Strategic move indeed, Facebook rolls out plans for a new messaging service via SMS mobile phone services. You might be wondering how antiquated, right?
I would be as well if I hadn’t spent a few months following the “backend” of the story about social media and its use during revolutions in the Middle East, in Iran before that, in disaster relief in Japan and the list does go on. We in the US primarily interact with the world wide web on some form of personal computer in the form of desktop (less so today), laptops and/or tablets and the growing smart phones. However, this technology has not translated for the rest of the world. The transfer of use is greatly limited by costs. An average middle class income in Egypt for example could hardly afford the cost of a personal computer and the internet services charges associated with it. However, everyone out of necessity as well, can afford a cell phone and pay-as-use cards or chips for mobile phones.
Internet use, therefore seems like a everyday occurrence, is in fact a luxury in the developing world. Facebooks fortunes rest on access to the internet via out of reach technology for these countries. While facebook may have a billion users, its potential in many markets has or is maxed out because the vast majority of people don’t use the internet daily.
Twitter on the other hand represents a business model and in particular accessibility that is unparalleled by many social media providers through its connection to SMS, or texting message connectivity. In one sit down a user in Egypt can set up an account via Twitter but not have to rely on direct internet access in order to stay connected on their cell phone to the internet. They still have access to the vastness that is the internet network to get their message out, but they dont rely on the internet website directly.
Thats why many in the Western media labeled the recent Arab revolutions to Twitter. I am finding out that that is itself a major point of debate and criticism and would require a whole other post but the conclusion is that Facebooks model is very limiting.
Just to get you some figures: prior to the Egyptian revolution, the population was around 78 million. The mobile phone industry had 73% penetration into the market, with only 10% of that connected with Data to the internet. Think about it this way, formal bank accounts in Egypt only amounted to 10% of the population. More people used a cell phone then had a bank account.
Now consider internet connectivity in Egypt. According to the pre-Revolution-Mubarak Ministry of Communication 2010 study, only 22% of the population had access.
Putting that into context think about the United States, with a population of 130 million people, there are 120 million cell phone subscribers here. Thats incredible! And internet access, while not complete, is still higher then that of Egypt.
Given the industry environment in the developing world, this makes complete sense for Facebook to want to get access to this market. Facebook is assuming that this messaging, free and subsidized by the company, will lead to new users, therefore new marketing and data gathering prospects. The downside is that the assumption is based on a growth in internet access, or developing a messaging service that is able to take millions of text messages and making sense of gathered data. Subsidized messages, MIGHT, allow Facebook to send direct advertisement messages.
The kicker here is that Facebook had been given the title of “SMS Killer” (according to wired a year earlier) just around the beginning of this past year according to NYTimes blog and here we are with Facebook readjusting its strategy to fit the global marketscape with its no-user-account-needed-SMS-chat capability. Will text messaging disappear? Probably not, but what it does mean is that Facebook has now realized the marketscape and impediment to its capturing a segment of the larger broader market. Check out this talk at TED by Robert Neuwirth about this market-D and how cell providers in Africa had to rethink their strategy to get market penetration into Nigeria, the largest market in Africa.
Corner Office Shaikh 