Bits Blog: Facebook’s Stock Soars Amid Rosy Growth Expectations

Pogue’s Posts Blog: What Readers Found in Facebook’s ‘Other’ Folder

A couple of days ago, I wrote this post about the hidden “Other” folder on Facebook. This secret folder contains all messages sent to you by anybody who’s not among your Facebook friends. Because you’ve probably never looked in there, it might contain really important messages that you’ve never seen.

Hundreds of you wrote to report what you found in there. Some found nothing there. Some found only spam. Some found awkwardly written mash notes: “They were all men who wanted to get to know me and commented on my looks,” wrote one reader.

In all of those cases, the Other folder is doing its job.

But many more of you wrote that, sure enough, your Other folder contained important, now outdated messages, some with sad results:

• “Notification of the death of a friend was hidden in my Other box. I had been very hurt at not being told, and actually missed her funeral.

• “Thank you, David. I will never be able to say that enough. Our son died very unexpectedly on New Year’s Eve past (http://MackBrady.com), and thanks to your note, I am just now seeing dozens and dozens of kind and wonderful messages of sympathy and support.”

• “I learned of the death of a former, valued colleague two months ago.”

A number of you discovered, too late, that you’d won prizes or jobs:

• “Shoot, I just discovered I had won a contest for Knicks tickets, but the message was in that ‘Other’ folder. It was from 2011. Grrrr!”

• “Damn, I discovered that a year ago, I won free tickets to the theater and I never knew.”

• “I just checked my ‘Other’ folder and found out that I won a free high-end kitchen faucet for a contest I entered last year. Rats.”

• “Just looked at my ‘Other’ messages and found one about a job opening — in 2011. Think it’s been filled?”

Many of you discovered greetings from long-lost friends or students:

• “I found one from someone I had worked with in Viet Nam in 1970 — he had sent me a message to reestablish contact over two years ago. Glad I found it. Hope he still reads his messages on Facebook.”

• “Whoa! There’s tons of important messages in here. Former students of mine were trying to reach out to me. I can’t believe Facebook doesn’t notify you in any way about these.”

• “Just found a message from a long-lost friend in my ‘Other’ folder. I’d been trying to find her for more than a decade with no success. ??David Pogue, when she and I finally reunite, our first glass will be raised to you!”

• “I reconnected with an old penpal who I haven’t heard from in 15 years thanks to your tip on the ‘Other’ folder!”

• “I logged into it and found a message from an old acquaintance from 40 years ago. It portends an interesting catching up on each other.”

There were missed social opportunities:

• “Just discovered my Other folder! Missed an amazing party (damn!) and found a ton of messages dating back several years!! How the hell did that happen?! I am a savvy social media user and I’m astonished at this!”

• “Whoa. I had 58 messages there, one being an invitation to a bridal shower.”

And there were Good Samaritans trying to return lost credit cards and wallets:

• “Unbelievable! My husband’s wallet was lost and presumed stolen — someone had found it a year ago and sent us a Facebook message, which was hidden until now! Thanks so much.”

• “Just checked and found a message from someone telling me that they found my lost wallet…a year ago.? They really need to redo some thinking on that ‘other’ folder.”

• “A couple of years ago, I stupidly left my card in an ATM while traveling in Argentina. ?I discovered this ‘Other’ inbox a couple of months ago, and my messages included one from a very nice lady in Buenos Aires, who had a) found my card, b) not stolen all my money and c) actually bothered to track me down through Facebook to see if I wanted to reclaim it. Unfortunately, I found out about 18 months too late.”

Several of you found yourselves in the same position I did: feeling bad that people thought they were being ignored:

• “Now I have to apologize to several past acquaintances and let them know I haven’t been blowing them off!”

Several readers wanted to know how they could access the Other folder on their phones or tablets.

The answer: you can’t. The Facebook apps don’t permit you to see the Other folder. (You can, of course, go to www.facebook.com in your phone or tablet’s Web browser — don’t use the app — to work on the Other folder there.)

There was also a comment from Jimmy Chen, who works for the Messages team at Facebook. He wrote:

• “Our priority is delivering the most relevant messages to you while keeping lower-quality messages out. We use a number of factors to determine that, the most important of which is friendship. If you’re already friends with the sender, or you have a mutual friend, then the message will land in your inbox.”

Mr. Chen was also concerned by the implication that the “Other” folder and the $1 charge to avoid it were created at the same time. They weren’t:

• “The Other folder has existed for a long time before we introduced that ability. The point of being able to pay $1 to deliver to Inbox is that sometimes there are legitimate cases where you’d want to message a stranger — for example, you discovered a long-lost friend, or you found someone’s wallet on the bus.”

One reader, Ilya, had a thoughtful solution to the $1 problem:

• “If the goal really is to prevent spam and not to raise revenue, why not refund the charge if the user replies to the message? In fact, why not let each user set his or her own amount for accepting messages from strangers? The deposit is refunded if the user replies (or just clicks a button acknowledging the message as valid).”

I love that idea! How about it, Jimmy?

I also heard from Jonathan Thaw, who works in Facebook’s public relations department. He said these critiques will be passed along to Facebook’s Messages team. He also pointed out that, in fact, one of Facebook’s preference settings lets you change how much mail goes into the “Other” folder. (When you’re viewing your messages, click the tiny padlock next to your name at top left of the screen. Click “Who can contact me?”)

You have only two options here: Basic (the factory setting, the one causing all the problems) and Strict.

Unfortunately, the Strict option puts even more messages into the “Other” folder! It’s making the problem of missed messages worse. (A warning there even says: “You may miss messages from other people you know.”)

Look: it’s clear that the “Other”-folder system is broken in a very upsetting way. It’s preventing important connections, blocking the very communications that Facebook was created to foster.

