Facebook, identity and throwing sheep

Way back in the dark mists of time, when Facebook first launched its platform on the desktop, one of the first hit apps was something called 'Superpoke'. Superpoke did quite a few things but the one that got all the attention was throwing sheep at people. That is, they'd open their Facebook news feed and it would say 'Benedict threw a sheep at you'. 

Of course, a website that did that would never work - you'd never get a critical mass of people to open an account on a new site just for that. But Superpoke could plug into the Facebook platform so you could do this fun little social thing right away with almost no friction. 

A lot of the social apps bubbling up now remind me of this. As I've written several times, by plugging into the smartphone address book, camera, photo library, notifications etc the frictional barriers to doing a new social app fade away: the smartphone is a social platform in the same way that Facebook is. The obvious expression of this is WhatsApp and similar things that directly address the core Facebook use cases. But it seems to me that there's at least as much potential in doing things that use the platform without trying to take over a core use case - things like throwing sheep. That is, the smartphone social platform enables a lot of experimentation with new ideas and behaviors that don't need to be your core comms channel and that would never have worked on the web, and (for a bunch of reasons) might not have been possible on the desktop Facebook platform.

Snapchat is arguably one of the biggest of these, and Secret is another. Firechat is also an interesting example - it leverages the wireless autodiscovery features in iOS7 to do hyperlocal chat. Of course this isn't quite as easy as Superpoke - you still need to install an app from the app store (for now, though that may well change) but the friction is still pretty low. With apps like Line, WeChat and Kik you can see people trying to pull this experimentation back up the stack and put it inside a social app again - that might be the right model for some things, but of course you're trading friction for flexibility. Making your own smartphone app needs that initial install but has much more power. 

I also think that (as I suggested here) retailers should be thinking about how they can leverage the social platform aspects of smartphones - shouldn't the Zappos app show you which of your friends have it and let you share shoes directly? Again, doing that well on the desktop would be really hard, but on a smartphone it's just a tap or two away. 

This takes us around to Facebook again. Perhaps the problem is not that people use WhatsApp instead of Facebook Messenger - rather it might be that they use Sephora instead of Facebook Messenger. This is partly about unbundling WhatsApp, just as WhatsApp unbundled Facebook, but it's also that the fads and gimmicks and silly little things (otherwise known as 'fun') don't happen within Facebook. The time sinks don't have to happen within Facebook. And maybe the commerce apps don't need to connect to it. 

The question implicit in all of this, of course, is identity. It's the machine-readable identify that allows all of this low-friction social experimentation. But what is the irreducible common denominator for connecting to your friends? Is it your Facebook identity? How much does it matter to Facebook if it isn't, if it still happens in something Facebook owns? Is it your PSTN phone number (which Facebook will actually let you use to find friends with the smartphone app)? Or do you change that from time to time without caring? The broader phone address book? Your email address? BBM Pin (cough)? Location? Would Apple try something within iOS (with the fingerprint scanner)? Where in the stack does the identify sit - the network, OS platform or something further up? Actually, I suspect there isn't any single common point that any company can own. 

Social messaging consolidation

In the last couple of years there's been an explosion of social messaging apps, of which WhatsApp was obviously the breakout hit. But one could easily suggest that in buying WhatsApp Facebook is just playing 'Whack a mole', with dozens of other bubbling up: last summer I went through Google Play and found 50 such apps with over 1m downloads.

The data all of these give is highly variable, though - downloads and user aren't the same thing and though many apps give user figures occasionally, 'users' often means 'anyone who ever downloaded our app' (which WhatsApp has complained about, making a point of giving MAUs) and many don't even tell you that. So it's interesting to look at Google Trends for some of the biggest names that have been floating around. (And yes, Google trends is indicative but far from authoritative). 

First, compare WhatsApp, where we know the numbers, with a few of the bigger names. 

(Comparing WhatsApp with Blackberry and BBM is also instructive.)

Now, keep Viber for scale (it reported 100m MAUs when Rakuten bought it in February) and add a couple of the names that have floated around as regional winners. 

Now compare Nimbuzz, an Indian player, with WhatsApp in India. 

Now, a couple of the US hits. 

Small globally, but big in the USA. 

The big gap in this, of course, is that we really can't use it to look at the really big contenders - Wechat is still mostly in China where Google Trends is useless, Kakao in Korea has the same problem, and Line is too generic a search term to tell us anything much. 

