Analyst Eric Jackson has told CNBC that he believes Facebook will disappear by 2020 as it struggles to monetize the mobile platform.
With 900 million people around the world logging into Facebook on a regular basis, you might be inclined to think the social networking site will be around forever.
However, Eric Jackson, the founder of investment firm Ironfire Capital, begs to differ. Speaking on CNBC’s business show Squawk on the Street on Monday, Jackson said he believes Facebook will have “disappeared” by 2020.
“In five to eight years they are going to disappear in the way that Yahoo has disappeared. Yahoo is still making money, it’s still profitable, still has 13,000 employees working for it, but it’s 10 percent of the value that it was at the height of 2000. For all intents and purposes, it’s disappeared,” Jackson said on the show.
The analyst formed his opinion after looking at how different generations of web companies have emerged over time. Yahoo, he said, was part of the first generation, comprising giant web portals. With the arrival of the second generation — social web companies that include Facebook — Yahoo and its counterparts faded. The third generation, says Jackson, is made up of businesses intent on monetizing the mobile platform, an area in which Facebook is seen to be having a hard time.
“When you look over these three generations, no matter how successful you are in one generation, you don’t seem to be able to translate that into success in the second generation, no matter how much money you have in the bank, no matter how many smart PhDs you have working for you,” Jackson explained. “Look at how Google has struggled moving into social, and I think Facebook is going to have the same kind of challenges moving into mobile.”
He continued, “The world is moving faster, it’s getting more competitive, not less, and I think those who are dominant in their prior generation are really going to have a hard time moving into this newer generation.”
Moving into mobile
Besides acquiring the hugely popular mobile photo sharing app Instagram in April, recent rumors suggest Facebook is about to push hard for a serious presence in mobile. There’s talk of it buying the maker of the popular mobile browser Opera Mini, as well as suggestions it’ll soon be integrating with Apple’s iOS 6. There are even rumblings of a Facebook phone.
However, in a regulatory filing with the Securities Exchange Commission prior to its recent IPO, the social networking giant indicated the challenges that lie ahead when it stated that its revenue and financial results could be affected by the difficulty it faces in monetizing its service on mobile devices.
But disappearing in five to eight years? It seems hard to imagine, although if the company’s surprisingly rocky start on the stock exchange is anything to go by, perhaps anything is possible.