Facebook Inc (NASDAQ:FB) is ready to eat into Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) share of mobile revenue, but the company is not planning on releasing its own smart phone, or even replacing the search giant’s service. Facebook appears to want to become the backbone of mobile, and the company may be able to succeed, even in the face of competition from the Mountain View company and others.
A report on the new Facebook Inc (NASDAQ:FB) endeavours from Nomura Research is positive on the company’s efforts to change the source of its income. The company has a price target of $84 on Facebook shares, and recommends that investors Buy the company’s stock on the back of its efforts to become the Google of the mobile world.
Facebook opens up mobile efforts
Facebook Inc (NASDAQ:FB) has a very clear message it is sending to the tech world. The company is not just offering a social network. It is offering a platform to other tech companies. The firm is creating a complicated web of developer tools, user tools and user information that will make it the backbone of the way some companies create mobile applications.
The most immediately important part of the offerings for investors is the launch of Facebook Audience Network, the company’s new mobile advertising network. The tool will be open to third parties, and will allow advertisers to leverage mobile data, and Facebook Inc. (NASDAQ:FB) user information, to advertise their products to users.
A Nomura Research report on the company’s announcement at its F8 conference judged “it can significantly increase ad inventory without having to increase the ad load on core Facebook, allowing it to maintain a high quality user experience.” That’s clearly the hope of the Facebook Inc (NASDAQ:FB) investors who drove the firm’s shares up more than 5% in the last five day’s trading.
Facebook gets into real competition
There are very few companies with the user information and market power to pull off the kind of manoeuvre that Facebook Inc (NASDAQ:FB) seems aiming to undertake in the next year or so. That limits the amount of competition by number, though it doesn’t necessarily limit the magnitude of competitive effort. Facebook spent most of its history battling for users. Now it is going to be battling for something much more valuable.
Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) currently operates in many of the areas that Facebook Inc (NASDAQ:FB) seems intent on entering. The company was in limited competition with Facebook in the past, given the social networks comparatively tiny market presence. The new efforts out of Menlo Park, however, put the companies firmly at odds.
It’s clear that Facebook Inc (NASDAQ:FB) has the right idea about where potential revenue is, but the company may not have the power of execution that investors would like to see in a company as ambitious as Facebook. The real worry is that the firm’s brash competitiveness will cause a real war with Google, ending the phony war period that has lasted for more than five years.
Google has provided the platform that most of the mobile world works on, but the company has still not secured any kind of success in mobile monetization. Facebook’s future seems brighter as it tries to outrun the world’s largest advertiser, at least according to Nomura.