Read an interesting article in Economic Times of India yesterday on Facebook IPO.
Two interesting facts caught my attention:
1. The Headline itself was quite staggering - Wall Street Struggling to find Facebook's intrinsic value
2. Facebook has warned its investors in IPO prospectus that its business is facing challenges in mobile
2. Facebook has warned its investors in IPO prospectus that its business is facing challenges in mobile
There is a general perception that Facebook is not doing great in mobile.Wanted to really understand in detail the issues Facebook has been facing in the mobile space. Here is the deep dive:
1. Facebook's major revenue as of today comes from Advertising.
Direct Advertising that is supposed to be much more effective and cost efficient compared to search advertising. The advertising has been much more effective in Web/Desktop systems, as there is enough real estate in the screen to encourage the day-to-day social networking and the advertisement snippets side-by-side. The moment this paradigm comes to Mobile, there is a scarcity of screen space and either one of the aspects need to compromised (either social networking experience or advertisements). Apparantly, business users/marketers wouldn't want to compromise on advertisements. This leads to a challenging situation for Facebook to manage advertisements in mobile devices.
Direct Advertising that is supposed to be much more effective and cost efficient compared to search advertising. The advertising has been much more effective in Web/Desktop systems, as there is enough real estate in the screen to encourage the day-to-day social networking and the advertisement snippets side-by-side. The moment this paradigm comes to Mobile, there is a scarcity of screen space and either one of the aspects need to compromised (either social networking experience or advertisements). Apparantly, business users/marketers wouldn't want to compromise on advertisements. This leads to a challenging situation for Facebook to manage advertisements in mobile devices.
2. Unlike conventional Web/Desktop architectures, Mobile brings lots of choices in Technology/Architectural choices. Efforts to standardize the multiplicity will go in vain. On the other side, producing multiple versions of the same application for variety of platforms will lead to fragmentation of user experience. I have used Facebook app in my earlier HTC Wildfire and its HTC's own app called FriendStream. Similarly, there is one published by Microsoft for Windows Phone Facebook app.
One aspect of standardization could be use of HTML5 and allowing users to access Facebook via Phone's microbrowser environments. Unfortunately, HTML5 is not so mature and not widely supported in variety of devices as of today.
Facebook's app marketplace equivalent environment - App Center - could potentially have to compete with Android Marketplace or Apple's App Store from Developer ecosystem perspective. (not necessarily from consumers perspective)
Third and final technical option - using voice/sms mediums for reaching mobile users - require Facebook to form new relationships with Telecom Carriers. Facebook has been doing something innovative along with carriers in couple of countries, but not across the world. Again, here the challenge is to establish relationships with multitude of carriers worldwide and innovating consistently across the board.
3. Location based advertising. This has been discussed for quite sometime now.
However, there are caveats for this solution as well - Revealing a person's location information may threaten his privacy/safety. Second, Some of the startups have started to offer 'Virtual Checkin' Options as well - which means user can mention that he is in a specific place, without even physically being there. That brings a whole new set of opportunities/solutions. And Location specific 'push' for marketing messages/offers may drain your phone's battery as well, with the use of GPS.
However, there are caveats for this solution as well - Revealing a person's location information may threaten his privacy/safety. Second, Some of the startups have started to offer 'Virtual Checkin' Options as well - which means user can mention that he is in a specific place, without even physically being there. That brings a whole new set of opportunities/solutions. And Location specific 'push' for marketing messages/offers may drain your phone's battery as well, with the use of GPS.
My general reading in mobile space is that I am yet to come across a company that has 'Mobile First' Strategy. What I mean by 'Moble First' Strategy is not treat mobile as simply an extension of existing Web Sites, but reimagining the product/service exclusively for mobile channel.
Most of the companies just dilute their existing websites and make it accessible to mobile devices. I dont think that is going to be enough, considering the fact that such an approach would underutilize the mobile device's capabilities.
So, the companies need to 'rethink' fundamentally their product/service and monetization options. In this case, Am starting to think if Facebook's real value propositon of social networking would be still relevant in mobile space?. If yes, Would it have the same user experience as Web/Desktop?. Why can't it be fundamentally different?. Would mobile devices fundamentally change the way people network? I am thinking 'Yes. It would be radically different'.
As I read somewhere, Facebook has grownup and its now facing the market to demonstrate its real business value. It would be interesting to see how it overcomes the looming challenges in moble. Not to forget the fact that this phenomenon is not just applicable to Facebook alone. All the companies that had a successful story in Web would need to reimagine for Mobile.
Why? - Users are migrating from Desktops to Mobile devices to access the Internet. Is it a Post-PC era?. Not necessarily. Its primarily for web content consumption.
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