Let’s hope that Facebook finds a better solution to blocking unwanted messages. Because right now, the secret Other folder is swallowing up a lot more than spam.

Bits Blog: The Limits of Facebook’s Search Tool

11:41 a.m. | Updated to clarify that companies like hotel chains were improving their Facebook presence even before Facebook introduced its search tool.

As I reported in Monday’s New York Times, Facebook is rolling out its Graph Search feature on Monday to all of its English-language users in the United States.

Peter DaSilva for The New York Times Loren Cheng, head of the team of linguists working on Facebook’s Graph Search, says users’ own search experiences will be the biggest force prompting them to share more information.

In theory, the tool, which has been undergoing refinement since public testing began in January, will allow users to search through their social network to find friends or other connections with a common link — say, “women who like Mitt Romney and Nancy Pelosi and live in San Francisco” (Facebook reports there are 12) or “my friends who like hiking.”

In practice, Graph Search has many limitations. Because Facebook uses so-called structured search technology to scan the boxes and buttons that users fill out on the site, it’s only as good as the boxes checked.

For example, when I searched my social network for “friends who like ice cream,” Facebook only returned 12 results. Left out was the silent majority who regularly lick cones and never bothered to tell Facebook.

Graph Search also tends to be too literal, often failing to discern the broader meaning of specific data points. For example, a search for “my friends who work at newspapers” returned no results, even though several hundred of my Facebook friends have listed specific newspapers as employers.

In short, Facebook’s Graph Search lacks the intuitiveness that people increasingly expect — and often get — from Web search engines like Google.

“You can search for restaurants my friends like, but ‘like’ is still binary on Facebook — they hit the like button or not,” said Nate Elliott, a principal analyst at Forrester Research who studies social media. “What if I want to find restaurants my friends love on Facebook. Or ones that get at least 3 out 5 stars?”

“There’s a lot of nuance required to make this really useful,” he said.

Over time, Facebook plans to encourage people to share more data to make Graph Search more valuable.

When I was on my profile page over the weekend, for example, the site prompted me to like more television shows, pulling up a long list of suggested titles, from current hits like “Game of Thrones” to moldy oldies like “Benson,” a political comedy popular in the 1980s.

The company is also considering how and when to prompt people to check in more frequently and write reviews without being too pushy about it.

“After you check in, half an hour later, do you want to rate that restaurant?” said Loren Cheng, who leads the team of linguists working on Graph Search. Or would you prefer to be prompted during dessert? Facebook is trying to figure that out.

Mr. Cheng said users’ own search experiences will be the biggest force prompting them to share more information.

“In user experience studies of likes, they say ‘why does it matter that I like something, why does it matter if I check into some place?’ ” he said. “You almost have to get them to a search result and they say, ‘wow, that’s what can I get. Tell me what I can do to get better results.’ ”

The search feature will also get more powerful later this year, when Facebook intends to add the ability to search through the text of status updates as well as information posted to Facebook by some third-party applications, like hotel and restaurant review sites and the streaming music service Spotify.

Consumer brands are already scrambling to tune their pages for Graph Search, said Susan Etlinger, an industry analyst with the Altimeter Group.

For example, big hotel chains have already been trying to make sure every property has its own Facebook page. Those pages could be easily liked by customers and found in a future search by their friends.

“Down the line, when people are searching for a hotel, you want to show up as a hotel with a positive reputation,” Ms. Etlinger said. “The experience you have at a Marriott in Minneapolis may not correspond to your experience in Houston.”

Facebook’s partnership with Bing, Microsoft’s search engine for the broader Web, will also benefit from better Graph Search, since Bing users who choose to link that engine with their Facebook account can pull up results from their social network along with overall Web results.

“When I look at the potential to create a more unified experience, they are making a very smart play,” Ms. Etlinger said.

Bits Blog: Looking at Facebook’s Friend and Relationship Status Through Big Data

WolframAlpha A data visualization shows the clusters of friends on Facebook. Each color represents a different group.

Wolfram Alpha, a computational search engine, released a detailed report Wednesday about people’s friendships and relationship habits on Facebook.

The research is corralled from the details of more than one million people who have signed up for a free feature on the Wolfram Alpha Web site, Personal Analytics for Facebook, that uses complex algorithms to answer questions and generate reports about the social network.

Wolfram Alpha A detailed look at how people meet friends on Facebook.

The research found that the median user has 342 friends on Facebook. This has continued to grow rapidly in recent years. But that number does not include everyone on the service, as “there are significantly more people who have almost no Facebook friends.”

The differentiating factor between people who are ultra popular on the site, and those who are Facebook loners, seems to come down to age.

“After a rapid rise, the number of friends peaks for people in their late teenage years, and then declines thereafter,” wrote Stephen Wolfram, a scientist and entrepreneur. “Why is this? I suspect it’s partly a reflection of people’s intrinsic behavior, and partly a reflection of the fact that Facebook hasn’t yet been around very long.”

The report also showed the relationship status of people across Facebook. People begin to change their relationship status to “in a relationship” in their early 20s, and then at around 27 begin to tag themselves as “engaged.” The next step, of course, is letting the world know they are married. The marriage relationships status continues to grow slowly for people in the late 20s all the way to age 60.

Wolfram Alpha A chart shows the relationship status of people across Facebook.

One curious addition to the relationship aspects of the research found that with age, “the fraction of people who report themselves as single continues to increase for women, while decreasing for men.”

A number of teenagers tend to muddy the statistics slightly by tagging themselves as “married” at a very young age. This is often a result of a strange Facebook hack that teenagers use to note that they are best friends with someone.

Mr. Wolfram compared the data from his research to the United States census data, and found that the two were almost identical, with Facebook users and the real world marrying in their mid-20s.

