Facebook About to Drop a Bomb on Foursquare?

Posted on March 26th 2010

Changes announced today to Facebook's privacy agreement suggest the company is about to flip the switch and add location-based capabilities to the social network. Some think this might mean the end for standalone location-based services like Foursquare and Brightkite. I don't think so.

Experts” have recently placed Foursquare valuations in the $50M to $70M range. I think this is low, and I also think it is too soon for Foursquare to sell. (More on 4sq in a moment.)

Brightkite, an early leader in location-based apps, is trailing Foursquare, Gowalla and others in terms of user excitement and online coverage, and recently introduced Check.in, the Friendfeed of check-in apps that lets you check-in once to update all of your location-based services.

And Yelp is an interesting player in this market, boasting a huge user base (huge by Foursquare standards) that it brought into the location-based world with an iPhone app earlier this year. The Yelp iPhone app alone had around 1.25 million users back in January, compared to around 500,000 today on Foursquare*. Yelp, for reasons I don't want to get into right now, remains a dark horse in this race.

So will all of these players run from the fray when Facebook throws down its 400 million-user glove? I don't think so.

There comes a time in the life of every hot software product's life (whether a Web 2.0 company or a shrink-wrapped software product) when its legacy of features and its sheer complexity, momentum and size, keep it from being as creative and cutting edge as it once was.

Witness Google, with Google Buzz, which has generated some interest but doesn't really seem poised to destroy Twitter. Or Microsoft Word, which added HTML capability years ago but will never be used by serious Web developers. Once an entity gets enough momentum, it will always be what it has become.

Facebook will remain burdened with all of the things Facebook is famous for, like Farmville, Mafia Wars, and miles-wide-of-the-mark contextual advertising. (Aren't you glad they still offer a “Poke” feature?) And there's something nice about simple, uncluttered, standalone apps, particularly in a mobile environment. Part of Foursquare's appeal is that it does one thing really well.

I guess Facebook could clone Foursquare's badges and point system, but then it would be Foursquare screen scraped into Facebook. If Facebook can develop some unique capabilities or strategic alliances to enhance user check-ins, maybe they'll steal some users from Foursquare, but right now Foursquare is generating buzz, and, more important, signing deals with Zagat, Starbucks, Warner Brothers and others, an indisputable validation of the appeal and potential for the service. (Then again, if Foursquare is an acquisition target, these deals would make the company more appealing to whoever is going to absorb them.)

This is definitely the year of location-based social media, and a lot of interesting things are going to happen in the next nine months. Wagers anyone?

* I couldn't find current stats on Yelp's iPhone app user base, hence the discombobulated comparison


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Joel Postman

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Comments

JDeragon
Posted on March 27th 2010 at 1:56PM
Nice article :)

The last mile of social media is local. Apple just filed a patent for a mobile location based social networking application.  While all things social enable global reach commerce is local, relationships are local and if we can add productivity to local relations we all win.

The IPad will revolutionize advertising with relevance. Local "connectivity" will add relevance to relationship building. Local shopping with digital coupons and incentives based on user behavior and preferences will add tremendous value.

Facebook, Google, MSN and the small ones currently available and yet to be seen will add the "local" innovation that actualizes "networks" to be more than Mafia wars or virtual games.  Just my humble opinion but what do I know.

 

ExtremeJohn
Posted on March 28th 2010 at 6:31PM
I would have to agree with you solely based on my own interaction with Foursquare and Facebook, the bottom line is that I never use my Facebook phone app, seriously... Like once a month at best, I Foursquare multiple times daily, Facebook can add it but I will still be doing the Foursquare thing.
JamesHills
Posted on March 28th 2010 at 8:35PM
I think the other truth is that Fsq and similar - limited lo-so apps probably won't grow much more than they are without serious enhancement. The people that are passionate about "checking in" are limited. But the people who simply want to "update their status" and "share interesting things" (i.e. Facebook) is massive and mainstream.

 I have used and worked with (as a marketer) Fsq and GoWalla and I am SUPER excited to see what Facebook is going to do.

 That all being said though, they all have their own distinct markets and it is WAY too early in the game for anyone to forecast the demise of one because of actions by another.

 


TerriBrooks
Posted on April 1st 2010 at 9:13PM
I have just recently begun using Foursquare and love it.  It is now one of the first things I do when I visit a local restaurant or venue.  It's great advertising for the business and just lots of fun for me and my online community.

I use Facebook religiously also, and will be interested to see what they come up with as far as location-based capabilities. 

Posted on August 19th 2010 at 1:58AM

They already did today, Facebook has already launched Facebook place, now definitely a good competion with foursquare.

Check this out : http://www.buzzingup.com/2010/08/facebook-launches-its-geo-location-feature-called-facebook-places-live/