Welcome!

SOA & WOA Authors: Carmen Gonzalez, Liz McMillan, Scott Bampton, Gilad Parann-Nissany, Andrew Phillips

Related Topics: Web 2.0, Java, Wireless, SOA & WOA, Linux, Big Data Journal

Web 2.0: Article

Facebook Plays Short and Long Game with WhatsApp and Oculus Rift | Part 1

Takes on Google and Mobile

When Facebook decided to invest a cool $19 billion ($16 billion upfront) for messaging app WhatsApp the entire world was bound to take notice. Telecommunications types, in particular, were keen to understand how this latest move would impact them as mobile operators have been feeling the heat from over the top (OTT) players like Google and Facebook for years. (To put this $19 billion in perspective, AT&T, one of the world's largest telecom carriers, invests about $20 billion in networks and spectrum in an entire year.) Shortly thereafter, in another surprise move and with the dust not quite settled on WhatsApp, Facebook picked up virtual reality startup Oculus Rift for $2 billion. This left many in the industry wondering what exactly was going on. While WhatsApp and Facebook's previous acquisition of Instagram for $1 billion were in keeping with its social network roots, Oculus Rift was in the video game industry and had yet to release a product. This led many to ask: What was Zuckerberg thinking? But if you dig deeper, these acquisitions are intertwined and central to Facebook's short and long term play to develop the next-generation communications platform. With WhatsApp and Oculus Rift, Facebook takes on Google and mobile providers in the race to do just that.

Let's start with WhatsApp. Messaging is one of the top activities on smartphones and these apps are increasingly viewed as social networks. WhatsApp is already an international phenomenon, even if it has not made as much of a statement in the U.S. just yet. In some markets, WhatsApp generates almost as much messaging traffic as all traditional carriers combined. Instead of people using carrier text and voice messaging at cents per message, WhatsApp users consume a few bytes of their data plan for close to zero, and send WhatsApp $1 a year. That's correct: WhatsApp charges nothing for the first year of service and then a mere $1 per user per year. That's not much to a phone company, but nice work for an app company getting close to half a billion users. This leads phone companies to pine after all that revenue they're losing. As if that's not enough, WhatsApp will add a voice calling service to its offering. With this capability, WhatsApp Facebook challenges telcos not only on mobile messaging but also for their bread and butter business: phone calls.

Facebook's entire history is all about getting more and more people to sign up and WhatsApp currently boasts more than 450 million active monthly users. The rapid rise of WhatsApp's user-base was largely due to the low cost and its commitment to not collect user data for advertising revenue, despite users providing detailed personal information to the company, including private texts to friends. If these qualities remain intact, the combined user base of both networks will be truly massive.

Zuckerberg assured the world that acquiring WhatsApp was not simply about money, but rather that it was in tune with his vision that everyone in the world should be connected. He has also stated that mobile operators should give away Internet access in developing nations. Who is going to argue against the idea that communications (in the broadest sense) has delivered social and economic benefits to people in affluent countries? If we expand opportunities to communicate by providing cheap and effective tools, then people and economies benefit, and that's a good thing. However, with free Internet access and almost free WhatsApp voice calling, Facebook can offer nearly what carriers can offer and all those customers will in reality have more disposable income to pay bigger subscriptions and respond to ads. This will mean Facebook gets richer, even as Zuckerberg implied that this would be a happy coincidence, and not the fundamental reason for the acquisition. But it's important to remember that mobile operators stand between Facebook and its customers and rallying public opinion behind a noble cause is good for Facebook and makes the carriers look greedy for not supporting the cause.

WhatsApp is obviously an important element of Facebook's strategy and the company is committed to honoring the app's principles: cheap, reliable, easy to use, no ads and preserves privacy. Just like Google, Facebook is increasingly faced with the harsh reality that many people simply don't like or trust its platform. Buying companies like WhatsApp and Oculus Rift and giving them the freedom to stick to their core roots is an important component to growing the all-important subscriber base and restoring the value and "cool" factor of Facebook long term. Rather than trying to integrate acquisitions into the mother ship, Facebook and Google (e.g., Nest acquisition) are taking a similar approach by putting their significant marketing and development resources behind the acquired companies while letting them continue to innovate autonomously.

