Selasa, 01 April 2014

Why Facebook was smart to buy Oculus


Yes, I think Facebook Inc. probably overpaid in its $19 billion acquisition of Whatsapp . And yes, I think it also probably overpaid in its more recent$2 billion acquisition of Oculus VR.


But even if these recent ideas don't pan out, I disagree with those who think that CEO Mark Zuckerbeg has gone plum crazy.


When you're a company like Facebook , deals like Oculus are the ones you have to make.


It's either that, or risk dying slowly.


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We can moralize about the fact that Oculus was crowdsourced into a buyout target or that Facebook's stock is structured into two classes that give Zuckerberg near-dictatorial power to make decisions.


And we can speculate all we want about what fraction of the 450 million Whatsapp users will ever be 'monetized' effectively by the tech giant, or whether Oculus will ever turn a profit.


But to me, tech companies stay on top by making bold moves that look far down the road rather than focusing on the short term.


So while only time will tell if Facebook was right or wrong on these recent deals, investors should not fault Zuckerberg for his tactics one bit.


What Facebook is doing right

It's easy to roll your eyes and say the Oculus deal makes no sense. Shares of Facebook are down about 10% in the last week in part because traders just don't get it.


And besides, looking at a picture of folks using these wacky virtual reality glasses makes it hard to keep a straight face.


But broadly, I think Zuckerberg has his head in the right place by thinking beyond the current Facebook platform and trying to move where he thinks the market is headed instead.


In the future, will virtual reality be as useful to me as the video conferences I hold at work via GoToMeeting? Will a virtual reality chat be as emotionally satisfying as the regular Skype chats my little girls have with Grandma?


Nobody knows for sure. But since it's impossible to predict precisely where technology is headed, the best a tech company can do is follow its instincts.


And sometimes, that pays off big-time.


Take Google Inc. with its 2005 acquisition of Android , a little-known company that it snapped up for an estimated $50 million. Nothing came of the deal for a while, and the initial reception of the operating system was pretty mild in 2007 as the first generation iPhone captivated the market.


But almost 10 years later, it's hard to imagine that even the most optimistic Google engineer would have seen just how ubiquitous smartphones have become - or that Android would be on roughly 8 in 10 of these devices worldwide.


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