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The Social Network Half a Billion Love to Hate

The Social Network Half a Billion Love to Hate

Facebook's friends list just topped half a billion, and the last 100 million signed up within just the last six months. That's despite a recent survey that indicates customer satisfaction with Facebook is in the pits -- but who are Facebook's actual customers, anyway? Meanwhile, phonemakers harangue Apple, Apple hits a revenue grand slam, and HP hints at the shape of Slates to come.

By Paul Hartsock
07/24/10 5:00 AM PT

"Incredibly dysfunctional" is not an option you can list as your relationship status on Facebook, but that seems to be the way to describe the site's relationship with its users. It's like an ex-boyfriend or girlfriend you hate so much but just keep going back to again and again and again, possibly because you can't find anyone better.

Never has the site been more popular. It just reached half a billion users -- just six months after reaching the 400 million mark. Facebook was quick to trumpet those numbers, and with them came the announcement of Facebook Stories. Supposed to be a place where you can tell the world about how Facebook changed your life, or something. Most of them go like this: Someone you don't know met up with someone else you don't know and got married and made babies. I guess you could also go there and write something about how a mishandled privacy setting ruined your life, or at least embarrassed the hell out of you. A story's a story -- it's not called "Nice Facebook Stories."

Anyway, at the same time everyone was huffing big bags of Facebook love, the American Customer Satisfaction Index piped in with a huge buzzkill: The site scored just 64 out of 100 on its latest E-Business report. That puts it in the bottom 5 percent of companies -- that's below the usual dumped-upons like airlines, cable companies, and even the IRS.

The results are kind of curious -- ACSI's methodology talks a lot about "customers," but reading the report, it makes is sound like the people they're actually polling are users. Is it fair to call them "customers?" I've never bought anything from Facebook -- have you? Probably not, unless you're an advertiser -- those are what I'd call Facebook's actual customers. And considering the kind of stuff that Facebook users say they're displeased with, it sounds like advertisers may well be very satisfied with Facebook's performance.

According to Larry Freed of ForeSee Results, which produced the survey with ACSI, it all boils down to three main complaints. First is the constant site redesigns, and it's pretty rare to hear anyone -- user or advertiser -- rave about yet another interface makeover.

The second main complaint is the commercialized nature of the site. It's amped up the ads and marketing big-time over the last few years, and users are getting sick of it. But if the site 's growing so quickly -- those last 100 million members were added in the last half-year, remember -- then maybe those new members won't mind the ads so much. They never saw it before the commercialization started really picking up. For them, what's going on now is normal. If I'm buying ads, everything sounds fine to me.

Another user grumble is privacy -- they say the controls are confusing, and it's troubling how much access application makers have to their private profile info. That's a completely legitimate complaint from a user satisfaction standpoint, but if we're talking about Facebook's actual customers, this is like the cows complaining that Tillamook makes too much cheese. For the ad guys giving Facebook money, your private info is delicious. They can't get enough. They wouldn't want to see all the cows wander over to another pasture, of course, but those growth numbers indicate that won't happen any time soon.


Listen to the podcast (12:25 minutes).

Pulled a Britney?

HP inadvertantly exposed itself on its website this week -- or perhaps it was completely advertant, I don't know. Whatever the case, it briefly revealed tech specs on that Windows 7 Slate device that it had reportedly left for dead months ago -- the thing Steve Ballmer had with him on stage at CES last January.

A page on HP's website described a Windows 7 tablet with an 8.9-inch screen, still and video cameras, a 1.6 Mhz processor and 1 GB of RAM.

That page disappeared pretty fast, but not before it got cached by Google's servers and picked over by everyone wondering when Microsoft's Big Answer to the iPad will come.

You probably shouldn't hold your breath, though, because HP hasn't confirmed any dates. A company spokesperson verified for us that HP has begun customer evaluation tests on the device, but beyond that, no save-the-date cards are in the mail.

We did manage to learn a little about HP's naming conventions, at least. That HP rep, Marlene Somsak, told us that the word "Slate" is the category's name, not the product. So you could have a Windows 7 Slate or a webOS Slate -- Somsak confirmed that a tablet running the old Palm OS is indeed in the making. There might also be an Android Slate someday, but there's no official word on whether that project is truly dead or just in sleep mode.

Get Your Hands Off Our Phones

Last week, at an emergency press conference, Steve Jobs tried to prove a point about the iPhone 4 antenna's Vulcan nerve pinch -- a glitch that causes the phone to lose signal strength when it's touched the wrong way. Apple wanted to show the world that it happens to lots of phones, not just the ones that wear their antennas on the outside right where someone would grip it, like the iPhone does.

Reporters were shown videos of this happening to a bunch of handsets from rival companies -- RIM, Samsung, HTC, etc. See? Happens to everyone. So lay off, huh?

Public reaction seems to be split on this defense. Some saw it as a much-needed reality check; for others, it was kind of arrogant -- to them, it looked more like an excuse than an apology.

But the real anger came from the companies that make these other handsets. Normally they wouldn't mind being compared to the iPhone -- big seller, usually good reviews, makes tons of money, so forth. But in this instance, none of these companies was all too happy about being featured in Apple's little documentary. The competition has been eating up this iPhone antenna controversy for weeks, using it to make little digs at Cupertino: "You can hold our phones however you want" -- stuff like that. When they saw themselves getting dragged into the mess, it was time to write some letters. Strongly worded letters.

