BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Apple, Facebook And The Fountain Of Youth

Following
This article is more than 10 years old.

(Image credit: Getty Images North America via @daylife)

The seemingly unstoppable upward trajectory for Apple and Facebook are still prone to problems like the rest of us.

While Apple is succeeding in the smartphone and tablet areas, it still has more progress to make when it comes to computers. “Globally, Apple commands a 6% share of the PC market - so 94% more to go,” Hudson Square Research analyst Daniel Ernst tells Forbes.

Despite the intimidating market share, Ernst is still optimistic Apple will continue allocating resources towards the company’s computer division to further grow sales – especially with the addition of several new features to Macs, as announced at last week's WWDC.

While the computers aspect of Apple’s business is far from saturated, the phones and tablets seem to have reached that level.

This leads to the other issue concerning Apple’s ability to convince customers to upgrade, as the company continues to roll out new versions of its marquee products, the iPhone and iPad. After all, the success of these devices largely depends on updates to keep fans engaged in the brand. There comes a point, however, when consumers may stop trading up some of their Apple devices if the company fails to maintain innovation. “Some of their products tend to be more evolutionary than revolutionary. Not every single product can turn the industry upside down,” Ernst says.

This was seen last fall when consumers were expecting a totally revamped iPhone 5, but were only offered an iPhone 4S, which looked identical to the iPhone 4, except for the 4S’s addition of the now-famous Siri, who some argue can only understand basic voice commands.

Despite Apple’s quest for constant innovation, the company knows the youth market is highly lucrative. “If you polled Gen Y, Apple would have a much higher market share,” Ernst says.

Speaking of tailoring to the youth audience, Facebook needs to take a page out of Apple’s playbook, as focusing on the younger crowd could help Facebook’s issues of growth and monetization. Reports of Facebook possibly opening the flood gates to allow those under age 13 to use the social network indicates Facebook executives are scrambling to pump up momentum, which was lost during its flawed IPO last month.

JMP Securities analyst Mark Harding remains skeptical that officially allowing a younger audience on Facebook will fix the monetization problem: “Anybody under 13 that wants to be on Facebook is probably on the site already - it doesn’t take much to lie about one’s age.”

But he does believe this proposal would help control Facebook’s privacy issues, especially since the plan would likely involve parental control of tween and toddler’s Facebook accounts.

A comScore report in The Wall Street Journal reveals how April’s U.S. unique visitors for Facebook only increased 5% from the same time last year. Harding doesn’t consider this to be too troubling of a statistic, since it shows a maturing U.S. market, but doesn’t account for the opportunity for growth in Europe and Asia. “I think the slowdown in growth is a function of having reached really high levels of penetration,” Harding says.

And the numbers support this argument. According to Harding, some 70% of Internet users are on Facebook in the United States, causing an inevitable growth ceiling.

As to the crux of the issue for Facebook’s money-making problems, Harding points to two solutions: developing richer, more advanced web-based ads and developing an ad system for the mobile platform.

Easier said than done?