Using the Facebook data, researchers were also able to determine that although Facebook’s users now total 1 billion, the majority of people on the service are young.

The research also highlights other relationship information — including how people tend to meet and tag friends into grouped clusters around school, work or personal settings, and how the geographic location of friends changes for 18-year-olds as they begin to leave their hometown and head off to college.

This post has been revised to reflect the following correction:

Correction: April 26, 2013

An earlier version of this post misstated the number of Facebook friends among people who have signed up for Wolfram|Alpha's Personal Analytics for Facebook. The median user of the service has 342 Facebook friends; that is not the average number of friends for users of the service.

Tool Kit: Facebook’s Graph Search Makes Use of Friends and Likes

In January, Facebook began testing its new search tool, an enhanced version of the search box at the top of the site. The tool, which Facebook calls Graph Search, gets its name from “social graph,” a technical term for the giant network of connections among friends, friends of friends and so on. The social graph includes not just members’ names, but also the pages they have liked and the places where they have checked in.

Graph Search lets a user concoct short phrases, instead of stand-alone search keywords, to search Facebook; for example, “books my friends like.”

The tool does have limitations; if you’re looking for the nearest sushi restaurant in a big city, or trying to browse the complete works of the author Susan Orlean, searching Facebook is not the way to do it. In many cases, though, Graph Search lets you take advantage of the clicking and typing your Facebook friends, and their friends, have already done.

You can start a Facebook search by going to facebook.com/about/graphsearch in a desktop or laptop browser, and clicking the big button at the very bottom of the page to replace the search box at the top of Facebook with the enhanced Graph Search box. Facebook has not made the tool available on mobile apps yet, but says it will do so later this year.

Once the tool is installed, try typing a description of what you want into the search box, preferably using the term “friend” or “like.” Pages will pop up, as well as suggestions for searches based on what you have typed so far, using conversational language. This differs from the keyword-oriented style of Google, in which a user tries to think of words associated with what is being sought. Graph Search looks at Facebook’s organized data — names, likes, friends, locations, photo tags and so on — but not status updates or comments.

FIND A BOOK One of the most obvious graph searches is “books my friends like.” That will display the Facebook pages created for specific books on which friends of yours have clicked the Like button. Moreover, Facebook will show you which specific friends of yours liked each book, so you know who suggested which one.

You may have to scroll down a page or two to find a book you have not heard of before, or to dodge the collective bad taste of the social graph. (My own friends are too fond of books about social networking.) One way around this is to search for “books liked by people who like what I like.” This both broadens the search beyond your friends, and narrows it to those who have clicked Facebook’s Like button on the same pages as you.

Some authors, like Ms. Orlean, are also active Facebook users who click the Like button on book pages. That means you can search for “books liked by Susan Orlean” to see more than a dozen reading suggestions from the author of “The Orchid Thief.”

FIND A RESTAURANT Facebook cannot match Yelp’s extensive listings, reviews and block-by-block location targeting for finding a nearby restaurant. But while Yelp has a Facebook-like friend network, chances are you have not built up a network of your own there. Instead, you have built up a much larger network of Facebook friends, many of whom have been clicking the Like button on restaurant pages.

With Facebook search, you can look for “restaurants my friends like in Boston” or “nearby sushi restaurants my friends like.” As with books, Facebook will tell you which friends like which restaurant, so you know whose advice you are getting.

Keep in mind that Facebook’s idea of “nearby,” unlike that of a phone app, is not GPS-targeted. It can mean anywhere within city limits, even if it’s 45 minutes away. Facebook search works best for advance scouting of new restaurants worth traveling to, like “Japanese restaurants near New York, New York, liked by people who live in Japan,” or “restaurants in San Francisco, California, liked by people who like what I like.” In New York City, you can specify individual neighborhoods like “Park Slope, Brooklyn, New York.”

Facebook’s Redesign Hopes to Keep Users Engaged

Company executives have broadly said they want to make the News Feed, the first page every user sees upon logging in, more relevant.

In an earnings call with Wall Street analysts in January, the company’s founder and chief executive, Mark Zuckerberg, offered some hints of what a reimagined News Feed might look like: bigger photos, more videos and “more engaging ads.”

“Advertisers want really rich things like big pictures or videos, and we haven’t provided those things historically,” Mr. Zuckerberg said at the time.

Facebook declined to comment on the redesign, which is scheduled to be announced at its headquarters in Menlo Park, Calif. But the adjustments will reflect the tricky balance Facebook faces now that it is a public company: to keep drawing users to the site while not alienating them with more finely targeted advertisements, which is Facebook’s chief source of revenue.

The pressures are acute, given Facebook’s still anemic performance on Wall Street. It came out of the box last May with an extraordinarily high valuation of $38 a share, which slumped to half last fall, and has remained for the most part under $30.

“They have to walk a fine line between the user’s needs and advertiser’s needs,” said Karsten Weide, an analyst with IDC. The user, he went on, could use “better, more intelligent filtering,” while the advertiser needs “smarter, more flexible advertising formats.”

Facebook’s challenge is all the more important considering some warning signs of boredom.

Earlier this year came worrying news that 61 percent of users had taken a sabbatical from the social network, sometimes for months at a time; boredom was one of the reasons cited in the survey by the Pew Research Center. Even worse, 20 percent had deactivated their account entirely.

Advertisers have for years wanted to find new ways to show targeted ads to Facebook users, based on the vast data that the social network has about them. But Facebook has at times run into problems with new advertising products.

For example, last year, just before it filed for its public offering, it began to show advertisements in the News Feed, largely in the form of the controversial Sponsored Stories, where one user’s “like” for a brand was deployed to market that brand to a user’s Facebook “friends.”