RIM said it was "unacceptable" for Apple to drag it into the iPhone's problems. HTC said Apple didn't give operators enough time to test the device. Nokia said antenna design is a real big deal, as far as it's concerned.

Their basic point was that even though almost all smartphones with internal antennas can lose reception to some degree by being held a certain way, some phones lose more than others, and you don't even necessarily have to grip an iPhone 4 to make it happen -- just touch your fingertip to one particular sensitive spot on the edge of the phone and watch the bars evaporate.

The Usual

The iPhone 4 antenna saga may have enraged or amused or confused you, but as far as investors are concerned, the company can do no wrong as long as it keeps piling up the money they way it does. Apple's third fiscal quarter ended recently, and the media consulted its usual grab-bag of five-dollar words to describe it: Booming, stunning, blow-out, so forth.

Revenue was $15.7 billion and profit was three and a quarter billion, numbers that shredded Wall Street expectations in typical fashion. Margins tightened up just a little -- 39.1 percent versus 40.9 percent in the year-ago period. But you can stop crying, because its Mac sales set a record at 3.47 million, and that outgrew the market in both desktops and portables.

Yes, Mac sales are doing just fine, thanks, even though the iPad and iPhone seem to be getting all the marketing buzz lately. But that other iDevice, the iPod, may be looking at its sunset years. Smartphones -- iPhone and otherwise -- can now play music and videos just as well as iPods can, so why carry two devices? iPod sales declined about 7 percent year over year for the quarter. Revenues, however, grew. That's probably due to the popularity of the iPod touch, which is the most expensive in the line.

As usual, Apple kept its outlook pretty conservative, and why not? Not like it has to beg anyone to invest in it these days. Underpromising and overdelivering is all part of expectation management, which is something Apple knows a lot about -- most of the time. Calling your phone "magical" is kind of an impossible standard to live up to.

Soaking Up UV

The world of digital content is presently a confused swamp of incompatible platforms and formats. Once you finally find something to watch or listen to that isn't a total waste of time, you have to be sure you buy it from the right provider and load it onto the right device. Make sure you're registered and that you're using the right software. Once it's loaded, it might still have to verify your identity online once you hit play, so tough nookies if you're on a plane without WiFi. And did you make sure your subscription is paid up? That might trip you up too.

Maybe the record and movie and TV companies make it complicated on purpose, so that some of us will just throw up our hands and go over to Sam Goody, if one still exists. Or we'll just throw up our hands and go to the Pirate Bay, if that still exists. Whatever the case, it's all because of DRM, digital rights management -- the various plans and schemes companies come up with to lock down their content and make sure you damn kids don't go spreading their stuff around without paying.

The only thing that can save us from DRM hell is to find the One True Way -- the DRM system that all content providers and device makers and software makers can agree on -- something that's compatible with all media, all players, and still manages to prevent piracy and make sure everyone gets paid.

The latest to vie for that crown is UltraViolet, a system from the Digital Entertainment Content ecosystem, which is made up of cable, entertainment and technology companies. If it catches on, UltraViolet could make it so you only have to pay once to get a given piece of media on any device you own.

It's basically a cloud-based digital locker system. A central server houses your account data, and from there you can access anything you've ever bought. It's sort of like iTunes, but it works for everything -- and hopefully you wouldn't have to pay for stuff twice if you accidentally deleted it.

There are a lot of big outfits on board with DECE -- Paramount, NBC, the RIAA, Netflix, Comcast, Nokia, just to name a few. Notable refuseniks include Apple (not surprising) and Disney (maybe surprising until you remember they're super-tight with Apple).

Going, Going, Gone

Motorola may not have recaptured its Razr glory days, but it's definitely doing better than it was a year or so ago. It pledged its allegiance to Android, and now its Droid line is shaping up to be a nice success story. But handsets aren't the only thing Motorola's about -- it's also into set-top boxes, back-end broadcast equipment and, until very recently, wireless networking gear.

Big changes have been in the making for a few years now -- Motorola is planning to split into two separate operations, one for consumer stuff like smartphones, and one for business-oriented equipment. To do that, it's going to need to lose a whole lot of weight, so it recently hacked off most of its network gear business and put it on the block.

The buyer: Nokia Siemens. The pricetag: $1.2 billion.

The deal looks like it's going to be a good opportunity for both parties. Nokia's been trying to get into the North American networking gear game for a long time, but it kept putting its money on Nortel and never got anywhere. By buying from Motorola, Nokia suddenly becomes the third largest player in the U.S.

There are at least three positives for Motorola in this. First, that whole wireless networking thing would have been an awkward third wheel in an already difficult divorce, with the upcoming split between handsets and business solutions. Second, Motorola's getting out of the game while the getting's good. It's still has lots of good customer relationships, but keeping up with the technology improvements to stay competitive into the near future would be really expensive. North American networks are moving from 3G to 4G, and each G costs big bucks. Third, by selling the division, Motorola gets cash, and cash is good. Never forget that.


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