Dateline 2010: Facebook took over the InterWeb with its own AppStore

Apr 2, 2009 | Mobile & Web

Mark zuckerberg 366359photo by: wackedstarz

Apple’s iPhone AppStore is a success, I’ve said that before. But what if we extend the AppStore to adjacent areas, outside of mobile space? Let’s take a look at the essence and benefits for the AppStore type of model:

For developers:

  • Built-in customer base: All iPhone users are potential customers. Apple has already done the hard work to turn consumers into potential customers, and the developer can ride piggy back on this marketing effort. For a small developer, not having to do a full on brand building, customer acquisition exercise is a major attraction.
  • Built-in billing mechanism: For small developers, implementing a billing mechanism is a bit of a big deal. Most developers outside of e-commerce are not that familiar with billing, and the various issues surrounding it such as security, refund, etc., having a pre-packaged solution is a good enticement for the developers to jump on your platform.
  • Built-in revenue scheme: One of the best thing Apple did for the AppStore developers is that they legitimize paying for apps. There is no such notion on the web, and as a result has really delayed the profitability of web developers. Even today, Freemium and Ads are the only two real ways to monetize for a non-e-commerce web site. Both one of these methods require a substantial effort to build traffic in order to capture sustainable revenue. On the AppStore, however, you can just focus on building the app that people will pay for, and you’ll start getting revenue from day one.

For consumers:

  • Consistency and Quality: Because all apps are reviewed by Apple, the consumers can reasonably expect a certain quality bar for their purchases. It removes a psychological barrier that often delay a purphase.
  • Centralized billing: Consumers don’t have to leave their credit card details on various developer web sites, many of whom they have never heard of. Instead, they just entered their credit card once with Apple, and from then on, it’s 1-Click plus a password challenge. With the new SDK 3.0, Apple also is unifying the refund policy, and that will only erase another reason to NOT purchase an app.
  • These are great reasons to like the AppStore model. So the natural question is, who else can benefit from this model, particularly someone in the non-mobile space?

Here’s my best guess on who will take the AppStore concept to the next logical step: Facebook. Let’s see why:

  • Facebook has a large audience, as large, and as even, as anyone on the web. 200 Million is not a small number. And they are devoted customers too. 200M loyal customers that Facebook can share with my business? Well you’ve got my attention.
  • With Facebook API and now Facebook Connect, Facebook already has a platform that developers can use and help solve some common problems: getting someone over the hurdle of registering with your site; maintaining the user database; accessing the user’s profile data, which on Facebook is as rich as Google’s, though in a different way; and last, but not least, is the potential for customers to do the word-of-mouth marketing for your product. Those are very very compelling scenarios, which is why there are so many Facebook developers already. But if you buy now, Facebook will also throw in….
  • Integrated billing and accounting. Just like Apple simplified this for iPhone customers, Facebook can bring billing to Facebook API, and deliver the last major capability that developer needs. Because once you have a billing mechanism, you also get…
  • A revenue model. Imagine if you can buy a new Facebook theme for $0.99 without entering your credit card once again. Or a detailed pricing report for a new Lexus, so you can be armed with the details when you go into the dealer for negotiation. Or pay the monthly fees for a dating service. Users would love it, and developers will be as grateful to Facebook as they were to Google for the Ads business model, for handing them the micro-transaction business model.

And of course, nothing is preventing Facebook from partaking in the ad network either. They can play both sides of the revenue fence.

Given the company’s need to detail out their revenue models to investors, ahead of an IPO (likely) or an acquisition (not), I have no doubt that this is the right move for Facebook’s platform objective. Unlike Google, which has a cash cow business and is not as aggressive in upsetting the world order, and thus not pushing Google Checkout much, Facebook is still young and aggressive, and unafraid of failures in pursuit of business goal. I’ve got to think that this is already pretty high on Zuckerberg’s radar.

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