As I’ve stated several times over the past few years, I’m a big believer in the ecosystem play when it comes to technology stocks. I won’t get too much into why but you can certainly look at these posts for a better idea:
Most of us would all agree that Google (GOOG), Apple (AAPL) and Microsoft (MSFT) all qualify as ecosystems. They are at the center of mobile and desktop worlds thanks to their control through the operating systems (Windows, iOS, Android) that has extended over time. I’ve also personally had Amazon (AMZN) and Facebook (FB) into that group which I know many of you disagree with. These companies are increasingly competing in all kinds of different ways but I think it’s safe to say that Facebook is headed in the right direction as I tweeted a few days ago:
— IntelligentSpec (@intelligentspec) September 3, 2014
In this post, I won’t discuss the valuation or revenue expectations simply because I’ve done so in the recent past and I’m also more focused on explaining why I think Facebook is an ecosystem play.
The Current Environment
In an increasingly mobile world, it’s all about dominating the app landscape. You’d rightfully assume that players which have their own O/S have an easier path to promoting their own apps and that’s certainly true but Facebook has been able to achieve incredible numbers.
-The Core Facebook app remains the most used app by a significant portion of users. It is the only non-Google app to reach 1 billion installs on the Google Play app store.
-Facebook messenger is currently the most downloaded app on Android and iOS
-WhatsApp has confirmed it now has over 600 million users, with Zuckerberg saying it could end up reaching several billion users
-For all of the talk of “youngsters moving away from Facebook”, they have been moving towards a few apps, Instagram, owned by Facebook is arguably the top one.
-It continues to innovate with new apps such as Hyperlapse and Paper.
Now serving 600,000,000 monthly active users. Yes, active and registered are very different types of numbers…
— jan koum (@jankoum) August 25, 2014
credits: Facebook IR
The Coming Years
If the “desktop era” was the first big step in the “Social Web”, then I think it’s fair to say that mobile is the current era. In most of the world, that has translated into big companies such as Google, Apple, Microsoft and others unbundling their core apps into different “single purpose” ones. I’m not sure if that model will remain so or if the “China model” where a few apps make it possible to do just about anything dominate. If that ends up happening, I think Facebook has a great position through its core app, but also its messenger plays. It is very plausible that in the next “web”, search will no longer be at the “center” but it could be other core functions such as maps or messaging.
If we’re taking an even longer term view, the recent purchase of Oculus Rift by Facebook certainly gives it a leg up in trying to compete with Google in terms of artificial intelligence.
What Are Your Thoughts On Facebook As A Dominant “Ecosystem”?
Disclosure: Long Facebook (FB)