Last fall, again in an effort to drum up new revenue, Facebook offered brands and individual users a way to pay Facebook to promote a particular post on the News Feed. Those who did not pay could expect an average post to reach about a third of their Facebook friends, according to the company’s own analysis. That immediately drew criticism, including from Mark Cuban, a technology investor and owner of the Mavericks basketball team, who wrote in an angry post on his blog (http://blogmaverick.com/) last fall that Facebook had made it too expensive for a brand like the Mavericks to reach its fans.

This week, responding to fresh criticism, Facebook said it did not “artificially suppress” content to feature paid posts.

The social networking giant has tweaked its News Feed over the years. Since 2009, Facebook has filtered what every user sees on the News Feed, based on the wisdom of its proprietary algorithm, called Edge Rank, which determines which posts a particular user is likely to find most interesting.

In 2010, it allowed users to chronologically filter the contents of the scrolling feed. The next year, it introduced a separate right-hand-side ticker — Twitter-esque, some said — of everything that every “friend” and brand page had posted.

At the heart of Facebook’s business is to hold the attention of its one billion users worldwide. That means keeping them entertained and on the site as frequently as possible.

It seems to be losing this battle somewhat with its youngest users. Teenagers are increasingly turning to other services, including Instagram, which Facebook now owns, so much so that David A. Ebersman, the company’s chief financial officer, said last week in a conference sponsored by Morgan Stanley that Facebook considered the photo-sharing site a competitor.

Instagram is not its only worry. Americans are increasingly turning to Pinterest to share shopping desires with their friends; Tumblr is a popular forum for self-expression, and Twitter continues to grow as a platform for news and entertainment.

Many people may no longer know all their “friends” on Facebook, which makes it difficult for the company to stuff the News Feed with posts that users will find relevant. Then there are ads.

“The bigger opportunity for Facebook is in cracking the relevance nut,” said Travis Katz, founder of an online travel service, Gogobot, that is integrated with Facebook.

“The noise-to-signal ratio in the feed has increased dramatically,” he added, “to the point where I often miss stories that were important to me.”

At the Morgan Stanley conference, Mr. Ebersman said the company’s filtering algorithms get “smarter” the more a Facebook user clicks on what is displayed on the News Feed.

“So of all the information we are able to show you on Facebook, we are trying algorithmically to pick out which pieces of content to put at the top of your News Feed because we think you will find them most engaging.”

Bits Blog: Facebook's Other Big Disruption

Facebook A computer motherboard called Grouphug allows different manufacturers’ chips to be interchanged without altering other parts of the machine.

Facebook just made a potentially game-changing announcement. It got less fanfare than Tuesday’s announcement that it is going into the social search business, but this other announcement may have bigger long-term implications for the technology industry.

Put simply, some of the world’s biggest computing systems just got a little cheaper, and a lot easier to configure. As a consequence, the companies that supply the hardware to these systems may have to scramble to remain as profitable. The reason is a Facebook-led open source project.

In 2011 Facebook began the Open Compute Project, an effort among technology companies to use open-source computer hardware. Tech companies similarly shared intellectual property with Linux software, which lowered costs and spurred innovation. Facebook’s project has attracted many significant participants, including Goldman Sachs, Arista Networks, Rackspace, Hewlett-Packard and Dell.

At a user summit on Wednesday Intel, another key member of the Open Compute Project, announced it would release to the group a silicon-based optical system that enables the data and computing elements in a rack of computer servers to communicate at 100 gigabits a second. That is significantly faster than conventional wire-based methods, and uses about half the power.

More important, it means that elements of memory and processing that now must be fixed closely together can be separated within a rack, and used as needed for different kinds of tasks. There is a lot of waste in data centers today simply because, when there is an upgrade in servers, lots of other associated data-processing hardware has to be changed, too.

There were other announcements, like a computer motherboard called Grouphug that allows different manufacturers’ chips to be interchanged without altering other parts of the machine. Before, they were custom made. Put together, such innovations potentially lower the cost and complexity of running big and small data centers to an extent that works for a lot of companies.

“Who wouldn’t want a cheaper, more efficient server?” said Frank Frankovsky, vice president of hardware design at Facebook, and the chairman of Open Compute. “The problem we’re solving is much larger than Facebook’s own challenges. There is a massive amount of data in the world that people expect to have processed quickly.”

To be sure, it’s in Facebook’s interest to attack expensive hardware. The company makes money from a service that requires hundreds of thousands of computer servers distributed in big centers around the world. Google and Amazon.com, which are not members of the project, maintain proprietary systems which they apparently felt gave them a competitive edge.

For Facebook, the difference seems to be more in the software. To the extent hardware costs drop, that’s great for them. Mr. Frankovsky argued that, while “this puts challenges on the incumbents” in hardware, “it also helps them. They have a finite number of engineering resources, and this way they hear from a community about whether there is an interest for a product.” Intel may hope to benefit from its open-source release, since it could see an overall rise in demand for its chips with the move toward cheaper computing.

The real test is whether Facebook can increase the number of potential buyers for Open Compute equipment. “The question is, can they extend this beyond a few Web businesses like Facebook and Rackspace, or a few financial exercises at Goldman, and bring this to industries like oil or aerospace?” said Matt Eastwood, an analyst with IDC, a technology research firm. “That will take it from 20 or 30 companies to hundreds of companies.”

The issue isn’t so much a technical one, he argues, as it is one of getting corporate information technology professionals interested in radical design changes. Mr. Frankovsky is aware of the problem. Recently he and his colleagues led a seminar in Texas for BP, Shell and other oil giants on how they could use Open Compute hardware in their data centers.

This will not change things dramatically this year, and possibly even next, but over the long haul it could remake a lot of businesses. Linux, remember, was around for several years as a minor player, but eventually undid Sun Microsystems and others.

