Call me on Facebook? Will Facebook’s Network Effect catch the Mobile Industry out?

Will Facebook’s Network Effect catch the Mobile Industry out?

Facebook will win the mobile battle with operators and handset manufacturers by building a beachhead in the $400 billion youth segment.

Is Facebook’s Free Voice Calls the Beginning of the End?

New analysis from The 2013 Mobile Youth Report shows that Facebook may disrupt the business models of handset manufacturers and mobile operators by implementing change through the backdoor.

Mark Zuckerberg has gone on record saying that the Facebook of the future will be a “mobile business” but their manner of entry has been left to speculation.

This week, Facebook announced it will provide free mobile voice calls across its messenger app on the iPhone signaling its intent to disrupt the mobile industry from the bottom up. Rather than revolutionize telecoms through the high end executive road warriors, Facebook will win the mobile battle with operators and handset manufacturers by building a beachhead in the $400 billion youth segment.

Will Facebook finish off the job Apple started and change the mobile industry? In the 2013 Mobile Youth report, Facebook is singled out as one of the key 15 brands that will redefine the mobile industry. Here’s why:

Economic downturn, Apple’s slowing sales and the growth of both wifi and Facebook messenger provide a perfect storm for change. The world’s 2 billion mobile phone owners under 30 years old have become a critical battleground for deciding Facebook’s mobile fortunes and driving change.

By developing a separate messenger app, Facebook is able to mainline its youth market product development. The app not only provides free voice calls but also a platform to evolve new applications and serve them direct to the market’s most influential mobile owners – those aged under 30. 65% of youth buy their handsets based on what their peers (not what ad agencies) said. Applications are becoming increasingly critical in defining the handset experience. The 2013 Mobile Youth Report found that handset purchase decisions are heavily influenced by the availability (or lack of availability) of favored applications.

Facebook’s plans to build on its mobile messenger application present a significant challenge to the existing industry status quo. By developing a pipeline to the youth market, Facebook can introduce social search and other applications, effectively bypassing existing arrangements and charging models.

One key piece of data from the 2013 Mobile Youth Report favors Facebook’s mobile strategy: contrary to expectations, youth prefer diverged not converged applications. The Report found that in many cases the mobile phone operated as up to 7 social tools for teens. That means there is always room for one more application that fulfills existing social behaviors but understanding what “social behaviors” are couldn’t be gleaned from social media studies but more in-depth analysis of the emotional and psychological drivers behind behavior.

Unlike the mobile operators and handset manufacturers, Facebook has a distinct advantage in measuring these youth social behaviors enabling it to co-create the right services based on feedback from the frontline. Change may well catch the mobile industry by surprise: some handset manufacturers and operators have built their experience around converged or unified applications (e.g. SMS or BBM). The Report advises handset manufacturers and operators to get passionate about ethnographic research if they want to defend the youth market and, therefore, their future customer base.

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About Graham Brown

Co-founder of mobileYouth. Cultural explorer, ethnographer and digital anthropologist. Author of The annual mobileYouth report and books The Mobile Youth: Voices of the Mobile Generation, All is Social, The Youth Marketing Handbook, Fans and Youth Marketing 101.

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