The autonomous component is a key strategy. Facebook's internal innovations within its original social networking platform (Facebook Platform and Facebook Messenger for PCs) have not been successful. So, just like corporate giants in other industries, Facebook needed fresh infusion from the outside. For example, while Snapchat and Pinterest have been innovating in social media, Facebook bought its way in with the Instagram purchase in 2012. Facebook's "me too," Snapchat look alike app called Poke - an internal endeavor - again didn't make it off the ground. And it's not just Facebook. Google's list of abandoned projects has its own Wikipedia page that is worth a read. However, when you compare these two companies' success rates in innovation to other big companies (e.g. AT&T, GE, Ford, Nokia) they all have lists of failures alongside their successes that keep them in business. We expect Google and Facebook to be different because they are still relatively new, but now they are big and like any large corporation are just as prone to messing up big projects. Following in the path of corporate giants that came before them, buying innovative small companies is critical to their long-term strategy and relevance.

When it comes to these companies' actual wins, some might argue, for example that the Android OS and Google Web Services are only successful because they have been given way to boost Google's real business - Google search and Web ads - which are still responsible for the bulk of Google's revenue. This is a similar theme for Facebook. Both companies are riding the Web advertising wave, but now to stay on top in that field they need to remain the go-to players for the next-generation communications/advertising platform: augmented reality provided by Google Glass and Virtual Reality provided by Oculus Rift (Facebook). However it is important to note that advertising revenue has become, for these companies, not the primary goal, but rather a means to an end. Google's actions suggest that the company has a bigger picture in mind, and Zuckerberg wants to build a lasting place in history for himself and Facebook. Both companies are entering these new modified-reality markets to ensure they have a growing subscriber base and their advertising revenue is protected well into the future to give them the funds they need to do what they want in their endeavors. But that's where the similarities come to a grinding halt.

I'll get into the differences in my next blog. Follow us on Twitter to make sure you don't miss it.

More Stories By Esmeralda Swartz

Esmeralda Swartz is CMO of MetraTech, now part of Ericsson. She has spent 15 years as a marketing, product management, and business development technology executive bringing disruptive technologies and companies to market. Esmeralda is responsible for go-to-market strategy and execution, product marketing, product management, business development and partner programs. Prior to MetraTech, Esmeralda was co-founder, Vice President of Marketing and Business Development at Lightwolf Technologies, a big data management startup. She was previously co-founder and Senior Vice President of Marketing and Business Development of Soapstone Networks, a developer of OSS software, now part of Extreme Networks (Nasdaq:EXTR). At Avici Systems (Nasdaq:AVCI), Esmeralda was Vice President of Marketing for the networking pioneer from startup through its successful IPO. Early in her career, she was a Director at IDC, where she led the network consulting practice and worked with startup and leading software and hardware companies, and Wall Street clients on product and market strategies. Esmeralda holds a Bachelor of Science with a concentration in Marketing and International Business from Northeastern University.

