoleon’s France — they all no longer exist today. Giants of technology can fall, too.

Nokia, once the dominating force in the cell phone business, is fighting today with Windows’ phones for a single-digit market share for Smartphones. One also sees, with Microsoft, that the seemingly written-in-stone balance of power does not have to last forever. In Redmond, one despairs of finding footing in the post-PC age.

Hysteria

Apple recently made its quarterly results public. Although the iPhone 5 is selling like proverbial hotcakes, and the last three months have yielded a new record income, it was the result of a hefty drop in prices and hysterical speculation about the future of the company. The company fell far short of analysts’ prognoses. Has Apple reached its zenith?

After a less than favorable stock market launch, Facebook, on the other hand has, with Graph Search, a new horse in the race for the best search tool. For all intents and purposes, it does nothing more than accumulate information from one’s own circle of friends and add to it the search results of Microsoft’s Bing. Nonetheless, some commentaries went head over heels. Some considered Facebook the path to hell; others cheered the firm as if it had invented a perpetual motion machine.

Too Interesting for Golden Cages

Graph Search, feels Naughton, is a further step in Facebook becoming the AOL of our times by locking users into a “walled garden” or “golden cage” — most recently, the link to Twitter and Yandex apps was capped. Yet the Internet is, in its entirety, too varied, innovated and interesting [to be capped], which is why this approach is doomed to failure.

The Logic of the Market

The question is not, according to Naughton, whether the decline of Apple and Facebook will begin, but when. Currently, Apple manufactures products that are desired by customers and bring large profit margins. The logic of the hardware market says, however, that the more competition increases, the more these exact margins will shrink. Apple will become less profitable in the long run and will need to develop new markets, as it did once before with the iPod, the iPhone and the iPad.

Pressure for Intrusiveness

Facebook, on the other hand, is behaving mostly lethargically. Yet now, when it is on the stock market, it is all the more important to capitalize on its huge user base. To satisfy its investors, the service will sooner or later have to become more and more intrusive and manipulative of its users.

It is therefore damned to overdo this at some point and cause members to turn their backs on the service in droves. Whereupon Mark Zuckerberg’s company will become nothing more than a footnote in history books — like many other greats before it.



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