Facebook has introduced Graph Search, a tool touted by many as part solution to the firm's revenue problem, but one huge obstacle still stands in the way.
Facebook Inc (NASDAQ:FB) announced a new feature for its website, this week, called Graph Search. The new tool will allow users of the social networking site to view information they already have access to, like the movies and music their friends like, in a more digestible way. Initial responses have been positive, but the tool’s launch reveals that Facebook may still be far behind investors’ expectations.
Graph search is part of a new range of Facebook products introduced recently, they are designed to increase user engagement, while increasing average revenue per user. Graph search is in the latter category right now, with no advertising yet.
Some of Facebook’s new products are bound to fail and some are bound to be disasters, that’s why the company is launching so many of them. Graph search has several problems, which needs to be solved before it can ever be a threat to Google Inc (NASDAQ:GOOG), or a revenue spinner for the Menlo Park firm.
The most important question is how the service is going to work on mobile. More and more Facebook users are opting to use the social network on their mobile devices. Most of the worries that have caused the firm’s stock price troubles are centered around a lack of evidence that the firm can make money on mobile devices.
Mark Zuckerberg, Facebook Inc (NASDAQ:FB) CEO, said it was hard to estimate how long it would take to get the service working on mobile devices during the launch. That piece of information is vital to investors who, at this stage, should be expecting the firm to release products simultaneously on mobile, where the future of the company clearly lies.
One of the most important metrics to judge Facebook Inc (NASDAQ:FB) by is not the engagement of its users to the service, but the engagement of the company’s executives and developers to mobile services. Once again, the firm has failed to live up to reasonable expectations of its performance there.
Facebook operates in two core businesses, a desktop social network and a mobile one. The desktop market is shrinking quickly, while the mobile market is expanding. Still, the company is investing most of its energy into the desktop market, and thinks it appropriate to fail to even approximate the release date for the mobile version of an exciting new service.
Facebook Inc (NASDAQ:FB) is often portrayed as a new innovative firm, but it continues to make strategic decisions that implies the opposite. The release of a new promising product on an outdated platform is not something that an innovative company does. Facebook’s investors should be wary.
The social network can continue to release all of the great products it wants on desktop, but it won’t do any good. Facebook needs to show investors that it has a clear strategy ready to monetize on mobile. Once again, the firm failed on that front.