I've argued elsewhere that the lock-ins Facebook enjoyed on the desktop are much weaker on mobile - that it's much easier to switch between services and to use several at once. But at the same time, it does appear that WhatsApp has much greater scale than the alternatives globally (unless there's a huge new app I've just not heard of yet, which, frankly, is entirely possible). Still, there's a lot of regional variation: WhatsApp is certainly not dominant in the USA, China, South Korea or Japan. And (having said you can't use Google Trends to look at Line), Indonesia shows a fascinating mix. 

As I suggested here, perhaps part of the future is messaging within other apps, rather than lots of dedicated messaging apps. 

Whatsapp and $19bn

Mobile social apps are not, really, about free SMS. Mobile discovery and acquisition is a mess - it's in a 'pre-pagerank' phase where we lack the right tools and paths to find and discover content and services efficiently. Social apps may well be a major part of this. These apps have the opportunity to be a third channel in parallel to Google and Facebook.

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Interaction, canvases and ecosystems

Suppose that in 5 years or so I send you a Yelp review of a restaurant, from my phone to yours. What will that mean? 

  1. First, I might well use something like Airdrop, or touch my phone to yours to pass it across, or tell Now to give it to you, or indeed Now might decide to give it to you without my even explicitly asking. Or the review might be invoked by a Bluetooth LE beacon as you hold your phone next to the menu on display by the door
  2. But for the sake of simplicity, suppose I send it to you using an internet messaging app - either one built into the OS or a third-party one - Facebook, Whatsapp or more probably one that doesn't exist yet but by then has 15 engineers and 1bn MAUs. 
  3. It seems pretty unlikely that you'll see a dumb URL string on your screen. Rather, you'll get something rich and interactive, within the message.
  4. And you'll be able to go into that experience and tap the number to call the restaurant, or make a live booking, or swipe through photos.
  5. And if you tap 'book', it'll pass them a $10 booking fee in bitcoin, authorised with a fingerprint swipe. 
  6. Now suppose you decide to save this item, as an icon on your home screen, or some other yet-to-be created place. 

Now, what were you using? An app? a widget? Native code? What programming language? Did you install an app or surf the web? I'd suggest that none of those questions would really mean anything, at least not as we think of them right now. The programming language matters much less than the user flow. And some of this example sounds 'webby', but Google is the first to advance interaction models that are not remotely webby (such as Now). 

This is a pretty simple illustration (an expansion of the super-hot card metaphor) of a broader point I've made before: on the desktop internet, the web was by far the dominant model and that didn't actually change very much for well over a decade (before that, the interfaces of Windows and Mac were also very stable for a long time). But on mobile, not only are other models just as important as the web, but they're not remotely stable, settled or mature. The platform war may be over but that doesn't mean things are settling down. 

So I have very little idea what precisely I would mean if, in 5 years, I were to say 'I installed an app on my smartphone'. Further, I'm pretty sure that if it's an Apple smartphone it will run an iteration of iOS but I'm rather less sure what Google will have done with Android and Chrome by then. And of course I might be running a fork of Android from Amazon or, perhaps, Microsoft. 

This is the key reason why the new social messaging apps are so interesting - not because they have users and inventory now, but because they can be vectors for some of this sort of behaviour - a third acquisition, discovery and distribution channel besides Facebook and Google.

This may also have implications for any discussion about what it means for Apple that its ecosystem will have a minority of mobile users. We need to think about what it means to call a ecosystem that might have 800m-900m live devices 'minority', but we also need to think about what 'ecosystem' might mean. What, if any, 'winner takes all' dynamics operate in this environment? One reason the Mac didn't die was because the web changed what it mean to be a computer ecosystem: the mobile ecosystem has lots of changes to come too. 

Mobile interaction models

The interaction model for the desktop internet was pretty much settled 15 years ago. It turned out that the answer was a web browser. Stand-alone apps such as Pointcast were a mostly blind alley, and while apps persisted for email and IM, and for very specific things like music, the words ‘web’ and ‘internet’ became effectively synonymous to anyone non-technical. Over time we added Ajax and better search and better social, but everything really happened inside the browser.

