Nov, 03 2010

If you think Facebook’s announcements of Single Sign-On, Places API and Deals Platform were a disappointment, you and I disagree, and I’ll tell you why. Grab a few Red Bulls, blast some Ronald Jenkees, and turn off your phone – I can’t be interrupted and I have some explaining to do.

Three years ago, Google held a mobile press conference in which everyone hoped they would announce the gPhone. They didn’t… they announced a mobile operating system. Today, Facebook held a mobile conference in which everyone hoped they would announce the Facebook phone. They didn’t… they announced/extended their “Facebook Mobile Platform”.


Just as the implications of Android were much bigger than a potential gPhone, Facebook’s mobile platform strategy is bigger than any Facebook phone could be. Not to mention, the announcement’s similarities to Android’s own announcement draw some striking similarities:

  • Announcing Software vs. Hardware (and why it wins)
  • Consumer Disappointment (and why it’s wrong)
  • Empowering 3rd Parties (and creating leverage)
  • Becoming A Threat (but overwhelmed by opportunity)
  • Creating Momentum (and an Insurmountable Competitive Advantage)

Half of you already closed this article – too long. Half of the remaining half will close this article now – too wordy. But now that we’re saturated with the intellects and strategic thinkers in the crowd, I think it’s safe to continue (“meh” to those who read the headline and jump right to the comments). Let’s dive in:

Announcing Software vs. Hardware (And Why It Wins)
While Google and Facebook are very different companies, they aren’t that different. They’re software companies that empower their users with services. They’ve got a different set of services, but the bottom line is they are software companies that offer innovative, mass-market software solutions. Why would Facebook manufacturer a Facebook Phone? It’s outside of not only their core competency but also outside their mission.

Mark Zuckerberg addressed this in his opening statement today by saying [paraphrased], “Facebook is not going to build a phone. We want to empower social applications across all platforms. We don’t want to build applications, but instead platform components for people to build on top of moving forward.”


Can you read between the lines?

I heard that as, “We don’t want to sell one little phone. We want Facebook to dominate everything social in the universe and one phone won’t do that. So instead, we’re giving developers a social toolkit so they can make Facebook stuff and become our salesmen.”

Sound a bit like Android?

Google always professed that, “Android has no monetization strategy.” The goal was that by empowering people with smart and revolutionary mobile solutions, they would use the web more and that would be good for Google. If they could accelerate mobile innovation and smartphone adoption, they could expose more people to Google services, Google ads, and ultimately build new services that would take advantage of their current dominance. And inherently drive revenue (come on, they knew that).

Facebook doesn’t want to become the next MySpace. Building a phone does nothing to create a barrier to entry and it does nothing to further the social landscape which fruits they would then be able to enjoy. Let’s take a look at exactly what Facebook announced:


  1. Single Sign-On: Open an application and automatically enjoy the experience with access and perhaps pre-installed knowledge about you and your friends. Sounds a bit like signing into your Android phone with your G-Mail account and having your contacts, calendar, apps, etc… already at your fingertips and syncing up!
  2. Location APIs: If we know where you are and where you’ve been AND we know where your friends are and where they’ve been, there are some very interesting things Facebook can do from a social standpoint. Google tried some of them with Buzz and Latitude but weren’t that successful, but then again, Facebook is a company whose #1 strength is Social so perhaps they can do what Google did not. But oh yeah, they don’t have to… because app developers will do that for them… and then they enjoy the value added.
  3. Deals Platform: merchandising and couponing is an industry where big bucks reside. In reality, it’s a form of advertising. Both Google (with Adwords/Adsense) and Facebook (with Facebook Ads) know this is a fact. Google embeds ads in maps, apps and games but has the social significance of “deals” reached any type of nirvana let alone effectivness? Not reall. But Facebook is now using their vast social reach and location knowledge to create a marketplace where it can work. Or where 3rd parties can make it work and then they’ll enjoy the value added. Ms. Cleo Moment: think Facebook will eventually allow developers to embed location aware “deal ads”  into their apps and games for a cut of the profit?

Their 3 announcements were big announcements, and they were big announcements because they were software driven rather than hardware driven. Which leads us to our next two points.

