Israel acquisition reflects Facebook's new strategy

Roy Goldenberg

Snaptu has benefitted from the fact that smartphones are still being outsold by simpler handsets.

The acquisition of Snaptu by Facebook is an additional means by which the world's most popular social network company with 500 million users is consolidating its mobile Internet strategy. For some months now, Facebook has been pushing the cellular sector, and attracting more and more surfers to connect to its services from their mobile phones.

An estimated 200 million Facebook users currently connect to the social network from their mobile phones - about 40% of overall Facebook users. Above and beyond the advantages of accessibility to the site, this is also a large source of income. When a surfer enters Facebook from his or her mobile phone, it is possible to identify his location and offer appropriate ads.

Even though Facebook is developing in the cutting-edge world of smartphones, the Snaptu deal reflects belief in the market of simpler mobile handsets. Data from IDC shows that one billion such "simple" phones were sold in 2010, 78.5% of all the handsets sold last year. This is a huge market share which has been overshadowed the advent of smartphones.

Even though IDC predicts that by 2014, the market share of these simpler phones will fall to 60%, this is still a public that cannot be ignored. Snaptu's focus on these phones only emphasizes the hidden potential of the application that it has developed.

Last week Facebook "stole" another employee of Google. This is the latest in a long line of executives who have crossed over from the search engine giant to the company that is setting the tone in the present decade. The latest executive to be headhunted was Google's director of corporate development Amin Zoufonoun.

Facebook had a clear agenda in recruiting Zoufonoun. The company wants to manage an ever growing mergers and acquisitions department, and while Zoufonoun is not responsible for today's acquisition of Snaptu, which is relatively large compared with Facebook's previous acquisitions, his arrival is nevertheless a declaration of intent.

Alongside its financial resources, Facebook has the strongest sex appeal in the industry and needs to take advantage of this momentum to increase its already powerful know-how and services through more acquisitions. This is one of the most efficient ways to compete with the big beasts like Google and the fast growing cubs like Groupon.

Published by Globes, Israel business news - - on March 20, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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