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Switched On: Facebook's ecosystem dilemma


Each week Ross Rubin contributes Switched On, a column about consumer technology.

Despite amassing something close to a billion users, Facebook has mainly stayed true to the startup mantra of staying focused on a few core things. In this case, that has been promoting openness and sharing among friends and, increasingly, the world at large. Such was the case for its rival Google at the launch of the search company's IPO. Since then, however, the company has launched a pair of operating systems powering handsets and tablets around the world, a digital media store selling everything from apps to books, and its own social sharing service (at least twice).

With the vast capital infusion that comes with an IPO, Facebook has an opportunity to expand far beyond its own site and Like buttons that now line up in a row next to sharing buttons using Twitter and Google+. The company certainly has no love for Google and has kept Apple at arm's length, but it has had a strong partnership with Microsoft, which made a financially shrewd $240 million investment in Facebook back in 2007. Windows Phone would be a poorer experience were it not for its tight Facebook integration. The giant social network would gain from entering the device market or spinning its own version of Android as Amazon has done, but there would also be significant challenges to striking out into its own ecosystem.

First, while Facebook may be a master at helping people connect with each other online, it has been a laggard in connecting its users in the real world despite launching its own check-in services and acquiring former Foursquare rival Gowalla. Mark Zuckerberg has vowed that the company will focus strongly on mobile apps moving forward, but what can be done in an app cannot compare to what could be done by owning a platform designed from the ground up for creating, reinforcing, and creating new social connections. None of the major mobile OS providers have really taken this approach.

That said, they all appear to be active in driving location-based technology initiatives.. Google continues to invest not only in navigating maps but in driverless cars to take us to points on them. Nokia, which owns map provider Navteq, saw integration of its location-based services as a lynchpin in its decision to use Windows Phone, and Apple has been the subject of perennial rumors over the past few years regarding its location initiatives as the iPhone's implementation of Google Maps has lagged behind its Android counterpart.

Second, one of the knocks against Facebook has been that the company has done a relatively poor job of monetizing its users. Getting into devices and services the way that Google has could provide new revenue streams from users and lock out -- or at least push aside -- competitive services the way Apple has favored Twitter on the iPhone and the way we can expect Google to integrate Google+ more deeply into Android. Engineering such products, however, is so expensive that even many in the device business tend to outsource such affairs and Facebook, while a company with a deep software engineering culture, would be late to market.

For all its user appeal, Facebook has been more of a facilitator than a disruptor. Compare it to Amazon, which has been building its ecosystem steadily since it stepped outside its retailer box to launch Kindle and new bundled services around Prime, its multifaceted subscriptions service. While it is starting to play in the tablet big leagues with the Kindle Fire, Amazon has also been clever about not diving headfirst into the smartphone bloodbath, at least not yet. The first Kindle, though, was released a decade after Amazon's initial public offering. Expanding from Web platform to mobile platform may be a few chapters away in this Facebook.

Ross Rubin (@rossrubin) is executive director and principal analyst of the NPD Connected Intelligence service at The NPD Group. Views expressed in Switched On are his own.

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