Tool Kit: Facebook’s Latest Mobile Interface Expands Features

For the 600 million or so people who use their smartphones to stay on top of Facebook friends, recent weeks have been especially anxiety-producing. Recognizing some time ago that for many mobile users their Facebook phone app is their primary or only way of access, the company unveiled a barrage of new features that bring the mobile apps in line with the desktop browser version of Facebook.

Facebook created new versions of its official apps for Android and Apple phones and revamped its mobile-optimized Web site, m.facebook.com, which works for most other smartphones. Facebook says the mobile site actually has more users than the Android and Apple apps combined.

Some new features are easy to spot. Friends’ posts now include a Share option so you can repost their updates, pictures and links to your own timeline. But other features are more subtle, and take some poking around to figure out. I’m here to help.

The most significant change to Facebook’s mobile apps is that the News Feed, the real-time stream of updates from your Facebook friends, now provides the same sorting options as the desktop version: Top Stories and Most Recent. If you go a while without logging in, the app will set the sorting to Top Stories, which floats the updates from the friends with whom you interact the most to the top of the feed. If you’d rather see posts sorted with the newest always on top, tap the gear icon next to News Feed on the app’s main left-hand menu. (It can take a little practice to tap the gear rather than another control.) A menu will pop up that lets you choose your sorting preference.

Your photos now have a Make Profile Picture option, so you don’t need to go back to a full-size computer to turn a photo taken on your phone into your identifying image. With an iPhone, press and hold the picture to bring up the command; in Android phones, it’s an option in the overflow menu.

Facebook has also built its chat function into the mobile apps. Rather than the e-mail-like Message utility, Chat is designed for conversations in which both parties tap back and forth at the same time. To start a chat session, tap the human-silhouette icon in the upper right corner of the app. That will bring up a list of your friends who are available right now to start a chat session, either on their phones (indicated by a phone icon) or on their desktops (indicated by a green dot). There’s a Favorites list you can edit to list only the friends you message most, so you don’t have to pore through your entire list of available friends to find them every time.

Do you upload lots of photos to Facebook from your smartphone? You have two new options. First, you can now select more than one photo by tapping, to upload them together. You can also configure the app to automatically upload every image you shoot to a private album from which you can later share them with a couple of taps. To turn on this feature, called Photo Sync, go to your timeline and tap your Photos icon.

At the bottom right, look for the Synced button. Tap this, and the app will walk you through configuration of Photo Sync. Once you’ve enabled it, tapping Synced will display those photos that have been auto-uploaded from your phone to your account. You can choose at your leisure which ones to share, and they will be posted to your Facebook timeline instantly, rather than requiring you to wait through the upload process for each one separately as you go.

There are several new features for mobile status updates, too. You can tag friends in a post, just as on the desktop version of Facebook. Begin typing a friend’s name as it appears on a Facebook account, and the app will produce a list of friends’ names that match what you’re writing. Select the name, and Facebook will insert a blue link to the friend’s own page and also alert the subject.

Bits Blog: Test Run: Facebook's Poke App Is a Head-Scratcher

A photo of my friend Peter’s dog pops up on my phone for three seconds, then disappears. I respond with a picture of an enormous pile of nachos I’m working on at a Brooklyn bar.

Later in the night, I send my colleague Jenna a video of my cat kneading her paws in a plastic bag. She replies with a video of her family’s puppy prancing around, which vanishes after five seconds.

I get some messages from other friends that promptly disappear as well. Most of them say something along the lines of, “What is the point of this?” or “This is so weird.”

Indeed, it’s hard to grasp what the point of the Facebook Poke app really is. Poke, which came out last week, is a clone of Snapchat, an app popular among teenagers. Many have labeled Snapchat a “sexting” app — a messaging platform ideally suited for people who want to send short-lived photos and videos of you-know-what to get each other feeling lusty. The files self-destruct in a few seconds, ideally relieving you of any shame or consequence, unless, of course, the recipient snaps a screen shot. (Both Poke and Snapchat alert you if a screen shot has been taken.)

It’s a bit of a head-scratcher for adults, like me and my Facebook friends, who aren’t inclined to sext with one another. We’re more used to uploading photos of pets, food, babies and concerts, which aren’t nearly as provocative.

The most interesting aspect of Poke is that you can send photos and videos only of what you’re doing at that moment; you cannot send people a nice photo saved in your library from your trip to Spain a month ago. In this way, it gives your friends a glimpse into the moments of your life as you’re experiencing them. You can’t use any filters, or even flash, to distort these moments.

I can sort of dig that — living in a moment with my friends. But chances are, if I’m experiencing something that feels like a meaningful moment, I’m not going to be looking at it through a smartphone.

The Poke app doesn’t seem to be catching on with my other nonsexting friends, either; out of my 500 friends on Facebook, only 31 have installed it, and all of them work in the tech industry. Apparently not many people want to get a quick peek at my cat sitting on the couch.

Facebook’s Revenue Rises 32 Percent to $1.26 Billion

Facebook said on Tuesday that it now gets 14 percent of its advertising revenue from mobile ads, helping to reassure investors that the social network is beginning to figure out how to earn money off smartphone and tablet users.

Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.

"This certainly dispels the most bearish view, that Facebook couldn't monetize people on phones or tablets," said Colin Sebastian, an analyst with Robert Baird & Co.

"In about a six-month period they've actually started to generate decent revenues form their mobile applications," Sebastian added, though he said Facebook still needs to show that its mobile ads can command the same rates as its traditional ads and that they can deliver results for marketers.

Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.

The mobile ads helped reignite Facebook's overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook's long-term prospects.

