Facebook's New Possibilities

Ishfaque is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Facebook (NASDAQ: FB) has a lot going on behind closed doors. It is getting ready to unveil a new product/service next week infront of the media, so anybody can guess its going to be something very good. Being the largest social media company in the world by a huge margin, in terms of users and their data, coupled with a solid cash hoard, it can come with up with a number of game-changing innovations. Not surprisingly, it can cause competitors in the Internet and the broader technology sector to be jittery. Facebook boasts of user data few other companies can rival, and armed with that artillery it can enter new frontiers. 

Possible New Intiatives: 

Facebook Gifts to eCommerce Platform: Facebook has done a great job introducing gifts on its social media site, and as a result, users will become more tied and increase engagement on the platform, while bringing in additional revenues for the company. Facebook is enabling users to celebrate big moments in their lives, by allowing the digital gift option. And a natural stepping stone for Facebook Gifts is to build out an eCommerce Platform like Amazon (NASDAQ: AMZN). Why? Because it is already signing up small and large businesses alike to list their product for gift offerings. As more and more, businesses sign up, and an infrastructure is ramped up, an eCommerce platform will be a great monetization tool, where users can share their buying/selling decisions with their friends and family. Amazon will not be very pleased with such a decision as Amazon's margins are getting squeezed from the increasing number of large competitors entering the eCommerce space.

Social Jobs App to Recruitment Platform: Facebook, in conjunction with some a number of sites, has launched a social jobs app a few months ago. And in the process, it has made material progress towards building out a Recruitment Plaform. As more and more, recruiters are using the power of social networking to hire new talent, they are turning to sites like LinkedIn (NYSE: LNKD), and shying away from job boards like Monster Worldwide. Facebook's launch of the social jobs app, has caused a number of nervous investors to dump shares of social media rival, LinkedIn as it can be a very big threat for the professional networking company. Facebook can eat away LinkedIn's lunch easily, as its user base is more than 5x greater than LinkedIn's 200m users, and in the process gain a stronger foothold in the social media space. 

A Revamped and Monetized Instagram: The buyout of hugely popular photo-sharing app, Instagram has been a phenomenal success for Facebook under all scenarios. Thanks to post-acquisition publicity, Instagram's user levels jumped from 27m to more than a 100m. Instagram's addition to Facebook site has been a huge boost for a much better user experience on mobile, stimulated users to spend more time on both Instagram and Facebook and provides substantial tailwind for its mobile monetization strategy in the future. Facebook hasn't started placing ads for Instagram's huge and growing base of 100m+ users, and a media event would be a great launching pad for placing innovative ads or other monetization tools on Instagram. Monetizing Instagram would be a huge revenue stream for Facebook down the road, as users on Instagram spend a lot of time on the app. According to comScore, users spend more time on Instagram than Facebook's social media rival, Twitter!

A Social and Data Driven Search Engine: Among big technology companies, only Facebook has the huge scale of existing users to take on arch-rival, Google's (NASDAQ: GOOG) search engine business. Early backer and Facebook's current partner in search, Microsoft's (NASDAQ: MSFT) Bing has done well over the years, but still Google is light years ahead of Yahoo and Bing in the search market. Facebook's CEO has stated that the search engine market would be a natural next step for Facebook. And this comes as no surprise, because the search engine market is a huge one that attracts advertisers of all shapes and sizes, due to its huge reach and end user targeting capacity. And more importantly for Facebook it reduces their excessive dependence on display advertising only. Entering the search engine business can help Facebook generate hundreds of millions of incremental ad dollars on an annual basis, with Microsoft as a strong partner by its side.  

The Bottom Line

There is a wide range of things Facebook can unveil, ranging from smartphones and a big gaming app to a social search engine. While Facebook has shot down the possibility of unveiling hardware, there is still a very small probability of that happening, but it would be very disadvantageous for the company as it would bring in a lot of enemies, in the form of all the smartphone and tablet manufacturers. For now, a social and data driven search engine seems quite likely, but we have to wait and see. 

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ishfaque has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Facebook, Google, and LinkedIn. The Motley Fool owns shares of Amazon.com, Facebook, Google, LinkedIn, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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