This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
NEW YORK (TheStreet) -- If investors are getting that deja vu sort of feeling from Web 2.0 giant Facebook (FB) - Get Report, it's because the second-generation Web is turning out to be just like the first. Just glance down at any computer, tablet or smartphone with an "email" icon on it and right there, before your eyes, will be perfectly apt model for the past, present and future business potential of Facebook.
Think about it. Technically speaking, both technologies are about the same. They deployed in roughly the same way. Instead of the decades of slowly emerging Internet Web standards, sharing protocols and server technology that enabled Mark Zuckerberg to share faces and friends on Facebook, email started as private, text-based communication tool like, say, FidoNet and CECNet, then evolved into modern, commercial email systems in the early 1990s.
Similar to how Ivy Leaguers tried to look cool by using early versions of Facebook at the turn of millennium, tech hipsters back in the Age of Prince vied to be equally chic by sending email.
I had a great laugh several weeks back when I was chatting with Sree Sreenivasan, the chief digital officer at Columbia University. We remembered how we seriously considered spending $50 of our own money back in the day to junk our business cards and get new ones with email address printed prominently on the front so we wouldn't look like dorks.
And, just as with Facebook, email quickly caught the attention of financiers slinging the next hot tech play to investors. Back in the late 1990s, the now-and-forever goddess of geeks, Mary Meeker, hyped the near-magical transformational business potential of email.
"E-mail is the 'killer application' of the internet today," Meeker and Chris DePuy wrote in their famous
. In fact, the two -- then at
-- were so passionate about the wonders of electronic mail that these were the few portions in the report that were set in bold.
Like Facebook, email created a Hollywood hit: 1998's
You've Got Mail
, starring a spry Tom Hanks and Meg Ryan. It earned a respectable $250 million worldwide, according to BoxOffice.com, which is actually more than the $224 million fetched by
The Social Network
, David Fincher's brooding take on Facebook's launch.
Keep in mind that the market rollout of Facebook and email are far too similar to be accidental. Facebook and email both hit a billion users roughly a half-decade after initial commercial deployment. And Facebook is on track to follow email in terms of global penetration.
The Radicati Group
, the Palo Alto, Calif.-based research group that studies mass messaging, including email,
that there will be 4.3 billion email users by the end of 2016.
"This represents an average annual growth rate of 6% over the next four years," said the company.
Fair enough. That's not exactly what Facebook is doing, but it's not far off.
Facebook doesn't make any money either
The chilling part for investors, of course, is that email offers as grim a prediction as possible for the future of Facebook.
First off, email -- like Facebook -- still struggles to find customers who are willing to pay for it. The Radicati Group report confirms that the vast majority of email accounts (somewhere around 75%) are given away for nothing. And like Facebook, the money that spins out of email is not exactly the stuff of fatted calves.
boasted that its Gmail product reached
worldwide, with 5 million businesses using its professional Google Apps package. Sure, that sounds great. But Boston-based analysis shop
estimates that even though revenue will grow,
of the share price of Google stock comes from the value of Gmail.
And let's not forget that email -- just like Facebook -- faces brutal security issues that drive up costs for customers. According to the Messaging Anti-Abuse Working Group, the San Francisco-based trade group that monitors
in email, the overall amount of so-called abusive email was holding steady at between 88% and 90% of total traffic. This costs everybody in this sector loads. Sterling Heights, Mich.-based
created a handy online calculator thatr estimates that a business with 10 employees loses about 20 days of work a year to email spam.
Web 1.0 after all
Honestly, if you turn off the hype fog machine for a sec and compare any modern Web-based email service from Gmail to
or even Hotmail and enable all the latest functions for list management, rich media sharing and Web-based list and group management, really, how different is that experience from Facebook?
The answer is: not much.
Ignore the investor spam: Facebook is no upgrade from Web 1.0. It
Web 1.0. It is time to value it as such.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.