Advertising revenue increased 36 percent to $1.09 billion, up from 28 percent growth in the second quarter. But revenue from its payments and other businesses increased just 13 percent to $176 million.

Mark Zuckerberg, the 28-year-old chief executive who created Facebook in his Harvard dorm room, said mobile was the "most misunderstood aspect" of the company and took issue with the "myth" that Facebook could not earn money on mobile.

"Over the long run we're going to see more monetization per time spent on mobile than on desktop," Zuckerberg said on a conference call with analysts on Tuesday.

The company's shares leapt nearly 13 percent to $21.97 in after-hours trading on Tuesday.

Facebook said it had crossed the 1 billion threshold for monthly active users by September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.

The shift to mobile has challenged many of the Web industry's top companies. Google Inc is the No.1 provider of smartphone software with its Android operating system. But the company missed Wall Street's revenue targets in the third quarter, with some analysts blaming the shortfall on its increasing reliance on lower-priced mobile ads.

Social game maker Zynga Inc, which announced layoffs of 5 percent of its staff on Tuesday, has suffered as it struggles to translate its hit games to mobile devices and as the use of its games on Facebook's service declines.

NOT PLEASED WITH GAMING

Zynga's woes were visible in Facebook's results, with Facebook's payments revenue from the maker of Farmville down 20 percent year on year.

Zuckerberg said he was not pleased with revenue from gaming, but said that beyond Zynga - which accounts for 7 percent of Facebook's total revenue - the situation was brighter.

"The interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year, since payments has been adopted," he said.

Zuckerberg also said Instagram, the photo-sharing app that Facebook acquired for roughly $750 million this year, now has 100 million users, up from 27 million when Facebook bought the company.

Facebook posted a net loss of $59 million or 2 cents a share in the three months ended September 30 after booking a big provision for income taxes. Excluding share-based compensation and income tax adjustments, it earned 12 cents a share, a penny higher than the average analyst expectation.

Facebook Finance Chief David Ebersman said the company would continue to invest aggressively during the fourth quarter, though the company did not provide a specific financial outlook, in keeping with its previous practice.

Ebersman said that the total number of ads that Facebook delivered in the third quarter increased 27 percent year-on-year and that the average price per ad increased 7 percent.

Facebook's third-quarter mobile revenue marked a big jump from the second quarter, when Facebook said that it was generating more than $1 million a day from a new class of ads that appear in users' newsfeeds. Facebook said that roughly half of that revenue was from mobile ads, suggesting that mobile advertising revenue totaled $45 million in the second quarter.

Stifel Nicolaus analyst Jordan Rohan said that Facebook's mobile ad revenue was impressive, but said that Facebook needs to proceed carefully so as not to damage the user experience by overloading its service with too many ads.

And he said that Facebook's desktop PC advertising business appeared to have shrunk by about $40 million from the second quarter. Rohan said he would rather see the desktop ad business remain stable as the mobile ad business grows.

Facebook's third-quarter revenue of $1.26 billion was a hair above the average analyst expectation of $1.23 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Alexei Oreskovic; Editing by Phil Berlowitz and Mark Bendeich)

Bits Blog: Facebook's 5% Solution in Data Centers

Alan Brandt/Agence France-Presse — Getty Images Facebook’s data center in Prineville, Ore.

Forget the way we live and share on Facebook. The biggest innovation at the social network may be in back-end plumbing and innovative pricing. It is starting to affect the rest of the tech industry.

Behind the cat photos and Oscar opinions of one billion humans is Facebook’s burgeoning network of data centers. As complex as managing people’s personal data and sending them ads is, the company tries to buy from a relatively small number of suppliers, whom it keeps on a short leash.

“In computing at this scale, the data center is a factory floor,” says Frank Frankovsky, vice president of hardware design and supply chain at Facebook. “We try to keep things simple.”

Equipping the data factory works like this: Mr. Frankovsky and his team of about 25 people design five types of computers to run most of Facebook. These are Web page servers, database computers, data storage systems, news feed servers and something called memcache servers, which speed overall performance. They then figure out what it costs to build each kind of machine, and buy from a supplier, known in the industry as an O.E.M., or original equipment manufacturer, if that maker can equal or better Facebook’s performance, at a price within 5 percent of what Facebook figures is its own cost.

“When we first said we’d build our own machines three years ago, the O.E.M.’s didn’t believe it,” Mr. Frankovsky says. In the last release of Intel’s mass-market semiconductor for servers, he says, “we were internally ready three months before everyone else.”

The speed with which Facebook made the new computers, he said, was a result more of the incumbent manufacturers’ older design, manufacturing and sales processes than anything novel that Facebook did.

The Facebook purchasing model has been disruptive to many traditional suppliers, like Dell and Hewlett-Packard. Initially. at least, it seems to have helped ultra-cheap Asian manufacturers like Quanta Computer. Quanta, which makes the laptops sold by Apple, H.P. and others, began selling Facebook and others shrink-wrapped racks of servers instead of individual boxes. It now now supplies 80 percent of Facebook’s Web servers, Mr. Frankovsky says.

H.P. has responded by taking a more active role in the Open Compute Project, an open source project started by Facebook to build big data centers that are more energy efficient. A Web server from H.P., code-named “Coyote,” is now being tested at Facebook. Its “Moonshot” server, built for big data centers with the type of chips usually in cellphones, should also be a candidate when it comes out later this year.

While H.P. is selling substantially fewer computers to Facebook than it used to, Mr. Frankovsky credits it for reacting to a trend. “This industry is shifting from supplying lots of small and medium-sized businesses with lots of different computer requirements, towards clouds,” he says. By selling new products to Facebook with little profit, he says, “they get low margins, but they understand what they could design to sell in the long term.”

It works out nicely for Facebook that way, too.

