x Abu Dhabi, UAESaturday 22 July 2017

Tale of two companies

Facebook is a hugely popular network, but its employees, from founder Mark Zuckerberg down, still can't work out how to translate that into big profits.

For a company that has been written off by "experts" many times, most recently after the death last October of co-founder and chief executive Steve Jobs, Apple is doing more than all right. In fact, its market value has just topped $624 billion (Dh2,292 bn), making it the most valuable company ever on Wall Street. It is worth a staggering 53 per cent more than second place ExxonMobil.

Meanwhile, the much-hyped Facebook is also in the news. On Monday, its share price fell to half its value when the company listed on the Nasdaq three months ago. Further falls may come with the expiry of lock-ins that prevent Facebook staff from selling their stock.

The difference between the two companies is quite clear: one of them makes tangible, some say beautiful, products that people want to buy, and the other does not. Like My Space and Bebo before it, Facebook is a web application that people like to use - for now, at least - but its employees, from founder Mark Zuckerberg down, can't work out how to translate that into fatter profits.

Their most recent challenge is to integrate advertising on the mobile version of the app that is used on smartphones and tablets. The lesson for budding entrepreneurs is that people want to use Facebook for free but are happy to pay Apple for the iPhone or iPad they use it on.