You can view her other blogs at www.metratech.com/blog.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
SYS-CON Events announced today that Harbinger Systems will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Harbinger Systems is a global company providing software technology services. Since 1990, Harbinger has developed a strong customer base worldwide. Its customers include software product companies ranging from hi-tech start-ups in Silicon Valley to leading product companies in the US and large in-house IT organizations.
SYS-CON Events announces a new pavilion on the Cloud Expo floor where WebRTC converges with the Internet of Things. Pavilion will showcase WebRTC and the Internet of Things. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices--computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades.
The only place to be June 9-11 is Cloud Expo & @ThingsExpo 2015 East at the Javits Center in New York City. Join us there as delegates from all over the world come to listen to and engage with speakers & sponsors from the leading Cloud Computing, IoT & Big Data companies. Cloud Expo & @ThingsExpo are the leading events covering the booming market of Cloud Computing, IoT & Big Data for the enterprise. Speakers from all over the world will be hand-picked for their ability to explore the economic strategies that utility/cloud computing provides. Whether public, private, or in a hybrid form, clo...
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual Controller™ Technology (SVCT) to eliminate the I/O blender effect and accelerate applications Gridsto...
SYS-CON Events announced today that Red Hat, the world's leading provider of open source solutions, will exhibit at Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, a...
As the Internet of Things unfolds, mobile and wearable devices are blurring the line between physical and digital, integrating ever more closely with our interests, our routines, our daily lives. Contextual computing and smart, sensor-equipped spaces bring the potential to walk through a world that recognizes us and responds accordingly. We become continuous transmitters and receivers of data. In his session at Internet of @ThingsExpo, Andrew Bolwell, Director of Innovation for HP’s Printing and Personal Systems Group, will discuss how key attributes of mobile technology – touch input, senso...
The Internet of Things (IoT) is making everything it touches smarter – smart devices, smart cars and smart cities. And lucky us, we’re just beginning to reap the benefits as we work toward a networked society. However, this technology-driven innovation is impacting more than just individuals. The IoT has an environmental impact as well, which brings us to the theme of this month’s #IoTuesday Twitter chat. The ability to remove inefficiencies through connected objects is driving change throughout every sector, including waste management. BigBelly Solar, located just outside of Boston, is trans...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, will examine three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective storage designed to handle the massive surge in back-end data in a world where timely analytics...
Internet of @ThingsExpo Silicon Valley announced on Thursday its first 12 all-star speakers and sessions for its upcoming event, which will take place November 4-6, 2014, at the Santa Clara Convention Center in California. @ThingsExpo, the first and largest IoT event in the world, debuted at the Javits Center in New York City in June 10-12, 2014 with over 6,000 delegates attending the conference. Among the first 12 announced world class speakers, IBM will present two highly popular IoT sessions, which will take place November 4-6, 2014 at the Santa Clara Convention Center in Santa Clara, Calif...
The Internet of Things (IoT) promises to evolve the way the world does business; however, understanding how to apply it to your company can be a mystery. Most people struggle with understanding the potential business uses or tend to get caught up in the technology, resulting in solutions that fail to meet even minimum business goals. In his session at Internet of @ThingsExpo, Jesse Shiah, CEO / President / Co-Founder of AgilePoint Inc., will show what is needed to leverage the IoT to transform your business. He will discuss opportunities and challenges ahead for the IoT from a market and tec...
SYS-CON Events announced today that TeleStax, the main sponsor of Mobicents, will exhibit at Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. TeleStax provides Open Source Communications software and services that facilitate the shift from legacy SS7 based IN networks to IP based LTE and IMS networks hosted on private (on-premise), hybrid or public clouds. TeleStax products include Restcomm, JSLEE, SMSC Gateway, USSD Gateway, SS7 Resource Adaptors, SIP Servlets, Rich Multimedia Services, Presence Services/RCS, Diame...
From a software development perspective IoT is about programming "things," about connecting them with each other or integrating them with existing applications. In his session at @ThingsExpo, Yakov Fain, co-founder of Farata Systems and SuranceBay, will show you how small IoT-enabled devices from multiple manufacturers can be integrated into the workflow of an enterprise application. This is a practical demo of building a framework and components in HTML/Java/Mobile technologies to serve as a platform that can integrate new devices as they become available on the market.
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurring their adoption by amplifying "faint signals" from the alpha geeks who are creating the future. An...
SYS-CON Events announced today that Aria Systems, the recurring revenue expert, has been named "Bronze Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Aria Systems helps leading businesses connect their customers with the products and services they love. Industry leaders like Pitney Bowes, Experian, AAA NCNU, VMware, HootSuite and many others choose Aria to power their recurring revenue business and deliver exceptional experiences to their customers.
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce the value of the network in helping organizations to maximize their company’s cloud experience.
As a disruptive technology, Web Real-Time Communication (WebRTC), which is an emerging standard of web communications, is redefining how brands and consumers communicate in real time. The on-going narrative around WebRTC has largely been around incorporating video, audio and chat functions to apps. In his session at Internet of @ThingsExpo, Alex Gouaillard, Founder and CTO of Temasys Communications, will look at a fourth element – data channels – and talk about its potential to move WebRTC beyond browsers and into the Internet of Things.
SYS-CON Events announced today that Gigaom Research has been named "Media Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Ashar Baig, Research Director, Cloud, at Gigaom Research, will also lead a Power Panel on the topic "Choosing the Right Cloud Option." Gigaom Research provides timely, in-depth analysis of emerging technologies for individual and corporate subscribers. Gigaom Research's network of 200+ independent analysts provides new content daily that bridges the gap between break...
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.