As painful and testing as this customer-led price demand may be, at least some suppliers say it is a healthy system. “The burden falls on the tech guys to keep their product from becoming a commodity,” says David Yen, senior vice president of the data center technology group at Cisco Systems. “Facebook is pushing new standards that force companies to innovate.”

In addition to Mr. Frankovsky, the Open Compute Project’s board includes Andy Bechtolshiem, a founder of the innovative server maker Arista Networks; Jason Waxman, the head of high-density computing at Intel; and representatives from Rackspace Hosting and Goldman Sachs, which consumes a lot of computing power.

What is missing from the group, it seems, is much of a presence from Amazon Web Services or anything at all from Google. Google, which builds its own machines inside perhaps the biggest data centers of all, has played alone, to a point of not patenting its inventions for fear of disclosing its methods and giving up secrets around power consumption and data transfer speed.

Media Decoder Blog: Book by Facebook's Sheryl Sandberg Will Be Published in March

Knopf has set a publication date of March 2013 for a new book by Sheryl Sandberg, the chief operating officer of Facebook, that was written “to encourage women to aspire to and pursue leadership roles,” the publisher said on Thursday. “Lean In: Women, Work, and the Will to Lead” reflects on Ms. Sandberg’s own personal and professional experiences and discusses the latest research on equality in the workplace. Knopf is planning to print 400,000 copies in hardcover.

In a telephone interview, Ms. Sandberg said that the book grew out of a TED talk that she gave two years ago; a video of the talk has been viewed millions of times online and has prompted a flood of letters to Ms. Sandberg on gender issues in the workplace.

“Real equality means that women can do anything,” she said on Thursday. “Real equality means that men have to be more fully engaged at home. The book isn’t just written for women, it’s written for men.” Ms. Sandberg first discussed the book in August.

Germany Reopens Investigation of Facebook’s Photo Archiving

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News Analysis: Facebook’s Big Problem: Investors Losing Faith

Mario Tama/Getty ImagesFacebook‘s stock price fell on Thursday after some 271 million shares owned by early investors were free to be sold as a lockup period ended.

Want to better understand the crazy world of technology stocks? That requires having a grasp of something that can best be described as the curse of the ordinary.

That curse could mean that Facebook, which is already down by nearly 50 percent from its offering price to $19.05 on Friday, could drop even further.

It’s all about valuations.

Most efforts to judge the right stock market value for a company rely on profit forecasts. But earnings at young technology companies are harder to predict than at businesses using traditional approaches to generate earnings in other industries.

In times of optimism, that knowledge dearth can actually work to the advantage of technology companies. Executives fill that emptiness with promises of paradigm-breaking ways of doing business, prompting Wall Street analysts to project amazing profits. Investors get excited and flock to their stock debuts. In short, it’s all about being seen as extraordinary.

That magic allowed Facebook to go public at a stock price that was an astronomical 100 times its earnings per share. Back in May, investors seemingly had little trouble believing that Facebook could entwine advertising into all interactions on its site and generate extraordinary revenue.

Indeed, each of the companies that have gone public in recent months has needed one main magical story. For Groupon, it was that the company had found a revolutionary marketing tool that was perfect for small businesses. The untapped market was theoretically huge.

But the nightmare begins when investors stop believing in that central story. Earnings don’t have to be terrible, and they haven’t been at the hardest hit firms — Facebook, Groupon and Zynga, the online game company. The earnings just have to contain a few clues that the dream won’t be achieved.

Then, the transition from extraordinary to ordinary is brutal.

Groupon is down 75 percent from its initial public offering. The market now values it as if it were any old marketing company; its shares are trading at 12 times the earnings that analysts are projecting for 2013, according to data from Thomson Reuters.

This is a critical time for Facebook.

The faith level in the company is declining. Right now, Facebook is trading at 31 times the earnings that analysts are expecting for 2013. That’s not too expensive, but it’s far above Google’s 2013 price-to-earnings ratio of 14 times.

One reason investors have fled the stock is that Facebook’s second-quarter earnings showed few signs that it was close to achieving meteoric growth. “There have been almost no positive signals at Facebook in the past six months,” said Anup Srivastava, an assistant professor at the Kellogg School of Management at Northwestern University. He thinks Facebook shares should be worth about $12, based on his estimates of the company’s future cash flows.

Such a fate may seem unthinkable, given how far the stock has already fallen. But Facebook may struggle to keep pace with Google, which, though it is a more mature Internet company, is still finding ways to grow fast. In its second quarter, the volume of “paid clicks” (the number of times users click on a link that generates revenue for Google) rose 42 percent from the year-earlier period. That’s the fastest growth since 2007, according to analysts at Nomura. And despite its extraordinary growth, investors still give Google’s shares only an ordinary valuation.

But there’s still hope for Facebook.

Negativity can feed on itself in the stock market, and the over-optimism of the I.P.O. may simply have been replaced with rabid pessimism today. “As with most other young growth stocks, no one really knows Facebook’s value,” said Aswath Damodaran, a professor of finance at the New York University Stern School of Business. “That means people can overreact in both directions.”

There are ways to get back into investors’ good graces. One is for Facebook to be more convincing when explaining why it’s special.

Since its own I.P.O., LinkedIn has kept investors enthralled. The company trades at 79 times projected 2013 earnings, a clear sign that the market believes the company has created a revolutionary space for companies to recruit.

Then there’s Amazon.com, which is extraordinarily talented at projecting itself as extraordinary. Its shares trade at 100 times its projected 2013 earnings, even though it has reported what might look like disappointing earnings for several years. The dream is that Amazon is well on its way to dominating Internet commerce, and can look forward to prodigious profits.

