via Nasdaq : What Facebook Is Doing Beyond Social Media
With 1.94 billion monthly active users, Facebook (FB) is the undisputed king in the social media space. Together with Instagram and WhatsApp, Facebook has created social network strong enough to make competitors sweat. Facebook’s growth story has been impressive with its revenue rising from $7.87 billion in FY13 to $27.64 billion in FY16, and net income soaring from $1.5 billion to $10.19 billion during the same period. The social media technology giant is growing at a healthy pace on the back of an increasing user base, advertising cost rate and merchants onboard—led by its mobile and video advertising strategy.
Despite its phenomenal progress, Facebook is far from being complacent. It continues to invest in research and development (21% of revenue in FY16), and innovate aggressively to build new channels of potential growth for the times ahead. Here’s a close look at two of them—P2P payments and telecom infrastructure.
Facebook unveiled its intent to enter the Peer-to-Peer (P2P) payments market in March 2015 by introducing its convenient and secure mechanism in Messenger that allowed people to send and receive money seamlessly. Dubbed as “easy and free,” the service by Facebook extended in April 2017 to send or receive money between groups of people on Messenger—to allow people to chip in for a common gift or a dutch party. With the expansion of its services in Europe and eventually other regions, the payments in Messenger is set to become a significant revenue source for Facebook over time.
BI Intelligence estimates that the U.S. annual P2P payments, which includes informal payments by cash, check, digital money transfer, or other means made from one person to another reached over $540 billion in 2014. A report by eMarketer anticipates mobile P2P payments transaction value to climb to $92.11 billion in 2017. These figures project immense scope for Facebook’s payment service that offers ease and security for a strongly ‘connected’ user base.
During the February Conference Call, Sheryl Sandberg said, “We’re now per month at a billion messages sent between people and businesses and we think that’s very promising for our ability for people to use this platform to make those connections that will ultimately drive business opportunities.”
Telecom Infra Project
In February 2016, Facebook announced the Telecom Infra Project (TIP) with a goal to produce simple, efficient and flexible technologies that are relevant to both existing and future networks. TIP was launched to focus on three areas—access, backhaul, and core and management—applying the Open Compute Project model.
Back in 2011, Facebook launched the Open Compute Project (OCP) aimed at “reimagining hardware, making it more efficient, flexible, and scalable” for greater choice, customization and cost savings. In 2015, Facebook reported that the project enabled it to save $2 billion in infrastructure costs over a three-year period and also helped reduce data center electric bills by as much as 20% for companies such as Fidelity Investments. OCP continues to revolutionize the $171 billion data center systems industry.
Now with TIP, Facebook is gearing to upend the billion-dollar telecom market. It is estimated that data traffic in the most advanced markets will triple in the next five years, while traffic in emerging economies is forecast to grow 9x in the same period. Thus, the next-generation networks need to be equipped to support billions of connected devices while offering flexibility at lower deployment costs and better coverage at higher bit rates.
By working on the model of openness and disaggregation, Facebook is looking to unbundle the traditional telecom market to one that offers greater flexibility in building networks. Overall, it would reduce the huge hardware investments, thereby resulting in gains in cost and operational efficiency for both rural and urban deployments, benefiting not just Facebook but also other industry players and customers. With initial membership consisting of just five names—Facebook, Intel, Nokia, Deutsche Telekom and SK Telecom—the number has now crossed 400.
Overall, Facebook is poised to grow at a robust rate given its commitment to innovation and passion for advanced technologies. It is working to fulfill its mission—to make the world more open and connected—resting on the belief that “this journey is 1% finished.”
Source : Nasdaq | What Facebook Is Doing Beyond Social Media