IBM doesn't seem to realize that there's no shame in failing to understand just how social networks might help or fail to help business. Nobody really seems to have a good grip on the situation. Everyone in the world knows social networking is very popular right now. But nobody has monetized social linkages the way Google and others have turned web searches into cash fountains. Quite a few social networking companies are getting huge attention, but it's mainly for their attention, not their results.

Even the smartest investors in the room, the big names on Wall Street, showed their hubris and ignorance during the Facebook IPO. They poured billions into Facebook, but they still can't say whether it has a valid business model. It might turn out that Facebook and its ilk will follow the course of MySpace, the first really popular social networking service, on a dramatic ride to oblivion.

A lot of investors are already quite nervous. Facebook had a pratfall of an IPO, coming out at a corporate valuation of $104 billion and quickly falling below $71 billion. (It has rebounded a bit to $82 billion as we go to press on Friday.)

If one wanted an example company to compare to Facebook, there's a very important one called MySpace. You might recall that this was really the first big social network. It was bought up by News Corp for more than $500 million. News Corp is a company that's not at the top of too many lists when it comes to making friends, but it ranks high at influencing people. Anyway, after wasting hundreds of millions of dollars, News Corp gave up and unloaded the property. Eventually it ended up in the hands of a company associated with pop entertainer Justin Timberlake, which reportedly bought the ailing outfit for about $35 million, peanuts compared to the huge amount of cash News Corp poured into the social sinker.

IBM hasn't made that kind of a mistake in social media, for which its shareholders should be grateful. But IBM is a real company, not a family firm that metastasized.

What News Corp and IBM missed might be Pinterest, which offers a mix of social networking and shopping. It has grown very popular and it looks like it will be easy to monetize, at least compared to Facebook. If Facebook start imitating Pinterest, that might be a boost for P and a sign of imminent demise for F. If IBM had to hitch its social networking wagon to one outfit right now, Pinterest, not Facebook, would make the most sense. But IBM doesn't look like it's ready to make any serious moves into social networking. It is nowhere near current, let alone at the leading edge of this fast-moving development.

Last year, IBM backed a report from IDC that purported to sketch out the social media, or at least the main social platform of interest to business. IDC's list missed most of the outfits that are now in the headlines for good reasons or bad. IBM might have been better off checking out the list on Wikipedia. The IDC list does not include Facebook, which is mainly personal but, as an advertising medium, even without a well-regarded business model, is still potentially of great importance to business. A billion users might be wrong, but they still have nearly two billion armpits waiting to buy deodorant.

No matter what IDC said in its report for IBM, LinkedIn probably leads the business side of social networking. But despite its technical prowess, and roster of reputedly smart backers, it is as vulnerable as any other creature of the Internet. In fact, LinkedIn was recently made famous by its loss to hackers of 6,500,000 users' passwords. Nobody really knows just how severe the consequences of this incident might be, but lots of people use the same passwords for multiple purposes and, to make matters worse, the LinkedIn login name of a LinkedIn user turns out to be his email address, a too-common type of user name. So right away the hacked accounts have a big problem. The problem could be bigger if it touched on financial institutions, but banks are generally smarter than LinkedIn and make their customers pick user names that are not their email addresses. Still, an awful lot of websites where users buy things probably have logins that match the ones on LinkedIn. And LinkedIn is not alone. Twitter, another hugely popular social service, has security headaches, too.

Somewhere behind LinkedIn when it comes to social networking for business there's an outfit called Yammer, which may soon be part of Microsoft. The story anticipating the acquisition pegged the price of Yammer at $1 billion. That is way more than the total size of the social networking outfits in IDC's list. (You can't count some of IDC's entries, like Cisco, that might have a toe in the water but are not companies whose main offering is social networking.) And there are others, more of them every day.

Still, one of the real challenges faced by social networking and by out-of-touch companies like IBM that think mobile is a sure thing mantra is the observation, recently expressed with his usual excitability by Jean-Louis Gassée, that the widely imagined mobile monetization opportunity is mostly bunk. Gassée may be a card-carrying curmudgeon, but he's been right about things at least as often as he's been wrong. And he's always unafraid to challenge orthodoxies. He is exactly the kind of gadfly IBM ought to have on its roster of advisers, or list of Facebook Friends, or band of Tweet Followers. Some kind of deal would be good for Gassée, too. It's about time he actually did some hard work. And we can't think of any job that's harder than getting Ginni Rometty in tune with the twenty-something disposable income crowd that makes social media investors believe there's a gold mine in it somewhere, somehow.

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