Business battles are often ecosystem battles, in which brands develop a matrix of conveniently connected products and services, in an attempt to lock customers into a dependency. Offline companies follow this tack (think razors and blades). But the internet, with its many connection nodes, crossovers to tangential realms and parallel on-ramps is where ecosystem wars are most elaborately waged.
Only rarely do market conditions cultivate a broader ambition in which a company has a chance to step beyond mere ecosystem competition to a higher level of sovereignty. Facebook's imminent release of Home represents a stab at that rare imperialism.
Facebook might not universally be considered a major ecosystem player, for good reason. The anatomy of a competitive ecosystem includes three chief components:
- Service: this could be a web site, a desktop client, mobile app, standalone software -- anything that enables a user to consume content, produce content, play a game or join a community.
- Device: hardware is a tough business to enter for any company that starts with a soft service product. But Amazon, Google and Microsoft each did it.
- Retail Product: Apple became an ecosystem powerhouse when its iTunes transaction business acted as a hinge between its service (media management) and devices (iPods and computers to start).
Facebook, despite its colossal success, suffers an ecosystem void by not owning a mobile device. That is why speculation about a "Facebook phone" was particularly charged with incredulity and excitement. But while Facebook doesn't have enough swords in the air to juggle a multifaceted ecosystem, it does own the paramount imperialist advantage: it is the internet's dominant engagement platform. It has executed prodigiously on the dependency lock. Facebook is irreplaceable to those who are addicted to its particular social presentation.
Facebook has no similar competition for its explicit product points.
All the ecosystem giants enjoy massive user engagement. That's just another way of saying they have a lot of customers. But each is staked in a battle with at least one competitor that more or less duplicates an engagement driver. Apple's iOS devices benefit from a huge and fierce loyalty footprint, but they are not uniquely positioned or differentiated. iPads and iPhones have compelling advantages to some, dealbreaking shortcomings to others, and competing choices lie easily at hand. So the lock-in war wages. Likewise, Amazon's e-book lines compete with B&N products, its tablets are compared to Samsung's and its Prime media plans contend with Netflix, Google Play, iTunes and others.
Facebook has no similar competition for its explicit product points. Of course there are other social networks, and of course there are other ways to message friends, share photos and experience update streams. But Facebook resembles AOL of the '90s insofar as it contextualizes the internet for millions of people. Not everyone is on Facebook; not everybody lived in AOL's walled garden in 1997. But the scale and breadth of adoption is scoped similarly.
Facebook's troubling post-IPO issue has been mobile. The service gets lots of roaming usage, but monetization has been a (gradually resolving) question mark. With Facebook Home, FB leaps over the mobile customer-acquisition tactics of Apple, Samsung, Microsoft and BlackBerry, and likewise catapults its business strategy, by re-contextualizing the smartphone. (A few models, anyway, for now.)
This is radical. Context is deeply meaningful in the mass market. You might think that in 1997, AOL was in the ISP business, or the content-aggregation business. Yes, but at the bedrock level it was in the contextualizing business, presenting a coherent, curated, safe, hand-holding version of the internet, just when adoption was exploding amid swirling confusion. AOL was the dominant frame of reference for the internet, and even for the home computer, to a huge share of market.
If Facebook is the interface gateway and governing context for such a circumferential mobile ecosystem, its monetization problems will be over.
Some smartphone bewilderment exists now, even in a much more tech-savvy population. Addressing the bafflement of the app-driven interface is part of Facebook Home's clout. The other part is imperialistically putting FB at the beginning, middle and end of users' mobile experiences as it is on many computers. Not applicable to enough people? Perhaps. But probably a joyous reconfiguring of how small screens are organized for more users than the digerati imagine. Facebook doesn't want to own you only when you're on its site. FB wants to own you as you do everything else, to fold you into its larger enveloping context. Many of its users want that, too.
Partnering with Google and its Android OEM cohorts could be a far-reaching stroke. Consider Google's own imperialist farsightedness. Android is impressively successful, but it's just a device-specific operating system in the itinerant world. Google's two most innovative development efforts attempt to own the chief vehicles of movement in the world: your body (Glass) and your car (self-driving vehicles). If Facebook is the interface gateway and governing context for such a circumferential mobile ecosystem, its monetization problems will be over. And many of us will be living in Facebook's world even more than we do now.
Brad Hill is a former Vice President at AOL, and the former Director and General Manager of Weblogs, Inc. If you friend him on Facebook, expect frequent photos of his dogs.