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Facebook HomeClue: it’s not Facebook’s main rivals. 

Ovum says Facebook Home will cost telcos US$32.6 billion in 2013. By 2020, that could be as much as US$86 billion.

That’s because Facebook’s software, which effectively takes over an Android smartphone, replaces SMS with its own messaging. Although SMS use is declining, it is still highly profitable for telcos.

Home is a suite of apps sitting on top of Android. One of the apps is Facebook Messenger which effectively becomes the phones core messaging application pushing SMS aside. Because it is effectively free to users, this will also cut into voice revenue. And Facebook could add its own Facebook Chat voice messaging service to Home – that will cost telcos even more.

Facebook makes money from Home because it encourages users to spend more time inside the social media giant’s walled garden where they’ll be served advertising. The company may earn even more from mining data collected by the software and selling it to companies for their big data projects.

One thought on “Facebook Home threatens Android

  1. It’s also just basic user retention. Keep ’em feeling like they’re so locked in they couldn’t possibly migrate no matter how much they hate the experience.

    An interesting note about US SMS is that they charge to recipient as well as the sender. I think prices have gone down but a year or so ago it was 20c at each end…

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