1Q EARNINGS: Mark Zuckerberg On The Three Stages Of Maturity For Facebook’s Apps

By David Cohen 

3Generations650Facebook Co-Founder and CEO Mark Zuckerberg divided the social network’s portfolio of applications into three stages during the company’s first-quarter earnings call Wednesday afternoon, putting the flagship Facebook apps in the most mature category; followed by established offerings Messenger, Instagram, and WhatsApp; and capped by the fruits of its new Facebook Creative Labs initiative, such as iPhone app Paper. In his opening remarks, Zuckerberg said:

Our strategy for connecting everyone is based on two approaches. The first is about giving people new apps for sharing different kinds of content with different people. Today our apps are at different stages of maturity.

Our core Facebook app has an audience of more than 1 billion people, and it has become an essential sharing infrastructure for the world. We’re currently focused on building a great business around this, and our continuing revenue growth on mobile this quarter shows our strong momentum here.

For the next set of apps — like Messenger, Instagram, and, hopefully soon, WhatsApp — the current priority is growth. Messenger and Instagram both reached 200 million monthly active users this quarter. We believe these apps have a lot of room to grow and will start to be important businesses in the future, but monetization isn’t our near-term priority here.

And for the new apps that we’re building as part of our Creative Labs effort, we’re still in the very early stages of development. We’re working hard to develop the technical foundations for these services so that we can rapidly launch new products and then refine them based on the initial feedback from our community.

For Creative Labs projects that demonstrate a lot of value, our next priority will be to grow them to reach 100 million people, before we start developing them into significant businesses. Now we’re pleased by the early reaction to Paper, our first app from Creative Labs, and we expect this to be a good test case for our strategy.

He added on WhatsApp:

Our early tests and research into new technologies such as drones and other infrastructure to connect people are promising. And over the long-term, we also expect WhatsApp to play an important part in connecting everyone by offering a simple, fast, and reliable messaging system that could be as ubiquitous as Facebook one day. We’ll have more to share after the deal closes.

Finally, in response to a question from UBS Analyst Eric Sheridan seeking a “big-picture view” of Facebook’s apps, Zuckerberg replied:

In terms of building out a whole communication ecosystem, the way that we think about the new apps and products that we’re building is that people want to share all kinds of different content with all kinds of different audiences.

Sometimes you want to have a one-on-one conversation, or text, or chat, or voice call, up to having a small group conversation, to communicating, updating all of your friends on something at once. And sometimes there is really good public content, whether it’s news or premium video or things like that.

At the intersection of each type of content and each audience, we think that there is a really compelling experience to be built. And Facebook historically is focused on friends and public content. Now with Messenger and WhatsApp, we’re taking a couple of different approaches toward more private content, as well.

You’re going to see us do more things in more private content. That’s an ecosystem that’s growing incredibly quickly, and that also speaks to why WhatsApp and Messenger are both growing independently quickly — because they actually serve pretty different use cases within private sharing and private content.

There are different stages of maturity for the different things that we’re doing. So, the Facebook app by itself is the furthest along, and more than 1 billion people use it, and it’s not only one of the most-used apps, but it’s the most used app — it’s also at the core of our business.

Then the second set of apps we have are Messenger, Instagram, and, soon, WhatsApp, and you know Messenger and Instagram are each now greater than 200 million monthly active users. I think the WhatsApp folks independently announced, I think it was yesterday, that they just passed 500 million active.

So these are apps that are now at a pretty big scale, and the immediate priority is going to be getting them to 1 billion people, where they’re continuing to focus on that before focusing on monetization, and the way that we have with the core Facebook app, so that’s kind of a second stage.

The third set is the new Facebook Creative Labs apps that we’re just getting started — the things like Paper and a number of other things that we might announce that at some point. Those are even further along than even Messenger, Instagram, and WhatsApp, where it will probably take a few years for those to even to get to the stage that Instagram, Messenger, and WhatsApp are at, which, by themselves, are probably a few years away from being important businesses for us.

So that’s kind of the pipeline of things that we see, and there is kind of a full ecosystem of different ways the people want to share with different people.

Readers: What kinds of apps do you think Facebook Creative Labs is working on?

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