Facebook Inc Chief Executive
Officer Mark Zuckerberg took a victory lap at the world's largest mobile
technology conference in Barcelona on Monday, after beating out Google
Inc in a US$19bil acquisition of free messaging service WhatsApp. But he
faces bigger hurdles on the horizon.
Just 18 months after appearing at
risk of getting crushed by the swelling mobile wave, the No 1 social
network is riding high. It gets a huge chunk of ad revenue on world-wide
users of smartphones and tablets, from virtually nothing several years
ago.
Now, Zuckerberg's purchase of
WhatsApp, which raised eyebrows with the hefty price paid for a company
that boasts 450 million users but has little revenue, places Facebook at
the heart of smartphone communications.
"In the US you can dial 911 and
get access to basic services," Zuckerberg said. "We want to create a
similar kind of dial tone for the Internet."
Messaging, search and weather
information are among the essential online services that he said people
throughout the world should be able to access on Internet-connected
phones.
It's a vision that is sure to
have some telecom bosses gritting their teeth. WhatsApp and its fellow
messaging apps, including Viber and China's WeChat, have punched a hole
in operators' sales by offering a free alternative to text messages, a
US$120bil market for operators.
Research group Ovum said telcos lost US$32bil in text revenue last year and will lose US$54bil by 2016.
But Zuckerberg is trying to cast Facebook and WhatsApp as partners not foes of the industry.
The 29-year-old co-founder of
Facebook used his appearance at Mobile World Congress on Monday to talk
up his company's recent effort to make wireless Internet access easier
and more affordable in developing countries.
With WhatsApp now part of
Facebook, Zuckerberg said the messaging service will have the breathing
room to put its energy into garnering another 2 billion or 3 billion
users, rather than trying to generate revenue.
SURPRISE DEAL
Facebook's purchase of WhatsApp
is its latest move to transform a platform and company born on the PC
into a full-fledged network for a mobile generation. Zuckerberg's
progress so far on mobile has positioned the company to take advantage
of the fast-growing markets.
And it has helped boost Facebook's stock roughly 150% since July.
But with a new crop of smartphone
applications threatening to eat into Facebook's audience, worrying
signs of waning interest amongst younger users – which the WhatsApp
acquisition may help address – and a tech landscape evolving more
rapidly than ever before, Facebook can't afford to fall behind again.
That is critical for Facebook as
it courts the "next 5 billion" Internet users, many of whom live in
places like India and Africa and who are likely to first experience the
Internet on a mobile rather than a PC.
"If Facebook is not first in line
when those people are firing up their devices, it stands a chance of
never connecting with those folks, because there are so many
alternatives," said Brian Blau, an analyst at research firm Gartner.
Zuckerberg said the plan to bring wireless Internet access, and Facebook, to the world is a long-term project.
"I think we're probably going to lose money on this for quite a while," Zuckerberg said
NO SURE THING
To some, Google wields the advantage for now.
Its Android mobile operating
system comes pre-installed on roughly 80% of the smartphones sold in the
world today. That helps ensure new users will see and use its various
online services.
Once WhatsApp is in Facebook's
pocket, there's no guarantee the messaging service – which famously
eschews games, shopping or other popular add-ons – can remain ahead in a
notriously fickle market.
Rival messaging apps such as
Tencent Holding's WeChat and Naver's LINE are popular across Asia and
have hundreds of millions of users. They have also expanded to allow
users to book taxis, top up phone credit, and take part in flash sales,
all on the app.
WhatsApp, which Zuckerberg has
promised will remain independent, fits Facebook's recent approach of
designing or buying "spinoff" apps for smartphones, such as Instagram or
the Paper news app, which has earned positive reviews.
"You see Facebook trying to
increase its surface area, with different apps for different things,"
said Josh Elman, a venture capital firm Greylock Partners.
The idea is to give users multiple ways to interact with Facebook throughout the day.
To meet his ambitions, Zuckerberg
could use the telecom industry's help. Facebook has partnered with over
150 wireless providers over the past four years to offer free or
discounted Internet access, including a deal with Globe Telecom to
provide three months of free access to customers in the Philippines.
Once people experience the
benefits of wireless Internet access they will upgrade to additional
data services, generating more profit for wireless carriers, Zuckerberg
said.
The idea, he said, is to build a
"more profitable model, with more subscribers for carriers, and get
everyone on the Internet in a hopefully shorter period of time."
Not everyone is on board.
Vodafone Chief Executive
Vittorio Colao said earlier this month that Facebook had approached him
about waiving data charges when customers access Facebook website from
their mobiles. But Colao rejected the idea because he didn't see any
benefit for his company
No comments:
Post a Comment