Facebook – Jack of one trade

Home is a bad sign for the longer-term outlook.

• The final verdict on Facebook Home was brutally handed down yesterday with AT&T slashing the price of the HTC First from $99 to $0.99.
• With that one slash of the knife, AT&T has confirmed what everyone had already gathered; the Facebook phone is proving very unpopular.
• If this was an isolated incident, then one could put it down to poor hardware, but installations and reviews of the software on other devices have also been poor.
• This is a worrying development because as far as I am concerned the time is right for Facebook to try and spread its influence to other areas of digital life (see here for details).
• Facebook is the undisputed master of social networking and has contemptuously brushed would be rivals aside.
• Facebook is by far the most used application of any smartphone, accounting for 18% of all usage on its own.
• With 1bn users it has, by far, the biggest active membership of any digital community putting it in an excellent position to expand its influence.
• (My analysis says that Google will have 260m active users this year rather than the much-touted 1bn).
• The problem is that Facebook’s 1bn+ users don’t seem to want to use it for anything other than social networking which will meaningfully dent its long term growth.
• Social networking is a large parts of a user’s mobile life online but even then it only makes up 24% of all time spent on smartphones.
• This basically means that unless Facebook can encourage users to use it for other things, then it will be limited to 24% of the opportunity to monetise internet usage.
• Its rivals such as Google have much better coverage of digital life, meaning that their long-term growth prospects are significantly better.
• Hence, Facebook must encourage users to do other things such as mail, search, content consumption and gaming within the Facebook environment.
• The day for Facebook games seems to have come and gone with the rise and demise of Zynga.
• Facebook Home looked to me like the right idea but its execution and design appears to be somewhat clumsy and the users simply do not like it.
• The failure of Home is not a disaster; it just means that Facebook needs to try another way to engage users outside of social networking.
• Something less invasive, more intuitive and above all, more fun seems to be the order of the day.