Liz Gannes

Recent Posts by Liz Gannes

Four Big Projects Facebook Should Launch, and Probably Will–Even Though It Says It Won’t

Steve Jobs is famous for publicly dismissing a market shortly before Apple enters it. And Mark Zuckerberg and his team seem to have some Steve Jobs in them: There are several obvious product launches coming for the company, but it either denies they’re in the works or refuses to talk about them.

Here’s a scorecard:

An Ad Network: This is one that seems obvious to many industry watchers. Facebook has widgets and integrations around the Web, and could easily turn those into revenue-generating opportunities. It could use its social graph to introduce targeted advertising and provide real competition to Google and other ad networks.

But the company has denied repeatedly that it is working on an ad network. Dan Rose, the company’s VP of partnerships and platform marketing, said this week at DLD in Munich, “We get that question a lot, and the answer is always the same: there are no plans for that at this point.”

However, this week Facebook launched a reprise of its failed Beacon product that turns off-site behavior–user “likes”–into “sponsored stories” within its site.

Prognosis: Likely later this year. This would be a good revenue stream to turn on before Facebook goes public, as it says it’s likely to do in 2012.

A Facebook Phone: This one is a rumor mill regular, and it came up again Wednesday with a report that Facebook would launch two phones with HTC at Mobile World Congress this year.

Rose responded at another event in Europe, “This is really just another example of a manufacturer who has taken our public APIs and integrated them into their device in an interesting way….The rumors around there being something more to this HTC device are overblown.” (via Reuters)

But baking Facebook into a phone makes sense. As Facebook CTO Bret Taylor said on Tuesday, “Mobile devices are inherently social.”

Taylor said Facebook wants to take a platform approach to mobile, maximizing accessibility through use of HTML5. But it could be hard to resist demonstrating deep address book integration, instant personalization and other benefits of a Facebook-designed mobile phone.

Prognosis: The denials seem to be a matter of semantics. Facebook is likely to support these projects, and they are coming to market soon.

Payments for Non-virtual Goods: Another major move for Facebook this week was to announce that usage of its Facebook Credits virtual currency would be mandatory starting this summer. It’s a big deal that Facebook will be hooking up credit cards and PayPal accounts for many of the 200 million-plus users who play games every month on its platform.

The obvious next step for Credits is payments for non-virtual goods. But that may not be a viable model given Facebook takes a 30 percent cut of all Credits, which would destroy margins on just about everything but virtual goods. Asked this week at the Inside Social Apps conference whether Facebook would expand Credits to apply to other types of purchases, Deb Liu, the company’s commerce product marketing manager, said no.

“Facebook credits is built as a virtual currency and it’s really built for virtual goods,” she said. Facebook sees Credits as “an opportunity to drive better experience particularly in the games world.”

Still, that doesn’t mean Facebook couldn’t use a similar system to introduce ways for users to pay for digital goods like media within its platform. Margins for digital goods could feasibly swallow a 30 percent cut, as they already do in Apple’s iTunes store.

Prognosis: Facebook’s launch of Credits has been halting and unpopular, in large part because it’s awkward to layer a 30 percent tithing onto its platform after developers have built their businesses. It seems likely to continue to move slowly on payments.

Voice and Video Chat: The Daily What ran a screenshot on Wednesday of a Facebook voice call option appearing on the screen of a user participating in text chat. A company spokesperson didn’t dismiss it as a PhotoShop job, but said, rather, “We don’t comment on rumor and speculation and have nothing to announce at this time,” in response to an emailed inquiry.

As Facebook moves to unify its users’ communications through its Facebook Messages product, adding voice and/or video calls makes sense. And on that front, a Facebook-Skype partnership to fend off Google’s voice products has been in the works for some time.

Prognosis: Soon, given it appears to already be out for user testing.

Autonomous Cars: Not gonna happen.

Why might Facebook start being more audacious and challenging powerful incumbents now? Well, for one thing, there’s no point in trying to stay under the radar anymore.

Throughout its history, Facebook has been somewhat slow-moving and remarkably undiversified, iterating internally on things, such as its “like” button, for years before releasing them to the world, and ramping up revenue at an excruciating pace compared with market expectations.

But the company has done one thing extremely well: User growth. Now that it’s topping out on its potential growth in many markets, Facebook may have to make bolder moves on the product side to increase metrics like engagement. And now that it’s getting ready to face the public markets, it may finally need to prove it can open up the revenue faucets.

Please see the disclosure about Facebook in my ethics statement.