Facebook: Telecoms' New Best Friend?

The buzz at last week's Mobile World Congress last week was palpable: social networks are hot. As a sign of the times, INQ's INQ1 phone, also known as the "Facebook phone," took home the GSM Associations's prestigious Best Mobile Handset or Device award, beating out several smartphones like the BlackBerry Storm, T-Mobile G1, Nokia E71, and LG KS360. The INQ1 is a mass market £80 (US$116) device with tight Facebook integration. And this is just the beginning, according to INQ's CEO. “You’re going to see Facebook phones all over the place,” CEO Frank Meehan said. Facebook: Telecoms' New Best Friend? According to Wireless Week, "Seemingly every handset vendor and operator is trying to get deals with Facebook and other social networks." Why? Social networking applications are increasingly driving the growth of the mobile internet audience - especially among females. According to a November comScore report (note: the dateline on the article is actually incorrect), the European mobile social networking audience grew 152% from November 2007 to November 2008 to 12.1 million people. (The UK boasts the highest mobile social networking penetration rate, at 9%.) In addition, 33% of all mobile social networking users access social media sites exclusively. In addition, comScore reports that of those users who access social networking sites exclusively, 48% of female. By contrast, women make up only 32% of those seeking other types of mobile Internet content. Worldwide, eMarketer says the number of mobile social networking users will grow to 243 million in 2009 from 147 million in 2008. In the US, mobile social network usage tripled from September 2007 to October 2008, according to a report by The Kelsey Group and ConStat. In the UK, Orange has seen the number of people accessing social networking sites nearly triple since introducing a new rate plan that offers unlimited access to social networking sites in July of last year. In addition, Orange says the average mobile social networking user accesses 260 mobile pages per month, about 10 times the internet usage of the average customer. Vodafone also recently started allowing unlimited Facebook access to customers. As a result, handset manufacturers and operators are racing to bring phones to market built from the ground up around services like Facebook and MySpace. Nevertheless, some in the industry are still not pleased with the pace of progress. "I don't know why they are moving so slow," said Ken Johnstone, products and design director at INQ Mobile, which worked on the INQ1 for over two years. "It's a no-brainer." Facebook vs. MySpace: The Mobile Battle Facebook has built a large lead in worldwide audience - it topped MySpace 220 million to 125 million uniques in December, according to comScore - but MySpace CEO Chris DeWolfe gave the morning keynote at the Mobile World Congress last week, touting mobile's importance to the future of both audience and revenue growth for MySpace. DeWolfe said MySpace now counts 20 million unique users to its mobile services, up from 5 million at the beginning of 2008. In addition, the company relaunched its mobile site (though to mixed reviews) and announced new integration deals with the Palm Pre and Nokia N60 last week. The company says it is confident that "most smartphone makers" will feature MySpace by the end of 2009. Currently, MySpace Mobile operates across several platforms, including: m.myspace.com, the newly upgraded mobile site, which is also directly accessible through several carrier portals MySpace for Android (Android is a new open platform largely advanced by Google) MySpace for Blackberry MySpace for iPhone MySpace for T-Mobile's Sidekick By comparison, Facebook COO Sheryl Sandberg said last month that Facebook is also seeing 20 million unique users accessing Facebook across mobile platforms, up from 15 million users in January. As we've covered extensively in the past, Facebook currently operates 5 mobile services, including: Facebook for iPhone, which currently has over 5.4 million monthly active users Facebook for Blackberry, which currently has over 3.7 million monthly active users m.facebook.com, the standard mobile interface x.facebook.com, an advanced mobile interface Facebook SMS, through which users can update their status and receive notifications By Inside Facebook's count, Facebook for iPhone grew by over 1 million active users in January, while Facebook for Blackberry grew by over 0.8 million active users - each up by over 20% for the month. (MySpace did not break down its mobile users by platform.) In addition, Facebook Connect for Mobile, which was announced last July at f8 2008, is coming sometime this year (Facebook has not given a more specific launch date other than 2009). However, early Connect applications have already emerged on the iPhone. Facebook is also working on a native Cocoa development kit for the iPhone so that developers can build apps for Facebook for iPhone directly, but it’s not ready yet. Conclusion While Facebook is clearly outpacing MySpace in total global audience, the mobile battle is still neck and neck. Because mobile social networking usage is rising so dramatically, the social network that can build the strongest mobile product and audience will gain a big leg up in the overall war. Developing tighter integrations with mobile devices is certainly key to winning the mobile battle, and that's why Facebook's business development team is surely spending a lot of time with mobile phone makers these days. Detailed data on Facebook's any MySpace's performance across global markets is lacking, and neither Facebook nor MySpace have broken down their mobile audiences by country. However, Facebook has been growing by leaps and bounds internationally, especially in Europe and South America, throughout the last year. Striking deals with major handset makers around the world will certainly increase Facebook's mobile and overall growth worldwide. At the end of the day, mobile device manufacturers and operators will try to use the increasing popularity of Facebook and MySpace to gain a leg up in their extremely competitive markets. This bodes well for both Facebook's and MySpace's mobile efforts. Nevertheless, the network effects which drive social network growth will surely affect the respective growth rates of Facebook and MySpace on mobile platforms. And given the current trends in overall audience growth, we expect Facebook to take the lead over MySpace in worldwide mobile social networking audience size in the coming months.

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Facebook: Telecoms' New Best Friend?

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