Okay, I never thought that I would say this, but I am actually on Ballmers side on this one.

It seems to me like most companies are missing the point of how these sites work. There is a lifecycle to all these, which goes like: -

The 'cool kids' find a site that offers services and features that they like and move to it.

General public follows the 'cool kids' and the site account holders grow exponentially.

The 'cool kids' friends also grow exponentially until they reach an unmanageable level.

The 'cool kids' are then crowded out. The site is not cool anymore so they move on to something newer and better.

The cycle continues.

We have seen this with the growth of myspace, following it's set up as a social network site for musicians. This then got too big and there was a move to Facebook, there will be a move from Facebook too, it is the natural cycle.

My advise? Value the site on what you estimate to be the value you can get out of it's users for a 3 year period max.

Simon, Brisbane, Australia

My firm bet is that the deal will happen at north of $10 billion, it will involve $500 million in cash and Microsoft will get a guarantee that Facebook won’t sell to Google and Microsoft will get the right to handle CPC ad sales when Facebook opens up their search box to returning more than just people/events/groups/apps. The big question in the deal is the degree to which Microsoft commits to grow facebook’s business users by weaving facebook sign-ups into their Microsoft Office install process.

The reason I can be so sure about this is because Steve also said that in 2 to 3 years 25% of Microsoft’s revenue would come from ads. To make this come true Steve needs a deal with Facebook. When it does happen, color Google green with envy.

Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC

Lee Lorenzen, Monterey, CA

Steve Ballmer is positioning for a cheaper offer, that's all.

David, Mountain View,

Share the same sentiments from Nicholas. The question right now is if Facebook will move into ubiquity (like MSN) or obscurity (like ICQ). ICQ boasted some 100 million users at one point, but with poor software updates, many people migrated to MSN.

I'm under the impression that MS is downplaying FB's popularity to give it a more favorable position (and price) in the current negotiations.

Colin, Richmond Hill,

Ballmer continues to demonstrate that he is a member of an exclusive set of outdated executives which are ignoring the sociological culture of the new Internet. Social communities like Facebook are brands that have evolved from their university origins to now serve a business need of it's user population. They grow and adapt as a brand. Content management systems like Joomla & Drupal already perform what Facebook does with just a few hours of tweaking. It's the culture that drives the technology, not the technology drives the culture. That continues to be Microsoft's challenge in the open information age. The tools will evolve regardless of commercial investment and this will continue to challenge traditional companies like Microsoft. Focus on applications Steve, not infrastructure such as the operating system. The community has spoken, Vista is a failure so maybe you just open source it. Community and brand loyalty might return if Microsoft would finally give back.

Christopher Justice, Austin, Texas, USA

Hotmail and MSN Messenger are two examples of now pervasive entities that began as "faddish things appealing to younger people." So there.

nicholas, London, Canada

Every time Ballmer speaks, it sinks Microsoft one inch deeper into irrelevance and oblivion.

Not that I would totally hate them freeing some air for others to breathe !

Rachel, Gotham,