Communications, Platforms, Privacy Ruled NewNet in Q4

1Executive Summary

Much of 2010’s fourth-quarter action in NewNet technologies (i.e., social media, real- time feeds) centered on consumer markets and applications, although GigaOM’s Net:Work conference highlighted NewNet trends in enterprise collaboration and the future of work.

Just as in the third quarter, Facebook dominated the news. It held several press events to introduce or update products and strategies, with two of the company’s most critical initiatives being its revamped Messages and Groups efforts. Although Messages and its “social inbox” are no email killers, along with Groups the service is laying the groundwork for Facebook’s attempt to build a unified communications hub that could play a role in presence and identity management.

Facebook’s APIs and web services are powerful factors in establishing social media platforms and ecosystems. Other would-be NewNet platform players are trying to couple the API/UI combination that Microsoft used so successfully with Windows, but don’t appear to be gaining momentum. Just as Netscape once threatened the Windows franchise, startup social browser maker RockMelt might appear to be taking on Facebook. The truth, however, is that browsers don’t matter much anymore: The web itself is now the platform, with key players like Facebook, Google, Microsoft and Apple building out browser-independent ecosystems.

Speaking of Google, although it made some Chrome OS announcements this quarter, it is pointing a different operating system — its Android mobile OS — at most of the promising areas for NewNet platforms (tablets, phones, TV sets).

In the fourth quarter, a number of media companies launched or re-launched their sites to take advantage of the increasingly “digital-first” media environment. Their number included Myspace, The Atlantic magazine and Gawker Media. We laid out a modern media manifesto describing key elements that should drive a successful digital-first strategy. Many magazine and print companies launched iPad apps, with mixed results; most blend multi-media experiences, but few exploit connectivity and social media like they should.

Consumer privacy got a lot of government and regulatory attention, sparked by a somewhat breathless series of exposes in the Wall Street Journal. The FTC is talking about a “do not track” system, and the EU is threatening criminal and civil actions. Unsurprisingly, Facebook was a catalyst for the attention, as the Journal revealed that apps companies were leaking user information — in some cases in violation of Facebook policies, in others as part of pretty standard industry practices — to third- party data collectors and miners. The industry needs to get its act together before regulations stifle digital and social media advertising.

The other big news event of the quarter was Google’s ultimately rebuffed $6 billion pursuit of daily deals site Groupon. Groupon has built a fast-growing business in helping local merchants (and national players with local businesses) acquire new customers; Google has potentially complementary advertising and search services but does little business with small locals. And the vast majority of the roughly $130 billion in local U.S. advertising spending hasn’t gone digital yet. Local and social, however, could work nicely together, especially with a mobile spin.

Relevant Analyst
P1040724

David Card

VP Research Gigaom Research

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