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Nielsen study: Facebook’s gain is Orkut’s loss
BY S SWETHA 30. JUN, 2010 3 COMMENTS

We have been witnes sing the signs and talking about Facebook overtaking Orkut in India. Nielsen has now corroborated it through its just released Asia-Pacific Social Media Report. While we have seen the whole crescendo around Twitter build-up in India last year, the study validates the growing popularity, sharing how more than half of Twitter users (57%) in India have signed up in the past year and nearly 1/3rd of the overall social media users in the country log onto microblogging sites at least once a day. Facebook market share has spiraled upwards with 50% social media users claiming to use Facebook more often compared to a 38% for Orkut, even though 70% of social media users in India indicate Orkut as their preferred social media site. Most common reasons for the shift stated by the users include preference for look and feel, more features and friends switching to Facebook. Vizisense also shows a similar trend in India (refer to the graphic below )

Another interesting segment that the study speaks about is the increasing influence of online reviews on actual purchase. Product reviews and recommendations by friends has witnessed an upward trend. According to the study 55% of Indians that read online product reviews, have purchased products based on feedback. Consumer durables/electronics category has seen the greatest impact where 64% purchases are based on internet reviews. Some interesting trends in the other markets are – ○ ○ ○ Japan – blogs lead the way China – over 80 percent of social media content is bulletin board systems Korea – one of the most social media engaged countries in the world

Australia - LinkedIn among the fastest growth social media sites Related posts:

1. 2. 3. 4. 5.

Rocketalk claims to have taken a leap over Facebook and Twitter by 4.7% & 6.4% respectively Doing the math on social media by Karthik Nagarajan India Social Networking Audience grows by 43%, Facebook is No.1 Nielsen report on top online shopping trends in India 60% of social media users belong to non-metros – ViziSense media report Share

Case study: Kingfisher Calender – 2010 launch Government bodies use Social media – big daddy smells the coffee

3Responsesto “Nielsen study: Facebook’s gain is Orkut’sloss”

1. Alfonso Fraser13. Sep, 2010 at 7:09 pm

Orkut Team has been working hard in recent days to make Orkut Stand out in the competiton. Interface has been updated and looks so good now.

2. S Swetha13. Sep, 2010 at 10:20 pm

Thanks Alfonso. It would be helpful if you share more information and data points on this.

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Divisi on of Engin

eerin g& Tech

nolog y Mana

geme nt

MT50 07 Mana

geme nt of Tech

nolog ical

Innov ation

2

Intr odu

ctio n .

.In 2004 .

colle ge soph .

omor e Mark .

Zuck erbe rg .

want ed to build .

an onlin e .

versi on of stud .

entdi recto ry .

with basic infor .

com .mati on.

monl y know .

n to scho ols .

as face book .

[1]. Harv ard .

didn ot offer .

such a direc .

tory and the .

admi nistr ation .

insist ed that .

they were unab .

le to aggr egat .

ethe infor mati .

on requi red. .

Thus . one night .

Zuck erbe ..

rg hack ed .

into Harv ard’s .

stud ent recor .

dsan d creat .

ed a basic site .

calle dFac ema .

whic h .sh.

rand omly paire .

d phot os of .

unde rgra duat .

esan d invit .

ed visit ors .

to dete rmin .

e who was .

After .“hott er”.

.four hour s.

.450 visit ors.

and 22.0 00ph .

.oto view s.

Harv ard admi .

nistr ation disco .

nnec ted Zuck .

erbe rg’s inter .

net conn ectio .

n and took .

.dow n the site.

Zuck .How ever.

erbe rg conti .

nued with this .

new proje ct as .

he belie ved .

thati nfor mati .

on shou ld be .

avail able to all .

He .stud ents.

adde d appli .

catio ns and .

expa nded then .

etwo rks to .

othe r scho .

ols, and to

work netw orks

such as empl

oyee s from

theC en tral

Intell igen ce

Agen cy, M cDon

ald’s , and the

U.S. Mari ne

Corp s. Even

tuall y in Sept

emb er

2006 ,

Zuck erbe rg’s

socia l netw

orkin g webs .

. ceboo k.Fa ite.com.

was open ed to .

the publi c. .

Pres ently . the .

site has more .

than 68 milli .

on activ e .

user s worl .

.dwid e [2].

