Will Emerging Markets Decide Fate of Facebook Phone?
As mentioned in a previous article, the Facebook Phone has now been introduced. With the upcoming release of the new Facebook phone, new challenges will lie ahead to ensure its success. According to Forbes, Facebook will need to gain momentum in emerging markets where smartphones sales are increasing fast. India and Brazil have the highest number of Facebook users after the United States and the phone can be especially attractive in emerging markets if affordable. But would those people living in emerging markets want a phone designed by a social network and if so what can Facebook do to become a strong player in these markets?
According to a survey done by Upstream and YouGov, 31 percent of respondents from emerging markets would like to purchase a phone designed by a social network. The survey questioned people in Nigeria, India, Saudi Arabia and Brazil. This is promising for Facebook, however according to The Drum, the company has to be careful. As stated in Times of India, ads are Facebook’s principal moneymaker and the company is under intense pressure to make money and increase its share price. According to the article, Facebook made a little more than $4 a user in North America and $1.71 in Europe, but barely more than 50 cents in the rest of the world, including large markets like Brazil and India. So to make money in these markets, they will have rely on numbers. However, as mentioned in The Drum, this is where Facebook will have to take precautions. Reportedly, consumers in the UK and US have already expressed frustrations about the levels of advertising they currently receive. While emerging market consumers may be more open to mobile ads, heightened advertising may not be the way forward.
So how does Facebook even become a contender in these emerging markets? According to Forbes, the company will have to establish stronger international partnerships with mobile operators and app developers. If looking at India as an example, in this market local apps born on mobile platforms dominate. Apps like WhatsApp and Nimbuzz have complex relationships with local carriers and mobile developers. As reported in the article, Nimbuzz is one of India’s most popular mobile messaging services. Also, while having a close relationship with mobile operators, smartphone users can buy apps through their operator billing system. With low credit and debit card penetration in India, this is a huge advantage. Currently, if you buy an app on Facebook’s App Center, you’re sent to either Google Play or Apple’s App Store to make the purchase.
According to Forbes, researchers at Analysys Mason say that Facebook needs to become more native on mobile if it wants user engagement to grow. To do so, means Facebook needs to establish clear billing systems in local markets, which ultimately means creating relationships with local carriers. According to Times of India, analyst Michael Pachter stated that by partnering with HTC, a phone maker based in Taiwan, the social network is signaling that it is making an international push.
Considering the rise in smartphone usage in emerging markets, I do think that much of the success of the Facebook Phone will rely on its ability to perform in markets like Brazil and India. However, besides establishing partnerships with local carriers and offering more payment options, I think a lot more will need to be done. Speaking from my own experience, I know that in India, there are already established apps like Nimbuzz mentioned above. I believe it will take a lot of good marketing to convince Indians to give another player a try and stray from what they are already comfortable with. What are your thoughts on this?
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