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The Critical Path #78: Facebook Inside

Apr 2, ’13 1:22 PM
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Youtubers, BlackBerries and what Facebook is planning with their “Home on Android”. Horace and Moisés discuss how co-branding, strategy, and secret deals intertwine, with illustrations from Intel, Sony-Ericsson, and Acura

via 5by5 | The Critical Path #78: Facebook Inside.

  • Bruce_Mc

    Those “badge engineered” Sony-Ericsson phones used to make me crazy. Do you want the phone with extra storage and the good music player? Get the Walkman phone. You want the one with the good camera? Get the Cybershot phone. You want phone with a good camera, extra storage and a good music player? You can’t have it!!!! Arghhhh.

  • Isaac Crawford

    Seems to me that Facebook is well situated to be a platform. Not only do they have deep hooks in contacts, calendars, social, etc, they are also able to serve apps. Wouldn’t surprise me at all if this is the start of a Facebook platform.

  • robbie

    Horace – any thoughts on Tesla building solar powered charging stations, and making them free for Tesla drivers? Does that begin to make their electric vehicles more disruptive?

    • No. Powertrain technology is not disruptive by itself. I can so no reason for incumbent car companies not to adapt a new powertrain if and when they’re proven to be commercially viable (in terms of market, infrastructure, etc.)

      A disruption in the market (and hence growth) will happen only when an entrant discovers a way to capture profits that is asymmetric to the existing industry. From what I’ve seen of Tesla so far, it’s perfectly symmetric.

      • Any thoughts on Gordon Murray’s approach?

      • It sounds good on paper. I’d like to learn more however and it’s hard to find information (case studies or business plans using the technology). Perhaps they are inking deals left and right but I don’t see any public info.

      • Dave Brandt

        It’s disruptive to the oil industry, not the auto industry.

      • I would not suggest that’s the case. Making electricity from fossil fuels still requires extraction and storage and transport which is what the oil industry is mostly rewarded for.

  • Bruce_Mc

    I think Facebook could get the most bang for their buck by building an Android launcher and putting it in the Google Play store for free. Like most launchers, this would work on a wide variety of existing phones. A launcher can significantly change the way an Android phone works and looks.

    This video clip shows an interesting example of what can be done with a launcher. It starts to get interesting around 0:45. Both the MIHome Launcher and the theme that are being shown are free and work on many phones.

  • Now that we have seen the announcement, I see massive value creation for the Android ecosystem.

    For Facebook: A potential solution to the mobile display ad problem, via pervasive system integration.

    For users: Social interaction is a first-class citizen on their devices. Growing cohesion between the ‘applications’ installed on their devices and their real-world social networks. Personally, I feel that this is the next logical user interaction step after the homescreen-of-icons-of-independent-apps era.

    For Google: Compelling case for further Android platform adoption. Ad revenue may be in question to an extent, though the company could more than replace that revenue by unlocking the massive high-margin revenue potential in Google-branded, high-end hardware via Motorola.

    For developers: Potential for first class mobile platform integration (notifications, etc) come for free by integrating Facebook’s existing API.

    The only downside I see is for Apple (may make their platform seem antiquated in user’s eyes thus hurting adoption) and developers creating functionality that duplicates that provided by Facebook (whatsapp et. al.).

    • Bruce_Mc

      Facebook is hijacking Google’s phone OS here. FB can continue to let Google do the hard work of OS development, but they can reap the profits by extending the FB Android app.

      Imagine FB offering to put FB app developers on Android through an in-app purchase in the FB Home app. FB could take care of everything on Android for their current developers and advertisers, with no need for those people to deal with Google at all.

  • Bill Esbenshade

    Horace – In the interview you refer to Facebook Home as a “platform” and a “service,” and say the cell phone value chain (made up of operators, device makers, etc.) will “pivot around” Facebook Home if it ends up “capturing [most of] the value.”

    In other words, members of the cell phone value chain will adapt to Facebook’s business model to make sure they can provide customers with Facebook Home.

    But how does this play into traditional disruption theory? Are you saying that if current Facebook apps are not “good enough,” and users want a more integrated Facebook experience, then they will migrate from “not good enough” platforms like iOS and Android to Facebook Home?

    To me this seems unlikely, except maybe for heavy Facebook users. For light to moderate Facebook users, the Facebook app will likely be good enough, and these users will not want to give up easier, more convenient access to Google Search, Google Play, the Apple App Store, Siri, iTunes, etc.

    • It all depends on whether Facebook Home “improves” by becoming all the things you mention, namely search, media, apps, etc. I’m not convinced it will but that’s what the theory will suggest: A service moving to encompass the platform it sits on.
      Sent from my iPad

      • Bill Esbenshade

        Horace – Thanks much for the response! One final comment and I promise I’m done!

        In Seeing What’s Next, Christensen says that when products start to overshoot, companies need to shift their focus from improving product functionality and reliability to improving speed-to-market, affordability, convenience, and customization.  When functionality and reliability become good enough, then companies need to focus on making speed-to-market, affordability, convenience, and customization good enough.

        Google, Amazon, and Facebook/HTC offer cheap/breakeven hardware that’s subsidized by a unified, proprietary platform that generates profits through ad, content, and service related sales.  

        But a business model that depends on ad revenues from proprietary services is inherently at odds with a more customized product/service. To make money from ads sales, Facebook Home must funnel users through Facebook services, which worsens rather than improves product/service customization (moving down the trajectory of improvement rather than up it). With a proprietary services and ad-based business model, customization is discouraged/restricted and users are prodded into a one-size-fits-all solution offered by Facebook or Amazon or Google. iOS doesn’t try to funnel users into one service or another (at least not as much) — Apple can provide a more customized product/service, since it’s business model relies primarily on hardware profits rather than ad sales.

        And what happens when people using proprietary services and content need to communicate or work with people who are using different services/content? Applying Christensen’s convenience language, that outcome is not convenient for customers.

        From a big picture perspective, Apple can offer products that are “good enough” re affordability (through economies of scale and integrated, innovative design/engineering), convenience, and customization. 

        Amazon, Google and Facebook/HTC can offer cheap/subsidized hardware that’s clearly “good enough” re affordability, but which may not be good enough re customization and convenience. And Google and Facebook’s reliance on ad sales will make it harder for them to move up the trajectory of improvement re customization and convenience.

      • You’re right. The rush to offer “low cost” may not be in-line with what users truly want. The problem with defining price as the basis of competition is that in complex “systems-based products” there are many subtle factors which drive decision making. Some surely buy on the basis of price but some look at many other factors. This is true of many products which are well past maturity including for instance cars, homes and personal technology.