Exhi bit 1 inA .

ppen dix .

A sh ows the .

popu latio n of .

user s worl .

Base .dwid e.

d on repo rt by .

.Alex a [3].

the site’ s .

traffi c .

ranki ng rose .

from th i 60 n .

Sept emb er .

2006 to th in 6 .

Febr uary 2008 .

. Exh ibit 2 in .

Appe ndix A.fro .

m Wall Stre .

.et Journ al.

depi cts the .

mont hly grow .

th in num ber .

of activ e .

user s from .

June 2004 to .

June 2007 . In .

com paris on .

with the rival .

socia l netw .

orkin g sites .

as seen in Ex ..

hibit 3of A ppen .

dix A. Face .

book is rank .

ed nd i 2 n the .

S.“Top 10 U. .

Socia l Netw .

orkin g .

Site for .

Nove mber 2007 .

” repo rt .

relea sed by .

Niels en Onlin .

e. In Janu ary .

2008 . Zuck .

erbe rg .

repo rted .

Face book ’s .

reve nue at .

US$1 50 milli .

on in 2007 and .

proje cted reve

nue at US$3

50 milli

on for

2008 [4].

Divisi on of Engin

eerin g& Tech

nolog y Mana

geme nt

MT50 07 Mana

geme nt of Tech

nolog ical

Innov ation

3

This pape r

exa mine s

Face book ’s .

reve nue mod .

el and inves .

tigat es on .

the facto rs .

that led to .

thec urre nt .

succ ess of .

to .Face book .

unde rstan d .

and illust rate .

the differ ent .

tech nolo gical .

man age ment .

conc epts behi .

nd this succ .

Whil e the .ess.

emp hasis in .

this case stud .

y is on thele .

sson s learn .

t for a succ .

essfu l inno .

it also .vatio n.

briefl y discu .

sses the othe .

r issue s .

Face book is .

curre ntly facin .

g and reco .

mme nds som .

e futur e .

strat egie s to .

main tain its .

com petiti vead .

.vant ages .

Rev enu .

e Mod .

el .

Ther e were .

seve ral fundi .

ng from vent .

ure capit alists .

since the laun .

ch of Face book .

Nota blyU ..

S$50 0.00 0 .

from Peter Thiel .

(cofoun der .

of PayP al) in .

2004 . US$1 .

3 milli on .

from Acce lPart .

ners in 2005 .

. and US$2 5 .

milli on from .

Grey lock Part .

Acce l .ners.

Merit .Part ners.

echC apita l .

Part ners and .

.Peter Thiel .

The reve nue .

mod el of Face .

book is base .

d on the follo .

wing : • .

Displ ay adve .

rtise ment s– .

Exa mple of .

reve nue from .

this is thro .

ugh outs ourci .

ngad verti sing .

deal. Besi des .

the com mon .

bann er adve .

rtise ment s. .

Face book allow .

s user sto .

mak e their .

own adve rtise .

ment s know .

n as Fa cebo .

ok Flyer s at .

low price s .

base d onnu .

mber of click .

Thes e .s.

adve rtise ment .

s are filter ed .

acco rding to .

targ ets’ gend .

age.er. educ .

.ation statu s.

and regio nal .

netw orks. Direc .

t adve rtise .

ment s acco .

unts for majo .

rityof Face book .

.’s reve nue.

• Spon sors .

hip – This is in .

the form of .

hom epag e .

spon sore d .

stori es and .

spon sore dgro .

In the .ups.

form er spon .

sors hips. adve .

rtise ment s are .

displ ayed in .

the New s .

Feed secti on of .

Face book user .

s’ page s .

whic h most .

user s pay .

.atte ntion to.

The clickthro .

ughr ates of .

such adve rtise .

ment s are high .

er than norm .

al bann er .

adve rtise ment .

s by ten totw .

enty time s. .

Leve ls of filteri .

ng (suc h as .

by gend er or .

locat ion) for .

targ eted user .

s area pplie .

d with a .

Spon .prem ium.

sore d grou .

ps are grou .

ps in Face book .

creat ed for .

Divisi on of .

Engin eerin g& .

Tech nolog y .

Mana geme nt .

MT50 07 Mana .

geme nt of Tech .

nolog ical .

Innov ation 4 .

parti cular bran .

.d of good s.

