Editor’s note: On April 25, Facebook announced an agreement to acquire Parse, a cloud-based platform providing tools for mobile app developers. The mobile backend-as-a-service (MBaaS) company could be used by Facebook to make it easy for mobile developers to integrate its SDK and use Facebook login, Open Graph and other components of its platform. And with the recently completed acquisition of advertising platform Atlas, we speculated last week that Parse and Atlas could be made — or some parts of it — free to most advertisers and developers to bring them deeper into Facebook’s ecosystem, ultimately driving ad revenue. Ty Amell, founder and CEO at StackMob, a cloud-based mobile application development platform, explains why Facebook has a big problem on its hands, regarding the steep cost of its platform for developers that’s causing them to leave the platform for mobile. In an effort to stop the exodus, Amell elaborates why Facebook agreed to acquire Parse.
The Facebook acquisition is just the latest move of large public companies taking long hard looks at the MBaaS and API industries. Salesforce recently launched their mobile services platform, Microsoft is in preview with mobile services on Azure and Intel recently bought Mashery for $180 million. Not to mention Layer 7 being acquired by CA Technologies.
With Facebook’s most recent acquisition, does this mean Facebook is moving into the MBaaS space? The short answer: not necessarily. Facebook has a big problem — many of the game publishers that made money for Facebook are starting to leave the platform. While Apple can still get away with charging a 30 percent commission to app developers, Facebook is having a hard time justifying those types of commissions. Apple’s App Store is on rocket ship growth trajectory while Facebook’s platform growth may have plateaued. Without that growth, publishers are having a hard time justifying the steep cost of Facebook’s platform. Public companies like Zynga are having a hard time reaching earnings projections as more and more users move away from Facebook in preference of mobile.
Facebook needs a mobile strategy to slow the exodus of applications (and users) away from platform and towards mobile. Social sharing and Open Graph are just not enough. While they were an important first step, it is obvious that Facebook needs to do more. At Mobile DevCon New York City in April, Facebook announced the Facebook Technology Partners. Eleven companies were announced as charter member — three of which were MBaaS companies — and all had a mobile component. Facebook’s potential involvement in MBaaS is just the latest validation of the MBaaS industry and the best so far — at least on the consumer side.
However, the acquisition also means there is a lot of uncertainty out there for mobile developers that were using Parse. Facebook is not a software company, and they aren’t a services company. They have one true product: the Facebook platform. This means Parse will need to be integrated into that platform. Integration takes time, and with the speed the mobile market is moving at, time is not a developer’s friend. Even the slightest distraction to an MBaaS company can cause their product to fall behind and become unstable. There are a lot of developers out there that will be looking for a new home for their applications.
The consumer and long-tail side of the industry have been proven out over the last three years when StackMob first created the MBaaS space. However, there is still a much larger market out there for enterprise and disrupting industries beyond MBaaS. Every CEO, chief information officer, chief marketing officer and other c-level executives are all determining their mobile strategy and how they plan to connect with their consumers and unlock information within their enterprise. For the first time — in at least recent history — enterprises are completely rethinking how they architect and build applications. Those same enterprises are also changing how they do business and how they enable their sales force.
Bottom line is, Facebook is monetizing your users with your data. And that approach to doing business is a deterrent for many startups trying to get their feet of the ground in this economy — profitability for developers is suffering as user acquisition and ad rates soar. They have a few matters to contend with before clearing the path for a successful mobile strategy. A good retention strategy will be critical as developers find it difficult to sustain growth.
Whether Facebook is a player in MBaaS or not, the potential for MBaaS has never been greater.