Facebook's Barreling Full Steam Ahead to Unknown Destination
May 29, 2012 1:19 PM PT
While it was widely assumed that Facebook would pull an about-face following its recent high-profile IPO and employ some restraint when it came to future acquisitions, the opposite appears to be happening. The social networking giant reportedly has several potential moves in play.
The biggest -- for now -- could be the acquisition of the popular mobile Internet browser Opera, the last major independent browser company.
"Opera is a very good browser but more importantly, it is a good way for Facebook to get into the mobile browser space," Paul Amsellem, president of the Mobile Network Group, told the E-Commerce Times. "At the moment, Facebook is really limited, as they have one app on mobile. Opera would allow them to get deeper into the mobile space."
Facebook did not respond to our request to comment for this story.
Just weeks ago, it seemed that Mark Zuckerberg had attempted one last big score prior to the IPO with the acquisition of Instragram, but now it appears that Facebook is going to continue to operate as it had -- at least, as long as regulators will allow.
"Likely, this will be another face plant," said Rob Enderle, principal analyst at the Enderle Group. "However, Opera has a strong mobile presence and may look attractive to Facebook."
Still, getting a European acquisition to work is daunting for U.S. Companies -- even those that are expert at making acquisitions, Enderle told the E-Commerce Times.
"I doubt this would pass review in those firms," he added. "Since Facebook is run more like a personal resource for Zuckerberg, the acquisition is more likely -- and the resulting failure all but ensured. Physical distance, culture and inexperience will work against success here."
Facebook Getting Face
Rumors also circulated this week that Facebook could be looking at Face.com, a startup that develops facial recognition software. The rumors hinted that Facebook could look to gain Face.com for around US$80 to $100 million -- so far less than Instragram -- but still no small sum.
The question remains whether there is even that much value for the technology -- but more importantly, whether it would rekindle some privacy concerns.
"It's funny that the better face recognition technology gets, the more I only share pictures of inanimate objects," said Josh Crandall of Netpop Research. "Face recognition capabilities combined with Facebook sharing principles may be the last straw for many users who are concerned about invasion of their privacy."
Beyond privacy issues, actually making use of facial recognition software won't come without challenges.
"Getting through the quagmire of carriers, regulations, and catching up with what would be a massive disadvantage on apps may well be beyond Facebook's resources," stressed Enderle.
Facebook Looks for Phone Time
The other significant aspect of this is whether all this could come together and result in a Facebook-specific mobile handset -- a "Facephone." It could be that as Facebook has reached its zenith and is now post-IPO, it is looking to follow past success stories.
"It does look like Facebook, following Google's lead, is going to go into phones and will be meshing a series of technologies to make that happen," added Enderle. "One of the first signs that a new company is struggling with strategy is when they appear to be copying an older competitor badly, and this has all the earmarks of a poor Google Android/Nexus copy so far."
Facebook could also look to go beyond what Google did with Android and jump straight to the hardware.
"When you follow the IPO, it is clear that Facebook has a lot of cash. They are looking to invest in other areas, and one of the main areas is mobile," said Amsellem. "While buying Opera would be one way to do so, they could also look to do something with Microsoft."
Or Facebook could go a step further and purchase a company with experience in the space.
"Facebook could even look at a player such as Nokia or RIM," added Amsellem. "This would provide Facebook with a way to release a handset of their own."
Acquisition Could Give Time
One reason Facebook could look at such a big acquisition is that it would take time for results to be seen. Given that Facebook may have reached that zenith, time is one element it could use.
"With an acquisition such as the one with Instragram, analysts expect it to bear fruit immediately," said Amsellem. "But a big acquisition of a company like RIM or Nokia would be something that would take two to three years to cultivate. They need to buy a player in an industry they are not in."
It's not clear whether Facebook, which seems to make up the rules as it plays the game, could adapt to a much more rigid industry. Possibly -- but not likely.
"These rumors and developments reflect how Facebook prides its hacker attitude," said Crandall. "What fun it is to watch how the Facebook philosophy of product development -- 'Move fast and break things' -- plays out in hardware. Software changes easily, but hardware may prove to be a different game."