Is This the Next Apple?

Name me a company that:

a) Has a popular platform for software that's making some developers rich,
b) Is generating millions in revenue from said platform,
c) Boasts legions of customers who some might call addicts, and
d) Ranks as the world's most innovative.

Apple (Nasdaq: AAPL  ) , right? Close. The Mac maker was third in Fast Company magazine's 2010 rankings of the world's most innovative. But topping the list was Facebook, an online nation of 400 million. (Nasdaq: AMZN  ) was second and Google (Nasdaq: GOOG  ) fourth.

Most other tech leaders lagged. Intel (Nasdaq: INTC  ) fell from sixth to 14th. Cisco (Nasdaq: CSCO  ) fell from fifth to 17th. And Microsoft (Nasdaq: MSFT  ) almost went missing, falling from 34th to 48th.

400 million people can't be wrong, right?
Interestingly, Fast Company's rankings distinguished Facebook as more than just a benefactor of 2009 being the Year of Social Media. This isn't merely a rising-tide-lifts-all-boats sort of story, senior writer Ellen McGirt argues.

"Having all but vanquished MySpace, and pushing Twitter ever closer to becoming a mere utility for ego-streaming, Facebook lords over the social-media landscape, with no pretenders in sight," McGirt wrote.

I'm not sure I'd agree that Twitter is trending toward irrelevance. Even so, the numbers tell a fascinating story: Facebook's reported $11 billion valuation is over 10 times that of Twitter's $1 billion.

More importantly, with each passing day, Facebook is looking more like Apple. And not just because CEO Mark Zuckerberg gets astonishingly close to the black turtleneck stylings of Apple chief executive Steve Jobs in this goofy photo, courtesy of Kara Swisher of The Wall Street Journal's AllThingsDigital blog. (Zuckerberg is at the far right.)

No, it's not CEO fashions but the businesses that are matching up nicely. Revisit our opening checklist with me:

  • Just as the iPhone has bestowed fortunes upon some enterprising creators of games for the device, Facebook has transformed Zynga, creator of the hit games Farmville and Mafia Wars, into an IPO prospect. Electronic Arts (Nasdaq: ERTS  ) recently bid at least $275 million for Zynga's closest peer: Playfish.
  • Apple sold more than $13 billion worth of iPhone-related products and services during fiscal 2009. Facebook was on track for at least $500 million in 2009 revenue.
  • We really don't need to discuss this do we? Facebook has more than 400 million very active users; Apple is blessed with rabid, almost canonical defenders.
  • You already know Fast Company's rankings.

What you might not know is that Facebook appears to be taking some of its innovative cues from Apple. According to Bloomberg, the social superstar plans to expand a service called Facebook Credits, which would allow makers of games that live on its platform to sell virtual goods. Facebook would net the 30% of the profits, much as Apple does with iTunes, Bloomberg says.

Welcome to the age of platforms
This is very big news, indeed. It means that Facebook is growing into a serious platform for software, just as Windows has. Or Mac OS X, or even the iPhone OS. MySpace tried but failed to become a platform, and today is casting about for a lifeline. Facebook is long past the toddler stage.

Just look at the tools available. Facebook yesterday launched what it calls a "migrations" tool that allows developers to control when and how to integrate the platform's latest features into the software applications they've built for it.

Sound basic? It's not. Developers are used to upgrading software on their own schedules, yet social networks move at their own pace. Giving coders a measure of control is crucial; it allows them to think of Facebook as a platform for serious business.

Zuckerberg needs them thinking this way. In the cloud-computing era, developers have more platform choices than they've ever had. There isn't enough time to devote time to them all. Every little thing Facebook does to make itself more attractive to this group adds value, and makes a rich IPO that much more likely.

Facebook ... the next Apple?
Apple fans will recognize the pattern. After years of berating Windows and its own lack of developer support for the Mac OS, Apple embraced Intel chips and made it easier for Macs to run Windows. You know what's happened since.

Zuckerberg may not be the turtleneck-wearing iconoclast that Jobs is, but each of them knows something about courting developers and consumers. Little else matters when it comes to creating value in today's tech market.

Do you think Facebook will be the next Apple? Make your voice heard using the comments box below.

Apple, Amazon, and Electronic Arts are Motley Fool Stock Advisor selections. Google is a Motley Fool Rule Breakers recommendation. Intel and Microsoft are Motley Fool Inside Value picks. Motley Fool Options has recommended a buy calls position on Intel and a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy had to end a relationship last night. The other policy couldn't handle its commitment to disclosure.

Read/Post Comments (5) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 26, 2010, at 10:42 AM, RJRooster wrote:

    Facebook would be a great acquisition target for Apple's cash hoard, lots of growth opportunity in social networking. A symbiotic relationship!

  • Report this Comment On February 26, 2010, at 1:51 PM, PSU69 wrote:

    Disclosure, I own APPL , GOOG & I recommend FB to my clients. FB delivers people with amazing filters for clients and is giving GOOG a run for its money in SEO/SEM VALUE. GOOG should buy it before APPL does.

  • Report this Comment On February 26, 2010, at 4:13 PM, RTFM2009 wrote:

    It has a potential to be the next AAPL IF it goes to IPO, but in this economy they might not and if they did, I don't think it will be cheap since they already have big VC backing them. Those days are gone when we could get great companies for great price. If FB goes IPO it will easily be round 150 to 200 range, and upside is huge. This is just my guess. I think AAPL should seriously consider buying Facebook and kill GOOGLE.

  • Report this Comment On March 05, 2010, at 4:48 PM, markyaney wrote:

    Not the next apple, it will be bought by google or apple

  • Report this Comment On March 07, 2010, at 2:06 AM, mike2153 wrote:

    I have no interest whatsoever in Facebook and the other social masturbation websites.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1122297, ~/Articles/ArticleHandler.aspx, 10/24/2016 8:32:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
AAPL $116.60 Down +0.00 +0.00%
Apple CAPS Rating: ****
AMZN $818.99 Down +0.00 +0.00% CAPS Rating: ****
CSCO $30.15 Down +0.00 +0.00%
Cisco Systems CAPS Rating: ****
EA $82.87 Down +0.00 +0.00%
Electronic Arts CAPS Rating: ***
GOOGL $824.06 Down +0.00 +0.00%
Alphabet (A shares… CAPS Rating: *****
INTC $35.15 Down +0.00 +0.00%
Intel CAPS Rating: ****
MSFT $59.66 Down +0.00 +0.00%
Microsoft CAPS Rating: ****