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05-10-2012, 12:20 PM #1
Are Facebook's mobile apps intentionally bad?
Facebook says it hasn't yet figured out how to make money from mobile. Is that why its apps are so lackluster?
When Facebook purchased super-photo-app Instagram for $1 billion early last month, one of the first thoughts on many users minds was, “Great, maybe Facebook’s mobile apps won’t suck so much anymore.” But a interesting new amendment to the social network’s S-1 filing with the Securities and Exchange Commission has me wondering: Are Facebook’s mobile apps intentionally bad?
Here is what Facebook wrote in its updated S-1 (a document required of any company that is preparing to go public):
We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.
And yet, despite Facebook’s seeming neglect of the mobile space, more and more users continue to access the social network via their mobile devices — that’s what the company believes is behind its surge to more than 500 million daily users. With users flocking to its mobile platform anyway, Facebook is in a bit of a predicament: Master mobile, or suffer the consequences.
This little tidbit puts the Instagram (and Glancee) acquisition into perspective. Facebook’s financial success is becoming increasingly dependent on the company’s ability to better occupy the mobile space. Failure to do so means less money in the company’s (and soon, shareholders’) pockets. With the talented team from Instagram — an entirely app-based social network which, incidentally, also doesn’t make money from mobile ads — perhaps Facebook can finally crack the mobile revenue-generating code.
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