The Future of Social Networks is the Future of the Internet

Implications: * Social networks are no fad
* Their importance are greatly underestimated outside the industry 
* This creates opportunity for savvy investors
* Yahoo taking a stake in MySpace is the first step towards it becoming a division of News Corp. * If not, everyone at Yahoo may work for Mark Zuckerberg someday

Analysis: Although it is tempting to dismiss social networks such as MySpace as the latest in a series of fads started by fickle teens in 1958 with the hula hoop, careful observers will see this is a mistake. Social networks are not like celebrities, social networks are like cell phones. As cell phones are poised to become the hardware platform of convergence for voice, email, portable music players, electronic personal assistants and cameras, so too are social networks poised to become the software platform of convergence for voice over IP, chat, search, blogging, and photosharing.

Social networks are popular because they the latest advance in adopting technology to function the way people do rather than forcing people to adopt to technology.

Thanks to social networks, when I need a new car, rather than starting with a search engine to determine which one to buy, I ask one or more people in my social network for recommendations and then use a search engine to narrow the choices. Industry observer need only note that Google receives more traffic from MySpace than from its own white screen to see the commercial advantages a social network posses.

Since this in not widely appreciated, the opportunities for investors are great. Yahoo is better off taking a 25% stake in MySpace than making a run at Facebook because all its services will eventually be offered under the fabric of a social network and when this happens the company will be far more valuable as part of NewsCorp than as a Mark Zuckerberg enterprise.