The Facebook Economy

• 10/30/03

Thousands of new applications. Tens of thousands of new developers. That's what the wildly popular social-networking hub Facebook.com has drawn since May, when the company opened up its application-development platform to the masses.

Facebook has certainly attracted plenty of attention. Microsoft on Oct. 24 announced it will take a $240 million stake in Facebook's $15 billion round of financing. While the buzz over Facebook's potential impact on the enterprise development community still creates more questions than answers, the growing Facebook ecosystem is emerging as a force that programmers of all types must reckon with.

A growing number of companies are looking to business-ready social networking platforms as a way to improve collaboration among workers, partners and customers. Burton Group analyst Mike Gotta draws a parallel with search engine portal My Yahoo!, which in the late '90s helped drive the concept of enterprise portals: "It's the same theme," Gotta says. "Everywhere I go people are saying, 'Yeah, I want a corporate Facebook.' Does it mean Facebook? No, they don't really mean Facebook, they just mean they want something like that internally."

Other industry watchers seem to agree. Gartner Inc. recently listed social software as one of its top 10 technologies to watch for 2008, and Forrester Research Inc. found that social networking/Web 2.0 sites are already seeing significant -- though unsanctioned -- use in enterprises. According to a recent online survey of 273 IT professionals by Forrester, 28 percent of enterprises with 500 or more employees say their enterprises have some form of social networking initiative, while 20 percent are considering it. Only 6 percent have no plans, meaning a majority remain uncommitted.

Facebook finds itself in the spotlight with Windows and .NET developers, who had heard rumors for the last few weeks (which turned out to be true) about Microsoft looking to take a stake in Facebook. Microsoft also recently gave its Live Spaces service a Facebook-like interface, underscoring the impact the social networking giant is having on Redmond.

For enterprise developers, the appeal of Facebook is in its freely open APIs, which make it possible to link e-business and enterprise apps to a platform that touches a vast and growing audience.

Winning the Audience
There are other social networking platforms, of course, including the consumer-oriented MySpace and business-focused LinkedIn. At press time, LinkedIn Corp. had released a set of APIs to companies it has business relationships with. The approach stands in contrast to Facebook, which lets anyone use its APIs.

Ultimately, business models, not programming preferences, will determine the fate of social networking's great land grab. In the venture capital community, investors are responding to the rush of Facebook developers with fistfuls of cash, and companies are springing up overnight, creating applications aimed at tapping a 40 million-plus user data trove.

Tom Blue is one such entrepreneur. His Los Angeles-based company, AppSmash, has developed one of the first business-centric applications for Facebook, a career networking program called What I Do that organizes participants by occupation and location. "I noticed that once I set up my profile and put in my company information on Facebook, I got more referrals to my site in a week than I did in a one-year period on LinkedIn," he says.

It sounds compelling, but the soil of Silicon Valley still groans with the old bones of dot-com era wannabes. Certainly, the nature of many Facebook applications makes them easy to dismiss. To date, many are little more than widgets in terms of functionality, and are mostly oriented around entertainment.

Until late last month, Microsoft's opinion on Facebook was mixed. CEO Steve Ballmer had dismissed Facebook and its ilk as a "fad." Microsoft has since toned down that position. "I don't look at [Facebook] and see it as a threat," Ballmer said, speaking at the Web 2.0 conference in San Francisco, just days before Microsoft took its equity stake in Facebook, beating out archrival Google Inc.

Ballmer and Microsoft clearly have warmed up to the social networking giant. "They've done a really nice job on the developer platform. Basically, any really exciting application will have a developer story, and yet it doesn't really replace the operating system," Ballmer said.

One thing is certain: Facebook is becoming a home for business networking. Thousands of companies, including Apple Inc. (with about 5,000 members at press time) and Microsoft (about 17,000), have set up employee networks on the service.

As Facebook's platform matures, then, it could just be a matter of time before it aligns with the needs of business. "Facebook is a social networking site. But if you float up 10,000 feet, it's really a communication platform," says Rodney Rumford, CEO of FaceReviews.com, a California-based Web site and consultancy focused on Facebook applications.

Rumford has good reason to be enthusiastic -- he's in the business of developing Facebook apps. But some working .NET developers are equally bullish, seeing Facebook as a powerful reservoir of detailed, living data that could be pure manna for coders.

"The thing that interests me the most around the Facebook platform is the amount of user-generated organization around who they know and why," says Robert McLaws, president of Arizona-based Interscape Technologies Inc.

Developers also point to Facebook's value for delivering apps in lightning-quick, viral fashion. Users can browse offerings and inject them into their profiles with a couple of clicks.

Jon Brown of Grand Prairie, Texas, says he watched a Webcast by Facebook founder Mark Zuckerberg three times and suddenly began to "understand the potential for developers to make software that could be spread like wildfire."

Other developers are skeptical. "As a social networking site, [Facebook] has a place in bringing you in contact with those you may have lost contact with, but as a communications platform it's no more than (bulk) e-mail and a blog site with bells and whistles," writes Ian Butler, a Web developer from Centurion, South Africa, in an e-mail to Redmond Developer News.

Challenges also await developers moving to Facebook -- or any social networking site, warns Burton Group's Gotta. "The demand for people to understand how to design and build social applications is different than when we build a transactional, CRM or even a collaborative application," he says.

Growing the Ecosystem
So the question remains: Is Facebook really a bona fide platform worthy of serious consideration from the enterprise development community?

The answer may come from developers themselves. Resource pages on the Facebook site reveal a fairly substantial and growing ecosystem for the platform. Along with the company's own resources, there are client libraries for a range of common development technologies, including VB.NET, Python and Ruby (see "Face of the Platform," p. 23).

