Facebook founder and CEO Mark Zuckerberg appeared on stage at Techcrunch’s Disrupt yesterday to talk largely about Facebook’s mobile strategy. No doubt mobile is an exciting subject that deflects questions about the reasons why Facebook’s stock price has sunk 50% from its initial public offering price. Stock price aside, Zuckerberg focused on mobile not only because it is a less stressful subject compared to stock price, but because it is the solution to Facebook’s stock price woes.
To quantify Facebook’s focus on mobile, Zuckerberg reported that last year 90% of all of Facebook’s internally developed mobile software was produced by the mobile platform development team. Today, 90% of internally developed software is produced by product development groups outside of Facebook’s own mobile team.
Zuckerberg put to rest any possibility of a Facebook smartphone. And as far as Android is concerned, the news is there is no news about a native Android Facebook app. Much can be inferred regarding Facebook’s priorities from this void.
Zuckerberg stated that "on mobile we will make a lot more money than on the desktop." He could only state the reasons for this projection, but not his plan to accomplish it. Facebook’s mobile analytics show that mobile user engagement is greater than it is among desktop users. Mobile users are twice more likely to login every day and view twice as many stories per engagement on their streams than their desktop counterparts. But Facebook is still trying to discover how to monetize its mobile engagement. Mobile engagement is more focused because the screen is smaller with fewer distractions and options but it lacks the third column of a desktop often used for advertising. Zuckerberg said that Facebook was learning that mobile advertising needs to be "better integrated." Reading between the lines, a direct translation of Facebook’s desktop advertising formula to mobile devices will be intrusive and Facebook, like Google, has not yet uncovered the new style and formula that will produce accelerated and profitable mobile advertising.
One reason for Facebook’s void in mobile advertising revenues, besides market immaturity, is the decision to bet completely on HTML5, which Zuckerberg called "Facebook’s biggest mistake." Facebook just released its native iOS app that supersedes Facebooks HTML5 FaceWeb. The native iOS app is simply a feature-by-feature replication of Faceweb that demonstrates that at this point in the evolution of HTML5, when immersive user experience is critical, the comparatively more compelling engagement of native apps outweigh the productivity benefits of cross-platform development for iOS and Android. This is only one of the reasons that a new native Android app is a secondary priority.
Facebook’s 3.0 SDK release introduced features that make it easier and faster to develop Facebook-integrated iOS apps. And today Apple announced improved integration between iOS 6 and Facebook available on new and older iPhones. Most notable of the Apple and Facebook integration is the single sign-on that lets users post to Facebook from a variety of apps and will keep them logged in. This will give Facebook and Apple the ability to begin tracking mobile user behavior, providing the data for effective mobile advertising.
Facebook could not deliver a native app on Android with the same integration and access to mobile user behavior data that they could for iOS because mobile advertising is too important to Google to collaborate with Facebook. With a compelling native iOS app, though, Facebook is more likely to entice greater cooperation from Google in producing a better native Android app.
Earlier in the day, Benchmark Capital partner Matt Cohler made a prediction about mobile market share:
"Apple will obtain all the mobile market share in profitability and Google will have all the market share of units."
Apple’s cooperation with Facebook is a direct response to the margin pressure of Google’s Android-everywhere strategy. In response to mobile device competition from Google, Apple is cooperating with Facebook to challenge Google’s plans for dominion over mobile advertising. This race could get interesting.