Why Home is just the beginning of Facebook’s quest for mobile dominance

Facebook Home is a quite interesting move on the mobile market by the social networking giant, but not a decisive one. Its main goal could be to become the address book of every smartphone on the planet.

I appreciated the analysis by Steven Ambrose on the influence of Facebook Home. His main question: Do I want to surrender my phone to Facebook, and side-line everything else I do? The tone implicated already the answer, a strong “no”.

Nevertheless Facebook Home is not meant for people who will soon raise this question. The majority of Facebook’s billion or so users are happy with the service and are just looking for the easiest way to communicate. It’s about convenience. Like those same hundreds of millions of people look for the easiest ways to entertain themselves via TV.

For this audience Facebook has excellent marketing, far better than Google, although there have been reports that people in countries like Germany, the UK and the US are leaving Facebook. Some of these dropouts are youngsters, who are bored with the social network and are looking tot the next big thing. The rest are privacy sensitive people — in TV terms rather they prefer public service broadcasting to paid entertainment.

Facebook is still very strong. It already generates seven percent of global internet traffic, with more than 300 billion minutes of use per month against 220 billion minutes for Google – mainly spend with YouTube. The Facebook users already spent more than 25% of their time online with their favorite social network.

For these heavy users the phones locked with Facebook Home are really attractive. Even more for the hundreds of millions of users with low budgets. Facebook sponsored smartphones come within their reach.

Other ways

Facebook is by far the most important application for mobile internet. Already 23% of the total time spent on apps on Android and iOS (iPhone/iPad) in the US goes to Facebook.

I think Facebook can keep extending beyond its natural borders. In an interview with former TechCrunch boss Michael Arrington about strategy, Mark Zuckerberg famously said that pursuing a Facebook phone concept is “the wrong strategy…The phone just doesn’t make any sense.”

The last part is an exaggeration. The phone makes sense to Facebook, but it is far better off integrating the social network more deeply with all the devices already out there. Partnering with hardware producers like HTC and Samsung is however only one way for Facebook to attack the mobile market.

With video chat via internet (first via Skype, now its own Messenger too), Facebook has become a competitor for mobile operators like Vodafone. In January 2013, Facebook introduced an iPhone Messenger app for free calling over wi-fi and data connections, making it a competitor of similar services like Skype and regular phone services. Regular mobile calling is already in decline as a result of these services.

Facebook is extending its potentially huge power in the mobile service field. Late last year, Europe’s third mobile company after Vodafone and T-Mobile, Orange, announced a partnership with Facebook to offer a Skype-like internet calling application. It will connect subscribers with Facebook identities instead of phone numbers, and allow them to call via mobile, tablet, laptop, desktop etc.

With this ‘Party Call,’ to be launched in mid 2013, Orange recognises that online chat is replacing the traditional calling business. I think eventually all carriers could be forced to provide mobile Facebook services in one way or another, eating out their traditional business as WhatsApp already did with SMS messaging. The big question remains about pricing. Which business model will Orange find to keep its part of the mobile revenue stream?

In short, Facebook is able to take an important part of telephony in this way. Facebook’s greatest strength in such a takeover is its contact list, essentially the biggest address book ever. Facebook’s agreement with Orange could lead to the death of the phone number eventually. Internet calling with Skype was the first stage of this, Facebook Messenger is now also enabling voice messages through its mobile Messenger app.

The identification and authentication power of Facebook described in my book could be extended further into real life via mobile phones. It is imaginable that Facebook’s identification will become part of new tools. But that’s part of the future. It starts with courting and challenging the players in all the layers of the mobile market, from Google’s Android and Apple till HTC and Samsung, finally AT&T and Orange. The big game is yet to be played.