In mobile this is quite different: nothing is settled. We have the web and apps and of course app stores, and then we have many complications - voice, in-app payments, web apps, hybrid apps, widgets, push notifications, social messaging apps, Google Now and Siri. Then there’s the hardware layer - images, barcodes, NFC, bluetooth, location, motion sensors etc. Innovative and disruptive new interaction models can very often find a route to market, far more easily than they could on the desktop internet. Sometimes, they scale to a hundred million users in a year to two. And we have more and more waves of innovation coming, with things like local wireless from Apple and deep linking to within apps from Android, and a very fast-evolving social messaging space, and more things in 2014 and beyond.

So, we can actually have a pretty limited idea of what the dominant interaction models will be in 5 years. 

(There is a dream, of course, that all these nasty choices and options will go away and we can go back to the nice, simple, limited web, but that doesn’t seem very likely just yet.) 

One of the big changes here is the removal of monopolies. If the web is not the only interaction model then web search loses power as a discovery and acquisition channel. And in parallel Facebook’s desktop monopoly on social has not transferred to mobile and it seemly unlikely that it ever will (I wrote about the reasons for this here). So both of the key channels on the desktop are smaller and less crucial, and also work significantly differently, and are pretty poor at driving some key types of engagement, now that you’re not just looking for a click on a link. This changes lots of things, and creates lots of new opportunities.  

The puzzle for Google is how it brings its vast, decade-old machine learning project to bear on this new complexity of data and behaviour. The obvious problem is that data and behaviour within apps are effectively dark matter that it can’t track (hence the deep-linking initiative in Android). But this is balanced by much richer data collection. Your Android phone feeds it with data all the time - where you are, what you look at, where you go after you search and what you did the day before. The challenge is finding the right ways to collate and present that data - Google Now is one example but probably not the only one. The search box and the page of results is just one possible interface to that machine-learning project - what does Google look like after the search box?

Social faces a different set of challenges. It seems to me that on mobile Facebook will never have the near monopoly that it briefly enjoyed on the desktop - smartphones remove most of the frictional barriers that keep you on one social network. But mobile social more broadly is a vast opportunity. With web search no longer the dominant channel, social, on a far more social device than the PC, has an open door to push at. Tencent announced that the first 5 games that it launched with Wechat integration, starting in August, have had 576m registered users. Mobile social is an engagement, interaction and distribution channel, and it appears to be much richer, and probably much bigger, than social was on the desktop. 

If this is the end to near-monopolies in acquisition and discovery, it’s also interesting to think about it as the end to monocultures. If the interaction model shifts away from web search, that change makes different models and different types of behaviour possible. In turn, one might ask - what models and companies and behaviours were precluded by Google on the web? What good ideas didn’t work because of the way Google did search and the way Facebook did social? How did that monoculture shape things, and how does that change now? 

Instagram and Youtube

Instagram is looking like a great acquisition. It had 30m users when Facebook bought it in April 2012, and has now passed 150m, just 18m later. 

Screen Shot 2013-11-09 at 10.33.00 pm.png

 (The change in colour signifies the acquisition.) 

This reminds everyone, naturally, of YouTube - again, a product that has become far more popular since acquisition in late 2006 (this chart shows the only consistent data that seems to have been released).

Screen Shot 2013-11-09 at 11.14.16 pm.png

There's a difference here, though. Youtube is the dominant online video sharing platform but Instagram is not, remotely, the dominant photo sharing platform on mobile.  

Facebook's latest disclosure is that 55m photos are shared a day on Instagram, and another 350m on Facebook itself.  But 350m a day are also shared on Snapchat, and 400m on Whatsapp. And we don't know the numbers for Line, or WeChat, or the next half-dozen services to be launched that we haven't seen yet. Meanwhile Instagram has 150m monthly active users but Whatsapp has 350m and there are close to a dozen others with more than Instagram. 

So as it turns out, Facebook did not solve the unbundling problem by buying Instagram - even in photos. It bought just one of many mobile social products, and not even the biggest

All of these new services are driven by the fact that smartphones have characteristics that remove most of the defensive barriers that Facebook has on the desktop:

  • The smartphone address book is a ready-made social graph that all apps can tap into
  • The photo library is open to all apps
  • Push notifications remove the need to check multiple sites
  • Home screen icons are easier to switch between than different websites

The fluidity with which you can move between these apps seems to be breeding very fluid use cases. The original analysis was that these were unbundling Facebook in a semi-coherent way - most obviously, Instagram was taking photos, a core Facebook use case, and moving them to a different, specialised app. But it doesn't seem to be as clearly defined as that.

