March 29, 2013

The Facebook Cloud

The word “cloud” is being thrown around in the technology industry with a lot of carelessness and marketing hyperbole, so it has quite a loose meaning these days. In the interest of clarity, I’d like to describe what I mean when I say “cloud” or “cloud services”: In this instance, I’m referring to user-facing data storage and sync platforms. For example, iCloud, Dropbox, Google Gmail/Cal/Drive, etc. What I’m NOT referring to is “cloud computing” platforms such as Amazon EC2, Joyent, or Rackspace Cloud. With that out of the way, let’s continue.

Facebook is set to make some kind of Android-related announcement next week, ostensibly a Facebook-branded phone. The company, for all its flaws, remains a very popular cloud platform, although its users don’t often think of it as such. People (a lot of people) use it not only as a living address book, but also for messaging, blogging, photo sharing, and event planning. There are even apps – but to be fair, I’m not sure I’ve ever seen any really popular ones other than spammy news apps or games.1 For people who don’t have a problem with the blatant privacy issues, it’s an attractive alternative to the Apple and Google ecosystems.

With any given cloud service, it’s important to understand that the more data you put into it, the more useful it becomes. When you get a new phone or laptop, how quickly you sign in to iCloud or Dropbox is probably a good barometer of how much data you’ve got in there.

With Facebook, most of its users have been using it for so long that they don’t even realize how much data it’s hosting for them. While this may not be a desirable situation for the user, it certainly is for Facebook.

Facebook is one of the few companies, perhaps the only company, who can offer an extremely compelling out-of-box experience for new phone buyers. Turn on, sign in to your Facebook account, and the device comes alive: All of your friends, conversations, photos, and calendars appear and just work.

Besides being able to provide a great experience, there are other things pushing Facebook to have their own phone. The competitive handset market is creating an opening for another viable OS, as no one except Apple or Samsung is making much money, and there are many other players looking for options. Partnering with HTC makes the most sense, as HTC’s industrial design has typically been well regarded, and the company is undoubtedly looking for a new edge against its rivals.

Further, advertisements (which, let’s not forget, is what Facebook’s real business is about) are going mobile quite quickly. Facebook’s own quarterly earnings confirm this, as its mobile ad revenue increased from 14% in 2012 Q3 to 23% in 2012 Q4. Having deeper hooks into a mobile phone OS would definitely allow Facebook to collect more data, better target ads, and grow this revenue even more.

There are open questions. Given Facebook’s tremendous talent pool, building an entire OS isn’t out of the question – but is it worth it? Why bother when Google has already done the heavy lifting? If you’re going to rebuild the entire user-facing layer, why mention Android in your invitation at all? My guess is they will try to leverage the Android app ecosystem, much in the same way Amazon has done with the Kindle Fire.

The Facebook Phone has been rumored for some time, and with good and obvious reason. Whether this announcement is just a suite of Android applications, an Android “skin”, or something else entirely, we’ll find out soon. But when it comes to Facebook’s mobile future, the writing is on the wall.

  1. The same could be argued of iOS, where games consistently dominate the top apps lists. I don’t think that’s true though: Apple goes out of it’s way to promote or feature non-game apps, many of which become (or already were) hits.