Following a year of whirlwind growth, Facebook, has finally outpaced Orkut in Brazil, where the Google Inc. (GOOG) social network has had a stronghold for almost 7 years.
Orkut is a social network that Google launched in 2004. Internet usage was almost stagnant in Brazil until Orkut came in. The affinity for social media in that country made Orkut a huge success there.
But Orkut failed to live up to users’ expectations, giving Facebook a good chance to proliferate. Facebook’s applications and games, along with its ability to connect with people beyond Brazil lured users, dealing a huge blow to Orkut, and in turn, Google.
The value of a social networking company is directly related to its number of users. According to a comScore report, Facebook grew 192% from December 2010 to December 2011 in Brazil, with users rising to 36 million. On the other hand, Orkut’s user base only increased by 5% to 34 million users. The rise in the user growth rate clearly indicates the popularity and dominance that Facebook now enjoys in Brazil after dethroning Orkut.
Part of the reason behind Facebook's success in Brazil could also be Alexandre Hohagen, Google's former top executive in South America, currently based in Brazil. Hohagen was poached by Facebook early last year and he seems to have done the trick for the Zuckerberg-owned social network.
According to the Facebook data analyst, India is the third biggest Facebook market after the US and Indonesia and the growth rate of Indian users was 162.4%, second only to that of Brazil in 2011. The only competition to Facebook’s dominance over Indian social networks comes from Orkut and Google Plus.
Now that Facebook dominates Brazilian social networking, there are only six countries remaining––China, Japan, South Korea, Vietnam, Poland and Russia––where Facebook is not the premiere network. But given Facebook’s success in Brazil, we think that there is a fair chance that Facebook will capture the lead in at least one of these countries (and perhaps more) during 2012 to maintain its global dominance.
Currently, Google has a Zacks #3 Rank, implying a short-term Hold recommendation.
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