People aren’t using Instagram for photos, WhatsApp for text, Line for stickers... they’re using everything for everything. Instagram to tell people you're running late, WhatsApp to share holiday photos, Snapchat to make plans for the evening and so on. WhatsApp and Instagram are not in different categories - they're direct competitors for time and attention. Instagram, Snapchat, Line and all of the others are all poking away at different social behaviours and different options in the same communication space. 

This shouldn't really be a surprise: we already have three social apps on our phones - voice, SMS and email, and we don't stick to a rigid set of use cases for each one. These new apps just add more options into the spectrum. That, of course, points strongly against consolidation into a single winner.

So buying Instagram certainly looks like a good trade - it would be worth a lot more if it was selling today. But as a strategic move, it's looking increasingly irrelevant. Is FB going to buy Whatsapp, Snapchat, Line, Kakao and the next ten that emerge as well? Sure, some of those will disappear, but it doesn't look like FB will crush the competitors the way it did on the desktop. On mobile, FB will be just one of many. 

Just maybe, Facebook might have been better off rethinking the core product instead of buying what turned out to be just one of a swarm of alternative services. 

This, of course, prompts comparison with another (in)famous acquisition - Flickr's purchase by Yahoo. There was a period when AOL and Yahoo went around buying up lots of cool new web services as their portal model came under threat. They then generally mismanaged them, but that wasn't really the point. No matter how well they ran these acquisitions, they couldn't buy every great website that there was. Neither can Facebook. 

 (Update - I got the exact photo sharing numbers transposed when I wrote this - updated with links)

Tracking messaging

Always interesting to track the mobile mobile messaging apps. They have the potential to play a major role in the discovery of content and apps, they're taking a significant share of mind away from Facebook and they're still somewhat under the radar. But some of them are very big. (I'd include Line and Wechat, but the former isn't a useful search term and Google doesn't accurately reflect Chinese search volume for Wechat). 

And, of course, the survivors from the previous generation of mobile comms, most of which focused on interconnection with the PSTN, combined with roaming arbitrage, and none of which really went anywhere in the end, especially compared with the new generation.

And then there's a puzzle. Google Trends is obviously a little unscientific, but I do wonder why Viber shows up so far behind Whatsapp when it claims almost as many users.  

Finally, remember Vonage? Google Voice? And, for comedy value, Hangouts?

Facebook Mobile - still here

Last week Pando published a very widely circulated (and very good) article providing a post mortem of the 'Facebook platform', explaining how something that might have been a big part of the future of the web ran into the sand.

The timing was interesting, though, because it co-incided with the spectacular acceleration of growth in Facebook's mobile revenue, which was effectively zero a year ago and is now 40% of Facebook's ad revenue and all of the growth. 

Screen Shot 2013-08-03 at 12.05.17 am.png

This isn't a function of an increase in mobile users, since the trend there has been much more moderate. There may be some usage increase, though, since Facebook has significantly improved the smartphone apps, dumping a failed HTML5 wrapper approach. There may also be conversion from feature phone to smart - the feature phone app has 100m users but had 82m in November last year - not much growth on that side. 

Screen Shot 2013-08-03 at 8.43.38 am.png

 Clearly, Facebook is finding the right ways to turn on the advertising tap without (it hopes) damaging the user experience too much. Assuming this revenue is sustained, it's an impressive piece of execution by Facebook, especially for a company that was pretty late to understand mobile. Part of the benefit of having so (relatively) few employees is that it's easer to change direction. 

The puzzle that remains, though, is all the other social stuff that's happening on mobile. Competing mobile social services are huge and growing very fast. 

Screen Shot 2013-08-03 at 8.49.00 am.png

Whatsapp claims over 250m active users and Line, Viber and to some extend WeChat (though mainly Chinese) all have global scale. There are dozens of others with over 10m users each, and a while ago I poked around Google Play long enough to find 50 social messaging apps that have had more than 1m downloads. Obviously these are downloads rather than users, but Line claims 80% of its 200m registered users are active monthly and Whatsapp, of course, says 250m. Outside of China and Japan, almost all of these users have a Facebook account too. Yet they're using these other services instead. 

It's pretty clear that these aren't just going to be subsumed into Facebook - rather they unbundle key parts of the Facebook mobile experience. The interesting question is whether that actually matters, given Facebook's revenue trajectory. Is the mobile opportunity big enough that it just doesn't matter that Facebook doesn't have the dominance that it has on the desktop?