Thes e grou .

ps (suc h as .

Appl e Stud .

ents. PINK Victo .

NBA .riaSe cret.

Final s Trivi .

a Chall enge .

) are pers onal .

envir onm ents .

for user s to .

gath eran d .

inter act. trans .

formi ng the .

bran d into .

a parti cipa .

nt of Face book .

. The cost of .

each spon sore .

d grou p is .

US$3 00.0 00 .

for thre e .

mont hs. Ther .

e were 186 .

spon sore d .

grou psin Sept .

emb er .

• .2007 .

Gifts – User .

s can purc hase .

limit ed editi .

on virtu al .

gifts for othe .

r Face book .

user s at .

US$1 per item. .

Pat h to .

Suc cess .

From an inno .

vatio n base .

d on the belie .

ve of a soph .

to one .omor e.

with 66 milli .

on activ e .

user sand annu .

al reve nue .

of US$1 50 .

milli on. it is .

not diffic ult to .

see that Face .

book has been .

a grea tsuc .

cess. This is .

also evid ent .

from the signi .

fican t inves .

tmen t mad .

e to the com .

pany since itsla .

In Octo .unch .

ber 2007 . .

Micr osoft inves .

ted US$2 40 .

milli on for .

6 perc ent .1.

stak e inFa .

cebo ok [5].T .

his valu es .

the Face book .

at US$1 5 .

Follo .billio n.

wing that in .

Dece mber 2007 .

.Hon g Kong .

tyco on Li Ka- .

shin g US$6 .

0 milli on .

for 0.4 perc .

ent stak e in .

Face book [6]. .

And inJan uary .

2008 . Ger .

man inter net .

entr epre neur .

s the Sam wer .

brot hers also .

inves ted a signi .

fican tamo unt .

in Face book .

[7]. This secti .

on will exa .

mine the facto .

rs whic h .

contr ibute d to .

this succ ess. .

The Unta pped .

Mark et .

Unlik e othe .

r socia l .

netw orkin g .

sites whic h .

had been targ .

eting the older .

dem ogra phics .

orte enag ers .

(in the case .

of MyS pace .

). Face book .

was desi gned .

by colle ge .

stud ents for .

colle gest uden .

ts. It targ eted .

speci ficall y the .

stud ents withi .

n each univ .

ersit y. Stud .

ents need ed .

such direc tory .

servi ces and .

Face book provi .

ded a bett .

er site than .

that of scho .

ols. With endo .

rsem entfr om .

univ ersit y .

stud ents from .

repu table scho .

ols such as .

Harv ard. Stanf .

.ord and Yale.

stud ents .

Divisi on of Engin .

eerin g& Tech .

nolog y Mana .

geme nt .

MT50 07 Mana .

geme nt of Tech .

nolog ical .

Innov ation 5 .

from univ ersiti .

es in othe r .

coun tries were .

also keen to .

join after Face

book adde d

their scho ols

in. Desi gn

and Core

Feat ures

The desi gn of

Face book is

centr alize d

arou nd the

profil e of the

user s and

othe r core

featu resof Face

book whic h

can be adde .

d on (suc h as .

Phot oShari .

ng. whic h .

rank ed num .

ber one on .

theW eb with .

7 .more than 2.

billio n phot .

os on site .

and more than .

14 milli on .

uplo aded daily .

.Vide o and .

Even t appli .

catio ns). Thes .

e featu res .

appe aled to .

They .stud ents.

provi dedi nter .

activ ity of Web .

2.0 whic h .

colle ge stud .

ents like. The .

desi gn is simp .

It uses com .le.

mon grap hical .

user inter face .

and text .s.

links for featu .

re navi gatio .

n. The site .

is large ly .

unob trusi vean .

d easy for .

stud ents to .

Orga nizat .use.

ion by class .

es and grou .

ps allow s .

stud ents toad .

equa tely repr .

esen t and expr .

ess them selve .

As user s .s.

inves t grea .

t amo unt .

of effor t .

inbui lding up .

.their profil es.

and use of .

the core featu .

res (suc h as .

uplo adin g .

high volu me .

ofph otos) activ .

it creat .ely.

es a high switc .

hing cost for .

the user s to .

othe r socia .

l netw orkin .

g sites .Thu .

the succ .s.

ess of thes .

e core featu .

res resul ted .

in the lock- .

in of user s to .

the Face book .

platf orm. .