Amazon.com also shows there’s a way to get investors believing again. Its shares plunged amid fears that it could go bankrupt soon after the dot-com boom of the late 1990s, but in the last 10 years it has regained extraordinary status.

Facebook could use some of that Amazon magic.

Facebook’s Slide Continues Despite the Market’s Hopes

It has been a tough week for Facebook. Last Thursday, the company’s shares declined 8.5 percent in regular trading, as investors reacted to the weak earnings report the day before of Zynga, the social gaming site that is a major Facebook partner. Then last Friday, the stock was down again, to slightly under $23 a share in after-hours trading, after Facebook’s own earnings report.

This week the stock declined steadily each day.

“In this market environment, investors have little appetite for speculative opportunities, and unfortunately for Facebook, the stock will remain in the penalty box until they can demonstrate improving growth trends,” said Colin Sebastian, an analyst with Robert W. Baird & Company.

“That said,” he added, “Facebook is a powerful platform with enormous potential to change display advertising.”

Facebook made its Wall Street debut in May at a spectacular $104 billion, or $38 a share. Its assets seemed obvious: nearly a billion users, rich data about their tastes and friends, and potentially a variety of ways to make money from them, principally through advertising.

But the stock fell from its offering price almost immediately and except for part of June, never gained much ground. At $20.88, it has nearly lost half its value.

Another reason for the stock slide could be that Facebook employees will be allowed to start selling shares this month, although the bulk of the shares will be unlocked in November, raising fear on Wall Street of a glut of shares on the market.

Facebook declined to comment.

Still, the company is making money, acquiring other companies and expanding its work force. Its second-quarter revenue was $1.18 billion, which exceeded the expectations of analysts. And Facebook gained users, reporting 955 million, up from 901 million in the previous quarter.

But advertising revenues have not grown as fast as Wall Street would have liked. In the second quarter, these revenues grew 32 percent. That was a slowdown from the previous quarter, when advertising grew by about 45 percent, and far slower than in 2011.

Part of the problem, analysts say, is that users are migrating to the mobile platform faster than anyone anticipated — more than half are using Facebook on their smartphones and tablets — and the company has only recently started offering advertisements on the mobile platform.

The market research firm eMarketer said Wednesday that companies were expected to spend $6 billion on mobile advertising this year, with the United States and China making up the two largest markets.

Mobile advertising poses a fundamental challenge for Facebook, because it must be careful not to crowd the small screen with too many endorsements that could alienate users. On the other hand, the mobile platform offers Facebook a new way to collect rich data, from the location of the users to the applications downloaded.

Facebook has been experimenting with all sorts of ways to increase its advertising.

Morningstar, in a report issued last Friday after the company reported its second-quarter results, commended Facebook for its potential to refine its ad targeting but flagged several risks, including stepped-up regulation on whether the company would be allowed to track its users across the Web in a bid to serve up relevant advertising.

Morningstar warned investors that shares would continue to slide for the “next several quarters.” It said, “We would expect further near-term disappointment and would encourage investors to consider an even wider margin of safety before making an investment.”

Facebook’s Slide Continues Despite the Market’s Hopes

It has been a tough week for Facebook. Last Thursday, the company’s shares declined 8.5 percent in regular trading, as investors reacted to the weak earnings report the day before of Zynga, the social gaming site that is a major Facebook partner. Then last Friday, the stock was down again, to slightly under $23 a share in after-hours trading, after Facebook’s own earnings report.

This week the stock declined steadily each day.

“In this market environment, investors have little appetite for speculative opportunities, and unfortunately for Facebook, the stock will remain in the penalty box until they can demonstrate improving growth trends,” said Colin Sebastian, an analyst with Robert W. Baird & Company.

“That said,” he added, “Facebook is a powerful platform with enormous potential to change display advertising.”

Facebook made its Wall Street debut in May at a spectacular $104 billion, or $38 a share. Its assets seemed obvious: nearly a billion users, rich data about their tastes and friends, and potentially a variety of ways to make money from them, principally through advertising.

But the stock fell from its offering price almost immediately and except for part of June, never gained much ground. At $20.88, it has nearly lost half its value.

Another reason for the stock slide could be that Facebook employees will be allowed to start selling shares this month, although the bulk of the shares will be unlocked in November, raising fear on Wall Street of a glut of shares on the market.

Facebook declined to comment.

Still, the company is making money, acquiring other companies and expanding its work force. Its second-quarter revenue was $1.18 billion, which exceeded the expectations of analysts. And Facebook gained users, reporting 955 million, up from 901 million in the previous quarter.

But advertising revenues have not grown as fast as Wall Street would have liked. In the second quarter, these revenues grew 32 percent. That was a slowdown from the previous quarter, when advertising grew by about 45 percent, and far slower than in 2011.

Part of the problem, analysts say, is that users are migrating to the mobile platform faster than anyone anticipated — more than half are using Facebook on their smartphones and tablets — and the company has only recently started offering advertisements on the mobile platform.

The market research firm eMarketer said Wednesday that companies were expected to spend $6 billion on mobile advertising this year, with the United States and China making up the two largest markets.

Mobile advertising poses a fundamental challenge for Facebook, because it must be careful not to crowd the small screen with too many endorsements that could alienate users. On the other hand, the mobile platform offers Facebook a new way to collect rich data, from the location of the users to the applications downloaded.

Facebook has been experimenting with all sorts of ways to increase its advertising.

Morningstar, in a report issued last Friday after the company reported its second-quarter results, commended Facebook for its potential to refine its ad targeting but flagged several risks, including stepped-up regulation on whether the company would be allowed to track its users across the Web in a bid to serve up relevant advertising.

Morningstar warned investors that shares would continue to slide for the “next several quarters.” It said, “We would expect further near-term disappointment and would encourage investors to consider an even wider margin of safety before making an investment.”