Facebook – Once bitten, twice shy

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Tonight’s announcement risks being a big anti-climax.

  • The last time Facebook made a “big announcement” the result was the spectacularly unambitious Facebook Graph Search.
  • What could have been a big move to diversify away from social networking and take on the giants of the internet is nothing more than a better way to use what it already has.
  • It adds nothing to the ability of Facebook to dominate the Internet.
  • I fear that tonight’s announcement may be similar.
  • “Our new home on Android” could mean anything from an upgrade to its existing application for Android smartphones and tablets all the way to an entire phone.
  • Most commentators have gone for Facebook launching its own device which is something that has been on the cards for many years.
  • 4 years ago it was developing a dedicated device on Android with INQ but now it is HTC that is in the frame.
  • Whatever this announcement it is it should be judged in only one way.
  • How does this announcement help Facebook expand its presence in Digital Life from just Social Networking to other activities?
  • The more of Digital Life it can cover, the more time users will spend using its services and the more Facebook can learn about its users.
  • This will be directly proportional to the amount of revenue that Facebook can earn from its users by selling targeted advertising.
  • A device with a dedicated Facebook application won’t do much but if Facebook is deeply integrated then I could see it expanding its reach into instant messaging, telephony and so on.
  • This is what I am hoping for but given the lack of vision and aggression management displayed with its last announcement, I am not hopeful.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.