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Facebook Places and Location Based Services

August 18, 2010

Even before it has been unveiled, the pundits are saying that Facebook’s location-bases service (LBS) will kill Foursquare, Gowalla and other small startups.

LBS has so much potential, I doubt Facebook’s use of this technology will kill the smaller companies. There is just too much untapped opportunity for these smaller, more nimble companies.

What is more likely, is that Facebook will help introduce LBS to a much broader audience – current market penetration for LBS is estimated at less than 5%. I foresee consolidation, as opposed to death, for the smaller LBS services and one of the LBS leaders could eventually emerge as a giant, as Zynga did in social games. The founders of these companies are just too sharp to allow overnight extinction.

Postscript – Facebook introduced this evening at launch of Facebook Places, the following partners: Gowalla, Foursquare, Yelp and Booyah. So, the death predictions for LBS startups seem, at this time, greatly exaggerated.

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