Is underdog LinkedIn poised to beat flashy Facebook

LinkedIn allows someone to connect with another user by getting introduced through a mutual connection, tying such a function into CRM software would be immensely valuable for salespeople, AMR Research's Yarmis says.

"If they could expose that data and provide context for sales people, that would be huge," he says.

Jeremiah Owyang, a senior analyst with Forrester Research, believes LinkedIn could get involved in the Enterprise 2.0 space - the market of software vendors who take Web 2.0 technologies such as blogs, wikis and social networks and makes them palatable for business use.

"Already, LinkedIn looks more like a corporate intranet homepage rather than a networking site for finding your next job," he says. "LinkedIn is ripe to make a play for the Enterprise 2.0 space by acquiring a community platform vendor, or developing features for the enterprise."

Despite the injection of capital LinkedIn has received, the service will walk a tightrope with users if it decides to explore these types of revenue streams. A user, for instance, might not be thrilled to learn that salespeople are digging around their resumes and looking to pitch them products through a mutual connection.

"There is a risk that users go 'whoa, that is not what I signed up for,'" Yarmis says. "There is a risk of backlash."

Facebook provided a cautionary tale with its Beacon Advertising fiasco, when it began broadcasting the buying activities of its users to their friends without seeking their permission. It caused the company to backpedal in the form of an apology from Zuckerberg. Facebook also offered users the ability to opt-out from social ads.

Though LinkedIn will pour more money into its platform, don't expect the company to become more Facebook-like in its look and feel, says Yarmis. Critics of LinkedIn have long contended that it would lose out in the social networking wars because its interface is nowhere near as social and engaging as Facebook. In actuality, the fact that LinkedIn isn't as sociable could be the reason its users like it.

Anecdotally, Yarmis says, LinkedIn's older, professional audience appreciates the site's sparse feel. They aren't social media insiders or cheerleaders drunk on the idea of a social revolution as facilitated by Facebook or Twitter (the microblogging service). They merely want to connect with business contacts and utilize its "question and answer" forum to solve their professional challenges. As a result, they likely have little desire to see that environment muddied by applications that offer you fake martinis or to view someone's vacation pictures.

"The fact that Linkedin doesn't let them do all that stuff and that it's very focused is part of the appeal," Yarmis says.

Even if LinkedIn doesn't become more like Facebook, analysts say LinkedIn should use the money to invest in making the platform agile and ready for changes, especially to integrate with other technologies and applications.

"LinkedIn needs to respond faster to the market needs, innovate, and not rest on their laurels of profitability," says Forrester's Owyang. "The economic downturn provides them with a window of opportunity, as long as they stay fast and flexible."