Consumer Disappointment
In the technically challenged PhanCast 25, Dave Demarest made this point blatantly obvious by asking, “How many people do you think closed the live stream right when they said there was no Facebook phone?”

Unfortunately, software isn’t as sexy as hardware. Having that high powered, sleek looking handset with outrageous specs is what gets the bulk of people excited. When Android was first announced, it was applauded by only a few. The majority seemed to think it was uninteresting and hopeless. Thankfully these aren’t the people tasked with creating innovative tech companies.

For the first year after Android was announced, nothing too exciting happened beyond the Android Developers Challenge. There were weeks that went by without a morsel of Android news. When Android was announced the fanfare was few and far between but it inevitably had a humongous impact. This Facebook announcement is the same. While you might not appreciate it now being the consumer driven bloke you are, a year down the road you’ll look back and think, “wow they are smart.”

Trust me on that one.

Consumers often can’t appreciate the long-term strategy and business leverage of such initiatives. Consumers want something and they want it now. That’s the crazy thing about the type of innovation that has made Facebook and Google so successful: they’re building the things you want before you know you want them. And once you have them, they’ll be things you don’t want to live without.

Empowering 3rd Parties (and Creating Leverage)

Some people might ask, why doesn’t Facebook just create their own home brewed solutions and apps and reap all the benefits themselves? There are two reasons for that:

  1. Facebook can’t be everywhere at all times, pursuing every opportunity they uncover
  2. Facebook isn’t ignorant enough to think they will always have the ideas that unlock social mobile awesomeness – the world DOES have some pretty smart people beyond their own employees

Now, instead of Facebook going it alone to create the perfect solutions, they’ve got a world of developers all “working for them” – for free  – to make Facebook’s social and mobile platform infinitely successful. Android is no different. Every time another app or game lands on Android Market, Google has provided consumers with value. All they did was create the initial tools, and now thousands and thousands of people are out there building value for their product.

When MySpace was on top of the world you had to think, “How will anyone compete with them? Everyone has MySpace. Why would someone sign up with a social site that their friends aren’t on?” But people did, and now MySpace is more like UsedToBeMySpaceButIDeletedIt. New sites like Twitter and FourSquare proved that at any given time a new idea, opportunity, concept or hype can grab ahold of the world and reach that pivotal tipping point.

Facebook doesn’t want to become the next MySpace, so rather than enjoy complacency, they’re engineering layers of socially competitive advantage that will shield them from competition.

Think about Android. When Android phones first started launching, the odds were stacked against it with iOS, BlackBerry, WebOS, Windows Mobile, Symbian, and others. Now they’ve got a level of growth that is unmatched and a competitive advantage that seems like nobody can or will take them down. Regardless of what else is announced.

Facebook is a juggernaut but I would argue they still haven’t created a competitive advantage that makes them untouchable. The three announcements today are the catalyst which will propel them into that untouchable realm and for the same reason that Android was able to gain traction and dominance so early.

Opportunity. Google built an amazing mobile platform and let everyone in the world benefit from it:

  • Hey manufacturers and carriers, want an amazing mobile OS with thousands of apps? Here ya go. On the house. And feel free to do whatever you want with it. Not to mention we’ll keep it updated and new apps/games will keep pouring in daily.
  • Hey developer, want to create an amazing mobile application or game with the ability to reach millions of people and make loads of money? Here, have these awesomely open tools, go create it, and get rich.

Not everyone gets rich. We know that. But Android provided an equal opportunity for every developer on the planet to build an innovative app/game, offer it to the world, and enjoy limitless success. As Zuckerberg said today:

“Social is as big as mobile. Combine the two and you’ve got some huge opportunities for businesses to be created and industries to be disrupted”

The interesting thing is that mobile is inherently social; afterall, before all these apps it was used to talk to people with your voice. And social is inherently mobile too: you don’t only want to be connected to people while you’re at your desk at work, you want to talk to them when you’re out in the world, doing the things you love, and have something to say or something to share.

Facebook’s commitment to mobile is what will solidify their social dominance.

