Networking company Cisco Systems is to buy the underlying technology assets of also-ran social networking site Tribe.net, according to a report in the New York Times. The paper says the announcement will be made this week.

As the New York Times points out, it’s a curious match. With 55,000 employees, Cisco makes networking equipment for large companies, while Tribe.net has eight employees, and has been outpaced by successful social networking sites like MySpace and Facebook.

Cisco recently also purchased social networking company, Five Across, and so the New York Times speculates that the acquisition of Tribe.net will give Cisco the technology to help corporate clients create services resembling MySpace or YouTube.

After the purchase of Five Across, the head of Cisco’s new Media Solutions Group said that his group would help media companies move their content online.

“Part of our job is to form a relationship with media companies and deliver technologies and services to them, so consumers can consume what they want online,” he said.

Cisco isn’t the only one betting that companies want to build their own social networks; Netscape co-founder Marc Andreessen has launched Ning, which allows anyone with too much time on their hands to create their own social network. Ning is free if you don’t mind Google text ads on your social network, but you can also can create your own ad-free, branded private label social networks from $20 a month.

Andreessen was quick to criticize the Cisco’s possible purchase of Tribe.net:

“The idea that Cisco is going to be a force in social networking is about as plausible as Ning being a force in optical switches,” he told the New York Times.

Web 2.0 guru Om Malik, also thinks that Cisco’s foray into social networking will be a disaster:

“This social software thing – it is too marginal, doesn’t make money and can’t make you cool. Stick to what you know best - plumbing hardware –sell tons of it, make money, and learn to live with the fact that you are rich and old school.”

Beyond the issue of whether Cisco can make a go of it selling social networks to corporate clients, there are two broad issues that Cisco and companies like Ning seem to be forgetting.

Social networking is a time consuming pastime; it takes time to set up and maintain a profile, and to interact with other users. There are just not enough hours in the day for a typical user to be a member of more than two or three social networks.

The other issue is that for a social network to offer a compelling experience there needs to be a critical mass of users. That’s why MySpace has pulled so far ahead of the competition. It’s very hard for anyone else to build this critical mass of users.

Given the time-consuming nature social networks, and the critical mass of users required to make a social network compelling, there is only room for a very small number of large social networking sites. Consequently, companies are going to find it extremely difficult to attract a meaningful number of people to their private label social networks.

While the folks at tribe.net are more than likely celebrating that they have found a way out of their mire, Cisco is going to find that its social networking strategy extremely tough going. All I can say is that this is a disaster in the making.

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Entry was posted on Sunday, March 4th, 2007 at 11:26 am under Internet, Technology, Web2.0.

Read more entries by John Pospisil.
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