Why Facebook needs a hit

As it prepares to host its annual conference Thursday, Facebook is in a funk.

No, not the business. CEO Mark Zuckerberg announced that his social network had surpassed 750 million users in July (although there’s no telling how many of those are pets), and the company is on track to collect more than $4 billion in sales this year, mostly from advertising.

Call it a product funk. Facebook hasn’t had a big hit in eons.

In August 2010, Facebook introduced Places, which let you check in to locations on your phone, sort of like startup Foursquare. It lasted about a year. Foursquare, meanwhile, just passed 1 billion check-ins.

In October, Facebook announced the next version of Facebook Messages. The big idea was that users could get a Facebook.com e-mail address and then use their Facebook handle for all kinds of communications, including e-mail and text messaging.

Have you ever seen a single e-mail from a Facebook.com address?

This April, Facebook began testing Deals, a daily-discounts service like Groupon or LivingSocial. It lasted about four months before being canceled.

Every company has an occasional dud, but Facebook’s existing products are starting to suffer as well.

Its iPhone app was exciting when it was brand new, but it hasn’t gotten a major update in more than a year. And Facebook still doesn’t have an iPad app.

In the past few weeks, Facebook has rolled out a ton of new features that give users more control over what they share with whom. That seems like a good idea in theory, but it made Facebook a lot more complicated than it used to be. And the changes to users’ pages that Facebook began rolling out this week have prompted a flood of complaints.

We used to know how Facebook worked: Send a friend request and the person accepted or rejected it. Binary. Simple.

Now you can subscribe to people who aren’t your friends – like Twitter – and divide your friends into close friends, acquaintances and any other category you can think of.

The end result: you can now spend more time managing your social network than actually being social on it. Facebook seemingly never asked itself, “who has time for this?”

This product funk may actually be a byproduct of its success.

Mark Zuckerberg once said he didn’t care if he made users angry; it was better to innovate than to get stale. But since then, Facebook has grown five times bigger. Zuckerberg has dined with President Obama and had a hit movie made about his life. Google, once the king of the Internet, is so scared of Facebook that it launched a competitor called Google+.

In other words, Facebook is no longer the challenger. It’s maybe the biggest kid on the block, and it’s still growing. So maybe it has gotten a little more cautious, a little more afraid to take big risks and make big bets.

On Thursday, Facebook holds its annual developer conference, F8. Execs are calling it the biggest F8 in history. The company is expected to launch features that let users listen and share music, video and TV shows, and read and share stories from news sites without ever leaving Facebook. There may also be a new photos app for the iPhone and maybe even that elusive iPad app.

The company has a lot riding on these announcements. Insiders at Facebook once said it wanted to be the first trillion-dollar company. To get there, it’s going to have to start wowing users again.