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INTERNET SPACE
Facebook stocks up for Google fight
by Staff Writers
Washington (AFP) Feb 2, 2012


Amazon launches online shopping site for India
Mumbai (AFP) Feb 2, 2012 - Online retailing giant Amazon on Thursday entered India with the launch of its shopping website junglee.com, in a major boost to the country's rapidly-growing e-commerce business.

The website offers 12 million products across 25 categories -- including books, movies, mobile phones, cameras, toys and clothing -- besides its best-selling Kindle e-book reader, the company said.

"We are excited to give customers in India a single online starting point where they can shop a wide selection of products sold by local and global retailers," Amit Agarwal, vice president of Amazon.com, said in a statement.

The website allows customers to compare prices but purchases will have to be made through a network of third-party suppliers.

Amazon comes to the country at a time when Indians are shopping online more than ever before through popular outlets like bookstore giant Flipkart and the Nasdaq-listed travel portal MakeMyTrip.

Amazon said last month it was in the process of setting up its first warehouses in India, which would make shipments faster and cheaper.

E-commerce business is set for a boom in the country of more than 1.2 billion people, where incomes are rising but the use of computers, Internet and online shopping is still low.

Of India's estimated 60 million Internet users, only about ten million shop online.

India's government earlier this month allowed foreign "single-brand" retailers to open 100-percent owned shops, but has said that it will continue to block the entry of supermarkets.

India's retail sector is valued at $550 billion as of December last year, according to the India Brand Equity Foundation, which was set up by India's commerce ministry and the Confederation of Indian Industry.

As Facebook and Google jockey for dominance of the Web, the social networking titan's $5 billion stock offering will give it a hefty warchest for the ongoing fight, analysts said.

"It gives Facebook the ability to roll out more services," Gartner technology analyst Michael Gartenberg said. "It's going to be harder for companies to compete with Facebook."

Facebook, in its filing for an initial public offering, cited Microsoft and Twitter as competitors but made it clear its chief rival is Google.

"We compete broadly with Google's social networking offerings, including Google+," Facebook said of the social network launched by Google which has attracted 90 million users to Facebook's more than 800 million.

"Some of our current and potential competitors have significantly greater resources and better competitive positions in certain markets than we do," Facebook said.

At first glance, Google would appear to have the upper hand.

Google sites, which include the popular YouTube in addition to the eponymous search engine, attracted 1.09 billion unique visitors in December, according to online tracking firm comScore.

Facebook saw 794.3 million unique visitors in December.

But users spent more time on Facebook -- a key metric for advertisers.

Visitors to Facebook spent an average of 377.3 minutes on the site in December compared to 207.2 minutes on Google sites.

Google, which launched six years before Facebook, is also flush with cash.

Facebook, opening its books for the first time in the filing with the US Securities and Exchange Commission, said it had net income last year of $668 million and revenue of $3.7 billion.

Google posted a net profit of $2.71 billion last quarter alone on revenue of $10.58 billion.

But Facebook may have more upside.

"What Facebook's management would like us to believe is that Facebook's growth potential is much greater than Google's," said Virginie Lazes of investment bank Bryan, Garnier & Co.

"Google is a cash machine but what more can they do in terms of growth?" Lazes asked. "Google's growth is a maximum of around 15 percent a year."

Facebook's revenue meanwhile went from $777 million in 2009 to $1.97 billion in 2010 to last year's $3.7 billion.

"That's what the market will try to put a value on, this future growth potential," Lazes said.

The battle between Facebook and Google comes down to a contest for eyeballs and online advertising dollars.

Google is the dominant player in online advertising with a 44.9 percent share of US online ad revenue last year to Facebook's 6.4 percent, according to eMarketer.

Most of Google's revenue comes from search advertising while Facebook is the top player in the rapidly growing display advertising space.

Facebook's share of total US display advertising revenue was 16.3 percent last year to Google's 12.3 percent and Yahoo!'s 12.5 percent, eMarketer said.

"What's not to 'like' about the Facebook IPO?" asked Kathleen Smith of IPO investment adviser Renaissance Capital. "The social networking king is an advertiser's dream, accessing the intimate social interactions of one in every 10 people in the world."

Gartenberg said that because Facebook has become such a dominant force in social networking it may be better positioned than Google in the long run.

Social networking is not a "passing fad," he said. "It also seems to be pretty profitable.

"Facebook is the dominant player here and it's become dominant in such a relatively short period of time," he said. "To the point where we talk about companies like Google being the underdog."

Google, however, "is not going to stand idly by and allow Facebook to become the center of gravity of the Web," Gartenberg said.

"The only type of company that could mount a challenge to Facebook is a company of the size and scale and with the resources of a Google," he said. "That makes for what could be a very interesting year going forward."

Lou Kerner, social media analyst at secondshares.com, said the struggle between Facebook and Google is "about how people discover the Web."

"We've been used to periods of one king: it was Yahoo!, then it was Google," Kerner said. "Now we're entering a period of two kings of the net.

"Google is not going away."

.


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