Then there's the Microsoft connection. Coinciding with the platform's launch in May, Microsoft released a Visual Studio toolset for developing Facebook apps.

The betting line has been that Microsoft sees the Facebook platform as a way to drive adoption of its rich Internet application technology. The company made sure, for example, that Facebook supports Silverlight, its cross-platform browser plug-in and vaunted "Flash killer."

During last month's Web 2.0 Summit, Ballmer appeared on stage with Dan Fernandez, lead product manager for the Popfly mashup toolset and Visual Studio Express. The two demoed the new Silverlight-based Popfly online tool for creating Web-based composite apps, widgets and live Web pages, creating a series of mashups that combined photos from Facebook by dragging and dropping code blocks, rather than writing code.

Now available for beta testing, Popfly should appeal to code-averse Facebook users. Ballmer referred to Popfly as "a tool for end users, not necessarily for codeheads."

McLaws notes that platforms like Facebook also present powerful ways to target individual users: "Being able to uniquely identify you -- not just your name or social security number, but you, has merit. Microsoft's been trying to do that for a number of years."

Will Facebook attempt to crack the enterprise market? Company officials have publicly ducked the question and declined to speak with RDN for this article. But Forrester analyst Rob Koplowitz says Facebook shouldn't bother. "I think they have a really good business model. It's really hard to crack the enterprise."

In fact, several enterprise players already have good social-networking technology. Koplowitz singles out the My Sites feature in Microsoft SharePoint as "a really strong offering." And Gotta says companies like IBM Corp. and BEA Systems Inc. offer even better alternatives.

"IBM may be the best out of the major vendors," Gotta says of the company's Lotus Connections product. "Right now all the platform vendors are moving toward the social networking/social platforms space."

IBM Lotus Connections, based on the WebSphere application server platform, was released earlier this year and offers many of the attributes of Facebook, including profiles, communities and blogs. It also adds policy management and enterprise security lacking in services like Facebook and My Sites. Gotta also recommends BEA Pathways AquaLogic Pages.

The other stumbling block for Facebook centers on integration. "If I buy into using these tools from an existing vendor, I get the management-level integration, application-level integration, policy management [and] their security capabilities, all out of the box without getting a new vendor," Forrester's Koplowitz says.

Koplowitz also doesn't see Facebook as the next .NET in terms of need-to-know information. "I don't think your average internal enterprise software developer is going to rush out and invest in Facebook skills," he says. "I think it's an opportunity that people are going to assess on a case-by-case basis."

Even if internal applications are unlikely or inappropriate, Facebook's value to companies may point in the other direction -- toward existing and potential customers.

Salesforce.com Inc. employee Clara Shih recently created an application that mashes up Salesforce.com CRM customer data with Facebook user profile information. A demo of the app -- available on the Salesforce.com Web site -- outlines potential scenarios. For example, a salesperson could glean personal details about a potential client and use them to help break the ice during a meeting.

"It's clear this kind of thing can change the ways companies interact with customers," says Salesforce.com Director of Platform Research Peter Coffee. "The possibilities for internal applications are considerable, but probably not as transforming," he adds.

The other immediate development target for enterprises, Rumford says, would be to integrate their existing public-facing Web sites into Facebook.

About as Open as It Gets
The good news -- and perhaps the secret to Facebook's rapid success -- is the open API approach that welcomes developers. Coders can build Facebook apps with the company's HTML-based markup language, with a SQL-like query language and with its API. But the platform also allows the use of other tools and frameworks. Developers can call into the platform's API through its REST-based Web services interface.

"It's extremely accessible to all levels of users, all levels of developers," says Ankur Shah, director of London-based Techlightenment. "They've simplified access but given you access to all kinds of information. But then they've put up barriers in key places. It's a very clever platform."

Shah's firm has developed FriendVox, an instant messenger app for Facebook. Now in alpha, the program attempts to mine the promise of Facebook's data store through a feature called Socialistics. According to a company statement, the software "analyzes your relationships to determine who are most likely to be your closest friends (your inner circle), and then displays their news and also shows you a tag cloud to determine this at a glance."

The app runs on a PHP/MySQL back-end, with "some stuff" done using C# and .NET. For the UI the firm employed Facebook's markup language.

In fact, Facebook's decision to closely manage interfaces sets it apart from MySpace, the largest social networking service. While fully supporting audio, video and other media options, Facebook offers a decidedly more sober experience than MySpace.

Says McLaws: "Facebook strives to maintain visual parity across all their applications." Shah calls this is a major benefit. "From a developer's perspective, it's very strong because you can temper the expectations of clients," he says.

Microsoft's Fernandez thinks Facebook could be on to something. At the F8 conference, he remembers Facebook founder Mark Zuckerberg taking a dig at MySpace during his keynote speech. "His comment was, 'The videos won't start unless you click it.' There was literally a burst of applause."

Microsoft has been involved with Facebook's platform push from the beginning, releasing its tools in May. "What we wanted to do with Facebook is provide a set of tools for the spectrum of developers," says Fernandez.

The company's Facebook development toolkit is an open source project hosted on CodePlex. "On the other end of the spectrum is the power user, if you will," Fernandez says, referring to Popfly.

Fernandez has high praise for Facebook's platform overall. "To me it goes back to the openness of the APIs and the possibilities of the things that you can do. It just triggered this gold rush of ideas. All my applications can have a social context. Now Facebook is the viral-by-design method for application distribution," Fernandez says.

Fernandez expects Microsoft to issue more formal tooling updates for Popfly, but the Facebook Toolkit will evolve like any other open source project, with frequent incremental tweaks and updates. -Jeffrey Schwartz and John K. Waters contributed to this article.