The Netw ork .

Effec t .

Netw ork effec .

t is a char acter .

istic that caus .

es a good or .

servi ce to have .

a valu e to .

a pote ntial .

cust omer whic .

h depe nds .

on the num .

ber of othe .

r cust omer .

s who own .

the good or .

are user s .

ofthe servi ce .

[8]. In othe .

.r word s.

the num ber .

of prior adop .

ters is a term .

in the valu .

e avail able .

toth e next .

adop ter. For .

socia l netw .

orkin g sites .

. it is impo rtant .

to have a .

critic al mass .

Th .of user s.

e valu e of .

such netw orkin .

g sites to .

the user s is .

in the form .

of bein g .

conn ecte d to .

more user s. .

Henc e the parti .

cipat ion of .

large num ber .

of user s will .

enco urag e .

more user s to .

.join thesi te.

Prior to the .

publi c laun .

ch of Face book .

. it had alrea .

dy esta blish .

ed a critic al .

mass of user .

sin scho ols .

and orga nizat .

Henc e.ions. by .

open ing the .

socia l netw .

ork to the .

grea ter onlin .

eco mmu nity. .

Face book conti .

nued to ride .

on the netw .

ork effec t to .

attra ct more .

The .user s.

Divisi on of .

Engin eerin g& .

Tech nolog y .

Mana geme nt .

MT50 07 Mana .

geme nt of Tech .

nolog ical .

Innov ation 6 .

yout hful dem .

ogra phic that .

Face book attra .

cts is highl y .

prize d amo .

ngst adve rtiser .

the .s.

sour ce .

of reve nue .

for Face .

.book .

Strat egic Part .

ners hip .

In Augu st .

MyS .2006 .

pace (top rank .

ed socia l .

netw orkin g .

site) and Goog .

le sign ed a .

deal forG oogl .

e to provi de .

sear ch and .

cont extu al .

ads to MyS .

pace . in retur .

n for givin g .

US$9 00mi llion .

in guar ante .

ed pay ment .

s thro ugh .

On .2010 [9].

the othe r .

hand . after .

losin g out to .

rival Goog le on .

Micr .the deal.

osoft sign ed a .

deal to be the .

excl usive selle .

r and provi der .

of bann erad .

verti sing and .

spon sore d .

links for Face .

book [10]. By .

work ing on .

the dyna mic .

relati onsh ipam .

ong com petit .

ors and com .

plem enta ry .

servi ce provi .

Face book .ders.

was able to .

bene fit toth .

e strat egic .

part ners hip. .

This will be .

furth er elab .

orate d in later .

secti on on .

reco mme nded .

futur e strat .

egie s. .

Mod ular and .

Ope n Archi .

tectu re .

Besi des the .

thirt een basic .

Face book appli .

catio ns. the .

site has over .

0 00 third .15.

party appli catio .

ns built on .

the Face book .

Platf orm. and .

incre asin g at .

140 new appli .

catio ns per .

day. As thes .

e third party .

appli catio ns .

are host ed .

on their own .

it .serv ers.

mea ns that .

ther e is acon .

tinuo usly grow .

ing pool of .

appli catio ns .

avail able for .

Face book user .

and othe .s.

r than itsco .

.re servi ces.

the expa nsio .

n and main .

tena nce of .

Face book appli .

catio ns is almo .

st auto nom .

This pres .ous.

ents adva ntag .

es for the .

user s as well .

as Face .

book . .

Tech nicall y. it .

is possi ble .

for third party .

deve loper s to .

build new appli .

catio ns as Face .

book isbas ed .

on a mod ular .

archi tectu re .

desi gn and .

oper ates on .

LAM P (Linu .

x. Apac he. .

.P HP).MyS QL.

a free and .

open sour ce .

soft ware stac

k. It defin es

its own inter

facin g lang

uage , theF

aceb ook Mark

up Lang uage

(FBM L), and

open ed up

the Face book

API to anyo

ne inter este

din deve lopin

g Face book

appli catio ns,

harn essin g the .

effor ts of the .

.com muni ty.

Furt herm ore.t .

hese speci ficati .

ons are clear .

ly docu ment .

E xhibi t .ed.

4 in Appe ndix .

A sh ows the .

class diagr am .

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