Ping: Yet Another Music Social Net or Clever Verticle Integration First Step?

Social Network segment has become a bit more crowded yesterday. Apple, the biggest-market-capped technology company, has just entered the track to play in crowded Social Network market. Their ticket to the race is called Ping (not to be confused with ICMP Ping for geeks out there).

First impressions of Ping have been trickling in from major review sites such as sfgate.com and wired UK, and they have been mixed so far. I think jury will be out for a long time before we know whether Ping will grow to be a real contender in Social Network segment.

What we do know today, however, is that Apple is serious about entering Social Network market. Apple clearly sees Facebook dominance in social media as threat and opportunity. Half of all iPhone usage coming from Facebook, Americans spending nearly quarter of their Internet surfing time on Social Networking sites, all signs are pointing to upward trends on social networking, and these trends are presenting growing hole in Apple's consumer market story.

It's interesting to note that Apple was in discussion with Facebook to integrate Ping with Facebook prior to launching Ping. In fact during Steve Job's demo yesterday, one of the screens was clearly showing the signs of Facebook integration. Steve himself said negotiation with Facebook broke down due to 'onerous terms' by Facebook. I would think Apple has greater goal than music. Think about vertical social networking site for TV and movies via iTune.

But Apple has a lot of work to do to realize that goal. First and foremost is building the user base. Social Network can only be as useful as size of user base. Granted that iTune's 160 million user base will be good launching pad for Ping, but it's not clear whether Apple understands the multiplyer affect of connecting users to other Social Network sites, especially with Facebook, the most dominant player today. Apple's challenge is to go after Social Network user base while keeping massive Facebook at arms length.