Insight

Facebook and Google planning for the future

Facebook and Google are shaping their future with rumored Home and What's App deal.

April 15 2013

The most talked-about topics in tech and telecoms for the past two weeks have been Facebook Home and Google's rumoured (and denied) acquisition of WhatsApp. Obviously a new round in the on-going clash of the titans for the screens, minds and ads of the people, but even more than that. This time Facebook and Google are fighting not only for current dominance, but also for their future.

Facebook needs to start making money off of mobile, and Facebook Home, even though ad-free in its current beta, will almost certainly feature some type of advertising as it spreads to more and more Android handsets. After all, what's the point of a feature-rich lock screen if you can't slip in an ad or two?

But Facebook is not counting only on ads. Chat Heads, its converged messaging feature is perhaps the Book's most important innovation in a long time. It aims to take over your entire messaging, including SMS, and to do that it's taking a page from the iMessage book, defaulting to SMS when a message can't be delivered. This is where major OTT players should start thinking about the possible ramifications of Chat Heads. 

One of those players is WhatsApp, probably the best-known, and the most used OTT app in the world. With close to 300 M users on platforms as diverse as Nokia's S40, all the way to iOS and Android, WhatsApp is sticking to its paid model, and so far it seems to be working for them. That is no guarantee for a long future in a still nascent and turbulent market, but at this point, unless WhatsApp HQ knows something we don't, there is no reason for them to sell to Google.

And Google would love to get them some messaging: Google is the centrepiece of your digital world, but despite their omnipresence, they don't have a prominent messaging app the likes of Skype, Viber, Kik, KakaoTalk etc., etc. No wonder they would set their sights on WhatsApp, which is A) cross-platform, B) the most downloaded paid app on the App Store in the U.S., C) a high-profile buy. But what exactly is behind this increasing, let's call it an obsession, with messaging? Future-proofing of business models.

A recent study shows something potentially deeply disruptive: younger generations of teens and pre-teens are increasingly absent from “classic” social networks, instead using messaging apps for the same purpose – especially given their content sharing and group messaging capabilities. This puts Facebook in danger of being skipped over and Facebook Home is intended as the antidote for that – making it a new, complete web experience, but also the entry to smartphones and mobile Internet for millions of new users in emerging economies.

On the other hand, Google has its own social network, which famously did not reach Facebook's levels of engagement and public awareness. To repeat the lukewarm image of G+ (even though its qualities are often overlooked) and lose another generation to another platform is not something Google would take lying down.

Messaging continues to be the popular choice for P2P communication, which also drives its usage as a direct marketing tool and these developments could mean another boost to text marketing. As we’ve said before: no other communication channel offers the efficiency, read rates and ROI of SMS in mobile marketing and its potential is vast but still mostly untapped.

There are plenty of examples of fall from grace in today’s tech world, and most were caused by over-confidence and blindly sticking to proprietary technology or business models. Facebook and Google must be painfully aware of that and before being another episode in their epic struggle, these stories are first and foremost indicators in which direction these two giants of Silicon Valley are likely to be heading.