Thursday, May 31, 2012

The Facebook Phone?

Craig Mathais over at PCWorld is quick to poo poo the idea of a Facebook phone, "I've got two phones for you, an iPhone and a Facebook phone. Which are you going to choose? Case closed."  I'm sure there were those that said I have a Blackberry or and iPhone prior to January, 2007.  Those same critics probably said the same thing comparing Google Android to the iPhone, after all Apple was making and selling the hardware and Google just wants to give their operating system away for free, how can that possibly make them any money?

What I propose is that not only is a Facebook phone a good idea, but it likely to be a HUGE winner for the company who has been on the ropes since its bungled IPO earlier this month.

Its all about the operating system:

What separates the iPhone and Android from Microsoft and other companies' smart phones?  Quite simply, its the operating systems that sets them apart.  Both Apple and Google built their OSs on the Linux platform.  Facebook, as I am sure you are aware, is also built to run on servers utilizing that platform.  In fact, Facebook's engineers have actually rewritten massive portions of the OS, optimizing everything from the PHP interpreter that drives the Facebook site to the kernel and disk operations that give it real-time access to data.

The pioneering performance efforts Facebook has brought to the web they can and will bring to mobile devices.

Ok, its not all about the OS, Apps matter:

Ask any smartphone user and they will tell you that the reason they love their phone is not because it makes great calls or sends pretty emoticons in their text messages, they'll tell you its about the Apps.  Apps make the smartphone more than a phone.  They enable it to stream video, edit Office documents, play games with friends, and hundreds, if not thousands of other innovative ideas.

Again, we find Facebook has an advantage.  The first company to successfully demonstrate the concept of allowing third-party developers to have access to your platform to run their own software wasn't Apple, it wasn't Google, it was Facebook.  Today there are several companies like Zynga that have become household names because of the Facebook Apps they developed.  Who hasn't heard of Farmville or Mafia Wars?

Even Facebook's competitors are creating and promoting Facebook Apps. With the launch of a Facebook phone, built on the same APIs as their wildly popular social networking site, developers will be lining up to get access.

More than just a website, Facebook is a communications tool:

Facebook has always been more than just a social networking website.  For its creators, Facebook is and always has been a communications tool.  With additions like instant messaging, video conferencing, and traditional messaging Facebook has become the defacto Unified Communications tool for the web.

Facebook's messaging service acts much like email, allowing users to read and send messages when they feel like.  But unlike traditional email, Facebook inboxes aren't clogged with spam mail.  Facebook messages are also tightly integrated with their instant messaging so if a message is important users can respond instantly.

Facebook has a way to go to complete their unified communications goals, but they are well down the path and bringing the mobile phone to their package of communication tools can only enhance get them there quicker.

Advertising is not Facebook's only revenue stream:

Critics complain that Facebook only makes revenue from advertising and they have yet to figure out how to translate that advertising model to mobile devices, where the majority of people are now accessing the company's services.  The problem with this criticism is that its simply not accurate.  Facebook derives 12% of its revenue from Zynga Apps, not through advertising but through the 30% processing fee they charge on transactions for virtual goods.

Users of apps like Zynga buy and sell virtual goods within Facebook using Facebook bucks.  Every time a user buys Facebook bucks, Facebook gets a cut.  Every time they spend Facebook bucks, Facebook gets a cut.  To that point, Facebook is well positioned to launch an app market and their virtual currency will make it a seamless process for users to purchase apps and virtual goods both on their phone and on their home computers.

It won't stop at a Facebook phone:

It should go without mention that with the launch of a Facebook phone the company would not want to stop there.  It will be a natural progression towards a Facebook tablet and Facebook browsers for the Mac, PC, and Linux.  Facebook can go even farther.

Apple and Google have both made previous attempts at entering the television/set top box market.  Both failed miserably.  Facebook has something they don't, tight video integration within their existing service.  A Facebook TV/set top box would not only be capable of allowing users to post and chat about the shows they are watching, but it could allow them to instantly share clips with friends.

One of the biggest successes Facebook has is its news feed that allows people to share news stories, videos,  and quick updates about their lives with friends.  Integrating TV and the news feed is a natural evolution.  Users could be reminded in their feed when shows are about to begin, they could receive immediate access to DVR'd programming, not just on their TV, but on their phone and computer.

As an added benefit, you guessed it, it would provide more opportunity for Facebook to sell advertising by prepending ads to the front of clips and shows shared by its users.

What made Facebook a success:

What made Facebook a success is not that it was the first to the party.  Facebook didn't invent social networking, for years it trailed behind competitors like MySpace in the US and others internationally.  But what Mark Zuckerberg understood more than anyone else was how to embrace proven business models with his product.

When Apple originally launched Steve Jobs bet the farm on hardware, believing that is where the power of his company stood.  On the other hand, Bill Gates believed software was the real asset.  Microsoft quickly dominated the home and business computing markets because he understood developing a standardized platform for developers and helping those developers build software more easily, utilizing APIs and libraries that took real advantage of the operating system, would attract the best and brightest developers to their platform.  History has proven him right and Mark Zuckerberg followed by creating the Facebook API and the very idea of apps.

Another company Facebook's founders had to have watched is AOL.  What AOL did in the early 90's showed just how powerful a wall garden could be.  Even though AOL was having problems with busy signals, controversies in chat rooms, and other issues, they were still signing up customers left and right.  Quickly they became the largest ISP in the world with over 26 million users.  While AOL failed to successfully adapt to the emergence of broadband, they still survive today making millions of dollars in revenue each month.

Where AOL failed with its walled garden approach, Facebook is succeeding.  AOL wanted companies to buy into their garden, Facebook not only welcomes other companies, they actively seek them out and make it easier for them to bring their products and services to Facebook users.  Facebook's unified communication strategy also helps to keep their users on their site, only briefly jumping away to other websites to read an article or perform another quick task.  By staying innovative and providing tools users' can't live without, Facebook is keeping users sticky to their services.

From Apple and Google Facebook is learning the do's and don't's of mobile computing.  They will no doubt take these lessons and create one of the most innovative mobile devices on the market.  Their expertise with optimizing their platform will most likely produce a mobile device that out performs their competitors in every aspect.

By copying the success of tech giants and avoiding their mistakes Facebook has become a staple component of nearly every computer user.  They've also managed to do something only the best of tech companies have and that is to become a brand that is hated because its users can't live without it.

The Facebook phone could be the next innovation every Facebook user will love to hate but won't be able to keep from buying.

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