14 May 12

Facebook launches App store

by Gordon Eldrett, Business Development Manager

In advance of what is expected to be the biggest IPO in history for an Internet firm following the $1billion they paid for Instagram, Facebook has launched its own app store. Designed as a central source for apps like Draw Something, Farmville etc Facebook have announced that developers will have the option to charge a fee for apps sold in the store.

This is an interesting change of tack since the speed with which games and apps have spread through Facebook historically has been the fact that they are free (with advertising being the remuneration model for the developers). However, the growth of mobile internet and how to monetise it is clearly a concern. Facebook told potential investors "If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetisation strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected."

With mobile access to the internet set to overtake access via desktops by 2014 there is not much time to ensure their mobile revenue streams are in place.

Facebook say that the store is not designed to compete with the Apple App store or Google play. Facebook’s Aaron Brady said on their blog "The App Center is designed to grow mobile apps that use Facebook - whether they're on iOS, Android or the mobile web,".

Saverio Romeo, an industry analyst from Frost & Sullivan, said the store announcement suggested an aggressive push by Facebook to become a bigger player in mobile. He said Facebook needed to become "more significant, to attract more ideas and get more experience in the mobile space". He also said he believed Facebook could position itself as the first major app store to be platform-agnostic - that is, not tied to a single platform such as iOS or Android.

This will all come down to monetization. Apple have done an excellent job of making their apps a significant revenue stream and if Facebook can do the same then they are sitting on a potential goldmine.