Facebook is not at war with Google as both companies would like to think. It is really suffering more from guerrilla attacks from a set of small players that hit Facebook one functionality at a time. WhatsApp, Snapchat, Twitter, Quora, Path, Tango, Tumblr, Pinterest, Viber, Voxer, LinkedIn and even its own Instagram all chip away from Facebook. It’s the club of companies that are better than Facebook “at something” . And Facebook’s attempt to bury them all with a Facebook phone didn’t work out. Facebook has a billion users but these are many of the same users who more and more prefer the specialty formats of other platforms. While in Smartphones themselves the battle may be only between iPhone 5 vs Samsung IV, when it comes to apps people are much more picky. Facebook is losing dominance by the week to focused niche players.
For most people Facebook Swiss Knife approach is good, but given a choice, a tool set is better. What is Facebook to do? They are lucky enough to be sitting on a cash pile and it is a public company worth over $50bn. They have to do what Google has been doing for years. Buy, buy and buy. Instagram was a good start. Buy first and figure out how to monetize later, learn from Google’s acquisition of Youtube which for years was as struggle and now is a star.
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