5 ms·

> Oculus is not a service, just a technology; one that has no relation (nor clear route to one) to any Facebook-held product. Exactly. This is what diversifica

by froo 13y ago

> Oculus is not a service, just a technology; one that has no relation (nor clear route to one) to any Facebook-held product. Exactly. This is what diversification is all about. At it's core, Facebook is now a public technology company, which means that creating value for its shareholders is it's primary focus. Buying something that looks like it might be a big deal before it becomes a big deal is doing that. Killing it before it has a chance to become big, especially since it has no "relation to any Facebook-held product" (thus it's not competing) is definitely not in their best interest.

bduerst 13y ago
>Diversification Conglomerates have some of the thinnest margins across many industries. Jumping into the electronic devices industry with a product that hasn't even hit market yet is a bad gamble, especially since a dedicated electronics manufacturer (Sony) is going to release the same product but with an already dedicated market (Playstation). It would have been better to wait until OR released, because then early adopters would have demonstrated if it is a viable product.
- maldeh 13y ago
  Fair point. It definitely looks like an emotional purchase in a tough market. They're already getting creamed for it in the stock market [1] The way things look, this is largely a win for Oculus for finding a big backer, and a risky gamble for facebook. I think it's good that FB's putting some faith in a great team and product all the same -- [1] http://www.marketwatch.com/story/facebook-shares-drop-more-than-6-on-oculus-deal-2014-03-26 http://www.marketwatch.com/story/facebook-shares-drop-more-t...
nightski 13y ago
Publicly held companies often do things that lack vision and do not serve their best interest.
bradgessler 13y ago
I think most of us really wanted Oculus to be an insanely great technology, not Facebook's "diversification strategy".
- AznHisoka 13y ago
  exactly. FB has experience with stuffing LOLCat pics in your FB feed. Not innovative tech.
  - karangoeluw 13y ago
    Define "Not innovative tech"
    - hueving 13y ago
      Did he not just say, "stuffing lolcats into your feed?"
      - cheald 13y ago
        I'm not much a fan of Facebook, but it's only fair to give them credit where credit is due - things like Cassandra, HHVM/Hack, and React are all pretty important technologies, and their datacenter needs mean they've built an internal competency for hardware, too. I don't think this move makes obvious sense, but Facebook The Company (as opposed to Facebook The Product) is more than just an RSS feed of lolcats.
  - xerophtye 13y ago
    >FB has experience with stuffing LOLCat pics in your FB feed Seriously? Are you really saying that it's FB's evil plan to stuff cat pictures in your pictures? And not the fualt of those with whom you connect on FB? It's rather sad how so many people just think of FB as a "website" and not realize the truly innovative efforts they must go through to keep it running as such a massive scale. Not to mention, they built their own servers and pushed initiatives to help the whole industry set up proper infrastructures to achieve massive scale
jcnnghm 13y ago
Diversification at the corporate level isn't a good idea. Investors typically demand a discount (the conglomerate discount) for diversified corporations because they can easily diversify themselves by holding a variety of securities. Imagine an investor that values social networks highly, but who doesn't care for VR. They'll view this as a distraction from the core business, leading to a discount of the core business and an even greater discount of the VR portion. Diversification makes companies harder to analyze and reduces management focus, and has the tendency to depress both earnings and value. There are some exceptions around market inefficiency, for example in the case of emerging markets where companies are difficult to manage and finance, but those are becoming less common, not more. I think there may be an argument that the market inefficiency caused by the extra reporting requirements imposed by SOX is causing more companies to go public by way of acquisition instead of IPO, but I haven't really seen clear data on that point.

by froo 13y ago

bduerst 13y ago

>Diversification Conglomerates have some of the thinnest margins across many industries. Jumping into the electronic devices industry with a product that hasn't even hit market yet is a bad gamble, especially since a dedicated electronics manufacturer (Sony) is going to release the same product but with an already dedicated market (Playstation). It would have been better to wait until OR released, because then early adopters would have demonstrated if it is a viable product.

maldeh 13y ago
Fair point. It definitely looks like an emotional purchase in a tough market. They're already getting creamed for it in the stock market [1] The way things look, this is largely a win for Oculus for finding a big backer, and a risky gamble for facebook. I think it's good that FB's putting some faith in a great team and product all the same -- [1] http://www.marketwatch.com/story/facebook-shares-drop-more-than-6-on-oculus-deal-2014-03-26 http://www.marketwatch.com/story/facebook-shares-drop-more-t...

nightski 13y ago

Publicly held companies often do things that lack vision and do not serve their best interest.

bradgessler 13y ago

I think most of us really wanted Oculus to be an insanely great technology, not Facebook's "diversification strategy".

AznHisoka 13y ago
exactly. FB has experience with stuffing LOLCat pics in your FB feed. Not innovative tech.
- karangoeluw 13y ago
  Define "Not innovative tech"
  - hueving 13y ago
    Did he not just say, "stuffing lolcats into your feed?"
    - cheald 13y ago
      I'm not much a fan of Facebook, but it's only fair to give them credit where credit is due - things like Cassandra, HHVM/Hack, and React are all pretty important technologies, and their datacenter needs mean they've built an internal competency for hardware, too. I don't think this move makes obvious sense, but Facebook The Company (as opposed to Facebook The Product) is more than just an RSS feed of lolcats.
- xerophtye 13y ago
  >FB has experience with stuffing LOLCat pics in your FB feed Seriously? Are you really saying that it's FB's evil plan to stuff cat pictures in your pictures? And not the fualt of those with whom you connect on FB? It's rather sad how so many people just think of FB as a "website" and not realize the truly innovative efforts they must go through to keep it running as such a massive scale. Not to mention, they built their own servers and pushed initiatives to help the whole industry set up proper infrastructures to achieve massive scale

jcnnghm 13y ago

Diversification at the corporate level isn't a good idea. Investors typically demand a discount (the conglomerate discount) for diversified corporations because they can easily diversify themselves by holding a variety of securities. Imagine an investor that values social networks highly, but who doesn't care for VR. They'll view this as a distraction from the core business, leading to a discount of the core business and an even greater discount of the VR portion. Diversification makes companies harder to analyze and reduces management focus, and has the tendency to depress both earnings and value. There are some exceptions around market inefficiency, for example in the case of emerging markets where companies are difficult to manage and finance, but those are becoming less common, not more. I think there may be an argument that the market inefficiency caused by the extra reporting requirements imposed by SOX is causing more companies to go public by way of acquisition instead of IPO, but I haven't really seen clear data on that point.