Facebook Inc (NASDAQ: FB) co-founder and chief executive, Mark Zuckerberg, recently announced that he wants to triple the size of his social network, which now has about 1.6 billion members.
But how will Facebook reach new audience? By changing the telecommunications networks, aiming to make the Internet more affordable and available to those who live in developing countries.
However, this could be bad news for companies that make network equipment in Silicon Valley, just like Cisco Systems or smaller companies.
Akshay Sharma, research director at the technology advisory firm Gartner, stated that there would definitely be some pressure and some consolidation for many tech equipment suppliers.
“If you’re in hardware, you’re going to reduce head count from thousands to maybe 10 people, a hundred at most,” said Sharma.
This expansion might take years, but if Mark Zuckerberg manages to make the way people connect to the Internet more affordable, it would be just the latest instance of how the company has quietly upended the traditional economics of the technology industry.
The world after Facebook
Facebook has changed the way people interact with their friends and family on the Internet. But less understood outside tech circles is how the social network has come to be perhaps the most aggressive example of a growing number of companies that are unwilling to pay top dollar for products made by traditional technology suppliers, since advertisement on social media has been one of the best – and cheapest – resources because it can be managed by anyone.
Additionally to this, Mr. Zuckerberg has held to the open-source concepts, which have helped him play catch-up with the giant computer networks of companies like Amazon and Google.
The open source typically refers to freely shared code or even development plans that companies and people collectively create at a fraction of the price of traditional tech products. Bits of open-source technology can be found in all sorts of things, including Google’s Android operating system and Web browsers.
Many companies like Facebook often contribute to open-source projects, since they don’t make money selling products, where they actually have to buy products that help them to offer their service.
What’s an example of this? Sun Microsystems, a company that back in the 2000, it was worth $110 billion thanks to the demand for its computer servers and workstations. A decade later the company was sold for $7.4 billion. Sun fell to cheaper competition from Linux, which is one of the most popular open-source codes that now run in many of Facebook’s servers.
Source: Seeking Alpha