Becoming A Threat (but overwhelmed by opportunity)
Facebook’s Mobile Platform intends to empower developers to create the next generation of mobile applications, games and integrations. They’re empowering  3rd parties to build this next generation by leveraging Facebook, and so Facebook has wedged themselves into a position where the revolution depends on Facebook itself. That’s not smart… that’s genius.

But therein lies the dilemma: in the same sentence, Zuckerberg mentioned “opportunities for businesses” and “industry disruption”. Both of those phrases can apply to a singular company. Unfortunately, some won’t view this announcement as Facebook empowering them with opportunity, but instead imposing them with a no-option threat that levels the playing field and opens the door to competition.

I overheard one of Facebook’s mobile partners today when they were asked how they felt about the announcement, “Well it will definitely open doors… but to a lot of other people too. This is also a big threat to us. We’ve got to rethink our business.”

And it comes full-circle with Android.

Before any Android phone launched, many thought Google had no chance to break ground in the mobile market. It was dominated by industry legacies that wouldn’t budge to Google’s idealistic bullying. You can’t just come into a mature market, re-imagine it’s existence, and rearrange everything how you would like. Unless of course you’re as big as Google and have the perfect idea to go along with it.

I knew it all along… if even ONE of those carriers or manufacturers budged, the ball would have been rolled and as momentum gained, the rest would have no choice but to follow. And that’s exactly what happened. T-Mobile and HTC were the industry underdogs and immediately embraced Android to develop a competitive advantage. The others could either have their shot at Android or standby and watch T-Mobile and HTC eat up their market share. Once Verizon came around, Motorola pulled a 180, and AT&T jumped on board, there was no stopping Android. There was no turning back.

Right now Facebook’s Mobile Platform is at the “Big deal everything is practically the same” phase. But it won’t be that way for long. Existing companies and aspiring individuals will fully embrace Facebook’s APIs to create awesome applications that become household names. A large part of their success will come from the deep integration with Facebook. At some point, others will have no choice but to incorporate Facebook or enjoy limited limelight.

At least that’s what would happen in Facebook’s ideal world. I think that’s a little excessive in this particular scenario, but the concept still stands.

In the best case scenario, Facebook could notice how great your application is, buy out your company and swallow it up as part of Facebook’s core services. That’s a great exit strategy. But in the worst case scenario, Facebook could see what you’re doing, realize what a great idea it is, and build their own version of your app. Ouch.

It’s a threat and it’s an opportunity, but if others are leveraging Facebook’s APIs and tools, many won’t have a choice but to embrace the movement. And recognize the cost in allowing Facebook to be a middle man in your app experience – they’ll be collecting invaluable data about the apps user’s and the app’s users friends that help them continually build a better product, better algo, better service, etc…

Creating Momentum (and an Insurmountable Competitive Advantage)
At this point there isn’t a lot to say that hasn’t been said. If the above pieces all fall into place, the proverbial snowball will have been pushed down the hill. Facebook will have wedged themselves permanently into the social fabric of everything mobile and prevented themselves from becoming the next MySpace.

Think back a few years. At one point, Google was just a search company. Do you think they didn’t know that? While their algorithm was of tremendous value, it isn’t like they were untouchable. Hopefuls like Cuil entered the scene and Microsoft and Yahoo talked merger. While it wasn’t likely, it isn’t impossible to think that some enterprising person or company could come along with a really innovative and smart approach at search, capture the attention of the masses, and compete if not overtake Google on their home ground.

In a lot of ways, timing is everything. As Zuckerberg pointed out, mobile and social go hand in hand. Google had the perfect timing with Android and now it seems like their dominance in tech has reached the untouchable level. In many ways, Google’s success with mobile has paved the way for Facebook to combine the two and become untouchables themselves.

Both will have accomplished this with software rather than hardware. Both will have accomplished this with little fanfare upon announcement, but eventual momentum, wedging them into the fabric of mobile. Both will have accomplished this by building a foundation, leveraging their reach, empowering 3rd parties, and riding the wave created by the fruits of their labor.

Some may say both Google and Facebook have been untouchable for some time, but every great empire eventually falls. In fact, Google and Yahoo had so supplant what some may call untouchables in order to gain favor int he first place. In my mind, today was another step to ensuring Facebook won’t be falling, or faltering, any time soon.

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