Today’s Wall Street Journal Marketplace print edition carries a front page story (digital link here, subscription required for full article) on how the world’s most popular social network has made a giant miscalculation in how it’s going about it’s mobile strategy. I couldn’t agree more.
In fact, I was just posting on Facebook over the weekend about how lousy their mobile experience was and a number of my friends chimed in with their agreement. Why is Facebook neglecting mobile when over half their 900 million users access the network on iPhones, iPads and Android devices and when doing so, get a very limited and extremely slow-loading version of the site? And, might this lack of mobile foresight have something to do with the rather lack-luster performance of their post-IPO stock valuation? After all, their stock fell 11%…a whopping $11.5 billion off their initially priced market value…in the first full day of trading after the totally botched launch Friday.
It’s obvious to even the most casual observer that the extreme over-hype around Facebook’s IPO was setting everyone up for major disappointment. Starting with their stock priced at a price-to-earnings ratio in the neighborhood of 85 times their projected earnings in the next 12 months certainly didn’t help (by comparison, Google currently trades at a stock price 13 times earnings). But, people are starting to notice how truly clunky and unusable Facebook is on mobile devices.
As the Wall Street Journal article points out, Facebook’s problems with app developers is just one concerning aspect of their mobile situation. For example, CrowdStar, developer of games such as Fishville and Happy Pet, used daily by over 50 million users, last month said they have stopped making games for Facebook.
The reason? You cannot access their games on Facebook’s mobile version. So, in addition to developers having to fork over to Facebook over 30% of their in-app sales for things like virtual goods, they also are loosing a substantial part of their market and sales potential. Instead, developers say they are focusing future development efforts on the iPhone, iPad and Android apps. This puts Facebook on the defense, playing mobile catch up because early on they made a strategic decision they didn’t want mobile users coming to Facebook via apps but instead through mobile browsers.
Facebook’s reasoning was two-fold: 1) they didn’t want to be put in a vulnerable position of relying on the platform lords of Apple and Google; and 2) they wanted to create one version of their site, using advanced HTML5 coding, instead of a version for iOS, Android, Windows Mobile, etc. The only problem with this approach is that it’s going to take HTML5 another two to three years to mature enough to become truly useful as a mobile/browser-based platform. Meanwhile, everyone is using apps to access everything and that includes Facebook, which truly stinks as a mobile app.
Of note recently, Facebook is trying to show it’s mobile savviness by purchasing mobile app companies like Instagram (for $1 billion) and Glancee. Yet Facebook continues to basically ignore handset makers and carriers…all while this year, Apple iPhone sales are projected to hit 139 million devices and Android is projected to reach 364 million units, according to research firm Gartner.
So, is this lack of mobile vision raising it’s ugly head in Facebook’s anemic IPO stock price performance? Rick Summer, Morningstar analyst, listed the company’s potential failure to capitalize on it’s mobile future as a risk factor and pegged the stock price at at “fair market value” of $32 instead of the $38 price at which it launched.
Although mobile is a huge component for Facebook’s future success, it’s really just one component. But this issue also highlights the inherent danger in brands becoming overly-reliant on building their brand outside of their own owned and controlled digital platforms and destinations. You could spend months and tens of thousands or even hundreds of thousands of dollars developing a Facebook commerce platform and with their limited mobile user experience right now, you’re missing half your audience. Even worse, Facebook, as they’ve done numerous times in the past could change terms of service, making all your plans obsolete and all that invested time and money goesup in a puff of smoke.
The lesson here for brands is just as stark: If digital behemoth Facebook can have it’s value depressed and even threatened by it’s lack of mobile strategy, what do you think will happen to your brand for neglecting the same?
Something to think about as you plan your online content strategy and manage your entire digital presence. And, in case you think Facebook is already past it’s prime, here’s an interesting article from Wired on seven social networking apps that could replace Facebook.