Did Facebook Just Hit the Panic Button?

Facebook has been taking some hits lately.  A recent study showed a massive decline in Facebook use.  Google came out with their own social network 12 weeks ago, Google Plus.  In closed beta since that time, today they opened it up to the general public.  Facebook made some news of their own today though, as they announced a redesigned news feed, featuring a twitter style ticker.

The new Facebook is a lot to digest.  The news feed has been enhanced, with Facebook trying to predict which updates will matter most to you.  The sidebar now not only includes your chat window but a twitter style stream of updates.  You also have new functionality such as subscribing to someone rather than friending them, and enhanced "smart" lists.  This has already faced significant backlash.

Part of the reason Facebook came out with these new features is in response to their competition, most notable Google Plus and Twitter.  In a recent blog post, "Facebook Punches Back",  we outlined some of the changes Facebook has already made in response to Google Plus.  We talked about the unique position Facebook is in to respond, based on both their large user base and flexibility of their product offering.

Whenever a new competitior enters into a market, no matter the industry, it is important to understand their impact on your business.  The paniced company will respond to the new entry by trying to become more like them.   The thinking being that if consumers see something in the new service that they like, they might leave unless their current service incorporates that as well.

Savvy companies know better.  They know the first thing to do when faced with new competitiors is to reasess their value proposition.  Take a look at your current offering, and the needs of your customers.  Is there something you could be delivering more effectively?  In many cases, this means rather than being more like your competition, find out how you can differentiate yourself from your competitors.

In this case, Facebook, rolled out a set of services that their customers were not asking for.  Due to Google Plus being in beta, the large majority of people on that platform are industry insiders or very tech savvy people.  If Facebook assumed that this represented the same group as Facebook users then they made a mistake.  Facebook is made up of, well, everyone.  From college students to grandmothers, from IPhone users to folks who struggle with TV remotes, from doctors to high school drop outs.

With the mass market, Facebook held a major advantage over Google Plus, and that was simplicity and ease of use.  In an effort to be everything to everyone, they lost that.  Google Plus has some great new features, but they were going to struggle to get past the industry insiders and provide a compelling reason for most folks to convert over to Google Plus.  Facebook has taken its greatest advantage and destroyed it with the redesign.

They will start with music, and plan on partnering up with services like Spotify, Mog, Rhapsody, and Rdio to allow users to share music from differenct services on the site.  Spotify CEO Daniel Ek is scheduled to speak at f8.

Is this the next generation of a bigger and better Facebook or is this the beginning of the decline?  A company taking the leap to the next step or a company to big to understand its core market and how to serve them better?  Eager to hear from you, please leave your thoughts in the comments below.