Facebook, Post-IPO: With Money in the Bank, Focus Now Is on Mobile

NEWS ANALYSIS: May 18, 2012 was an historic day in the life of 8-year-old Facebook, and the bank accounts are now loaded. But now the pressure's on to keep everyone liking it and to make it mobile-friendly.

At about 8 a.m. on May 18, 2012, several hundred employees at Facebook's new Menlo Park, Calif., campus, the one that housed much of Sun Microsystems for more than a decade, gathered in the complex's central courtyard and watched on a big-screen TV the opening of the first day of trading of "FB" on the NASDAQ exchange.


After listening to founder Mark Zuckerberg say a few words, there were a lot of high-fives and toasts consisting of water, juices and coffee. Then they all turned around and went back to work.
By the end of the day, Wall Street had estimated their company to be worth $104 billion, one of the world's highest-ever valuations. But nothing's changed for the heart and soul of Facebook, at least not at this point. Facebook may be $104 billion richer, but it's still got a heck of lot of work to do in order to maintain that lofty financial status.


To their credit, Zuckerberg and his lieutenants already have begun to move quickly toward the most pressing problem they face right now: mobile. If Facebook is going to remain the No. 1 social network in the world, it must be able to monetize interaction with its subscribers in better fashion on mobile devices. And we're not just talking about smartphones and tablets.
Conventional display ads on small-screen devices take up a lot of personal device real estate. Mobile device users also see their smartphones and tablets as being more personal than TVs, laptops, desktops and large PCs. Thus, they generally don't have the patience or desire to deal with unwanted advertising on precious micro-square-inch phone interfaces.
Facebook on an Acquisition Spree
To this end, the company has bought several mobile-related software companies in the last few months, and there are undoubtedly more in the pipeline.
For the record, here's the activity list:
--In November 2011, Facebook acquired an HTML5-based app maker named Strobe, a startup focused on using the open-source SproutCore software to build mobile apps. SproutCore is a package of prebuilt JavaScript code designed to ease the creation of Websites and Web apps, including those that work on mobile devices.
SproutCore has been a central tool in building in Apple's MobileMe services, so it has a track record. By acquiring Strobe, Facebook now has the development team to build apps not only for smartphones, but a number of other devices -- including TVs, cars, even aircraft.
--On April 9, Facebook announced that it bought popular custom photo-sharing software maker Instagram for $1 billion. This application combines the effects of Photoshop with social networking; more and more people are using this free app. This is Facebook's largest investment thus far in a mobile app maker.
--On April 13, the company acquired Tagtile, a mobile business app unique loyalty and direct marketing solution designed to help grow a business. It also acts as a customer management app for local businesses.
How it works: There is a customized Tagtile cube device that a business connects to a power supply and locates near the cash register. Customers who already have the Tagtile app downloaded and installed in their phone will just have to tap their phone on the Tagtile cube once at checkout. The customer is then "tagged," and it becomes easy for the business person to keep in touch with his customers using Facebook and Twitter. Business records are automatically saved, and a conversation can be maintained between the business and the customer.
--On May 7, Facebook bought Glancee, a San Francisco-based social discovery software maker. Its application runs in the background on smartphones, using Facebook and other online resources to match people based on similar tastes or interests and then alerting users to when kindred spirits were in the vicinity.
Glancee was removed from Apple's App Store May 19 after Facebook revealed the acquisition on May 18. FB's investment in Glancee was not disclosed.
--The most recent buy (on May 18, after the close of the markets) is mobile commerce startup Karma, which makes mobile apps for sending gifts to friends and family. The price was not disclosed.
Facebook App Center Also on the Way
Facebook also has introduced an upcoming App Center, where developers can showcase their apps for the Facebook platform. These will mostly be apps for iOS, Android and mobile Web uses. Users will eventually be able to go there to find a whole new cache of social apps.
Facebook apparently is on the lookout for any mobile app company that moves.
You see, even a team as talented and as motivated at Facebook still needs outside help, and it is to Zuckerberg & Co.'s credit that they do not have the hubris that insists "We can do it all." This is because no company can do it all. Look at giants like Hewlett-Packard, IBM, Oracle, EMC and Cisco Systems. All of those highly successful companies, despite their tens of thousands of employees, would be adrift without their partner systems.


Facebook hasn't been so big on partnerships as it has been on acquiring new people and ideas. But we can expect to see more partnership-type deals in the offing as the company begins to build itself out using its newfound capital.
One more word about partnerships: Congratulations are in order for Mr. Zuckerberg and Priscilla Chan (pictured) on their May 19 marriage in Palo Alto, Calif., not to mention the attainment of Priscilla's medical degree. Been quite a week for them, it seems.
Chris Preimesberger is Editor of eWEEK Features and Analysis. Twitter: @editingwhiz

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...