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Facebook Expands Its Mobile Offerings

Tuesday - 1/8/2013, 2:00am  ET

Facebook has just announced its plan to launch into the voice-over-IP market. Available now, users will be able to send their friends a voice mail via its Messenger app, a feature most investors likely won't get excited about. The bigger development is that Facebook has begun rolling out a feature that will allow users to talk with one another for free, excluding data charges. Facebook has chosen Canada as its first test market and as long as the launch goes well, other geographies will follow suit. Between Microsoft Skype, Apple FaceTime, and Google Voice Calling, consider this yet another option for free VoIP.

What does this accomplish?
According to comScore, Facebook is a leader when it comes to mobile market share. Trailing behind Google's massive 96% reach, Facebook reaches 80% of smartphone users ages 18 and over. Facebook ranks No. 1 in terms of total engagement, averaging 441 minutes per user over a month. Mobile usage has officially surpassed the classic PC-oriented site. In this context, it becomes clear that Facebook is leveraging its leadership position in app engagement. The longer it can keep users engaged on mobile, the more chances it has to grow its mobile advertising business -- a current, yet improving drag for Facebook shareholders.

Implications for investors
According to Facebook's third quarter results, over 600 million users now connect to the social network via a mobile device, which happens to be its highest growth area -- up 61% year-over-year. This explosive growth has forced Facebook to better adapt its business model to be more suited for mobile. As a result, users have seen the News Feed become inundated with Suggested Posts and Sponsored Stories, which has now become a $4 million a day business -- 75% of which comes from mobile. Now the plan seems more strategic than just serving more advertisements. It's all about stickiness, engagement, and increasing the time spent with Facebook's mobile offerings. The more time users spend on Facebook, the less time they will have for competitors. Given Facebook's engagement numbers, this is a powerful proposition.

The other aspect to consider is how mobile carriers will react. If Facebook's VoIP service gains in massive popularity, it's possible that mobile carriers may restrict use. However, I think it's more important for investors to recognize that the more ways Facebook connects the world, the more opportunities it creates for its business. These developments are certainly a step in the right direction.

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This article was originally published as Facebook Expands Its Mobile Offeringson Fool.com

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