Facebook and alternatives on mobile

At the moment I spend most of my time working for Enders Analysis, a boutique TMT research and consulting shop. Every year Enders does a big UK mobile user survey, and this year I stuck in some questions about use of Facebook and of mobile messaging apps (Whatsapp et al). On Friday I put out a note to Enders clients with the conclusions, but this chart is worth publishing as a teaser. 

Screen Shot 2013-05-26 at 9.52.12 PM.png

The universe is UK adult mobile users. Of these, about 66% now have a smartphone, and 39% are using Facebook on mobile. But, a majority of those users are also using one or other of the various mobile messaging apps - Whatsapp, Kik, Viber and so on - and overall a quarter of the UK adult mobile base is using them.  

If you look just at 16-24s, the data gets even more interesting: 70% report they're using Facebook and 57% are using other messaging apps. Again, there's massive overlap: people have Facebook but chose to use other things instead. 

BBM and the rest

Blackberry gave a few operating metrics for BBM today as part of their developer event, at which they stated BBM will go onto iOS 6 and Android ICS+. There are: 

  • 60m active users
  • 51m using it for 90 minutes a day (definition unclear)
  • 10bn messages a day (sent and received)

Blackberry claims that this is 'nearly twice' the message/user/day volume of any other platform, but this isn't quite true: on a sent-and-recieved basis BBM does 167 but Whatsapp does around 100. On a sent basis (assuming a 50/50 split), Kakao does 56 and BBM does 83. 

The two charts below give a somewhat impressionistic sense of the landscape. These are just the biggest players, and the definitions are variable. WeChat has stated 190m active users as opposed to 300m registered: Whatsapp says 'over 200m' actives. In total, there are several billion accounts on all of the services out there (with massive duplication, of course): I've lost count of how many such services there are in total. 

Screen Shot 2013-05-14 at 3.58.32 PM.png
Screen Shot 2013-05-14 at 5.02.39 PM.png

BBM is now one of many such services, and not the biggest any more. Cross-platform may not be enough. 

(Note - I updated the second chart after Blackberry said it is quoting 10bn messages as both sent and received Link)

Mobile social consolidation

Facebook Home is a tactical move that points to a broader structural question: regardless of the specific appeal of Home as we see it now, does the current swarm of mobile social services resolve in consolidation into one or two dominant players?

If the answer is yes, then Facebook’s existing scale makes it by far the most likely winner. However, I'm not sure that consolidation is inevitable.

There are three relevant precedents to choose from. On one hand, there were once a range of competitors to Facebook on the desktop, and some argued that there would be regional winners. Instead, Facebook crushed almost all the local alternatives, such as Bebo or Orkut, leaving only specialised niche players like LinkedIn (whose main value is as a CV database, not a social network) or dating sites.

Conversely in instant messaging, there were regional winners: everyone in one country used Yahoo Messenger and everyone in another used AOL Messenger – not because of product differences but purely though network effects. This seems a less likely outcome, though.

However, the most worrying precedent for Facebook is AOL – a hugely dominant aggregator that was unbundled and never replaced.

It seems to me that a driving dynamic for consolidation and integration on the desktop is the network barrier: the hassle of creating your social ‘graph’ (in Mark Zuckerberg’s phrase) on a new network. This argues against the current fragmentation, naturally.

Yet on mobile the social graph comes ready-made in your address book and the accompanying PSTN numbering system. Your phone already knows who your friends are – you don’t have to enter them into each new social network. Both Whatsapp and Viber leverage this: they look at your phone book and tell you who’s already using it.

This is a much simpler global identity system than Facebook Connect: phone numbers (and the address book) are themselves a single global social network that any app can use, bypassing Facebook’s biggest protective ‘moat’ and removing a lot of the problems of fragmentation. Such apps ride on mobile and mobile numbers just as Facebook apps ride on Facebook and websites ride on the web. There are lots of social apps on mobile, just as there are lots of apps on Facebook or lots of sites on the web: this is not necessarily a problem.

In other words, the current ‘fragmentation’ of mobile social may only be the same ‘fragmentation’ that happened to the web as people moved on from AOL. People decided they were ready for best of breed services and content sites, rather than getting everything through AOL. The current rapid bubbling-up and equally rapid disappearance of new social apps may not be a transitional phenomenon.

(This is an excerpt from a detailed report produced for Enders Analysis.)