When it comes to his own communication needs, Greg Marra likes to keep pace—an Apple iPhone 5 and a Nexus 4 Android phone are constant companions.
But earlier this month, on his second visit to India, Marra's preoccupation was phones that go way, way, way back in technology time. His shopping bag had about a dozen handsets, priced from Rs 1,300 to Rs 4,500, from the very basic to an entry-level smartphone. There was a Lava Iris 349, a Micromax X272, an LGA 290, a Nokia 207, a Micromax Bolt A51...
With growing internet penetration and data usage, India is Facebook's new lab. A dissection of these handsets was part of the classwork for Marra and his six fellow Facebook engineers when they spent a week in India earlier this month. This group of seven engineers from the company's headquarters in Menlo Park in California—all American, male, 23-28 years, product managers—stopped at Hyderabad, Gurgaon, Mathura and Agra, and a few villages enroute the last two towns.
The engineers struck random conversations with random people: what phone they had; what all did they do on this phone and what more would they like to; how many pictures do they click in a day and what kind of pictures; how do they use keypads; what kind of connectivity they had; how did they socialise; where did technology sit in their lives; and, that prejudiced question, were they on Facebook?
Ultimately, for Marra and his team, it came down to this: if these people were not on Facebook, how could they bring them there? And if they were on Facebook, how could they make them spend more time on it? They were looking to identify realworld problems and give technological answers. It all revolved around the dozen handsets they had picked up at the start of their week, from Hyderabad. "Across the world, the number of users on desktop is close to saturated," says Marra. "Mobile is where the next billion new users are going to come from."
Last Wednesday, when Facebook announced its results for the second quarter, increasing user traffic and advertising on the mobile was the talking point. Revenues from mobile spiked 75% in the quarter and accounted for 41% of the company's revenues, against 14% a year ago. "Mobile will soon account for more than half the advertising dollars," Facebook co-founder, chairman & CEO Mark Zuckerberg said in a conference call after the results.
Since it went public in May 2012, Facebook had struggled to demonstrate that it could pull people to the mobile, and monetise that presence, contributing to a 35% decline in its share price since listing. If some of that scepticism lies buried in the recesses of a quarter gone by, the work that Marra and team are doing is the future.
With growing internet penetration and data usage, India is Facebook's new lab They are looking for the code to crack three big questions facing the world's largest social networking company, with $5.1 billion in annual revenues and 1.1 billion users: how to hook its next billion users and how to keep them there? In their scheme of things, the centrepiece for the answers to those questions is India—which is on pace to become its biggest user base within two years— and the mobile. That's why the point of collecting those dozen handsets from India.
Eight versions of Facebook
Even as the mobile replaces the computer as preferred hardware, Facebook believes a generation of users will leapfrog the computer to the mobile. In its first-quarter results, for example, 189 million of its 1.1 billion users—or 17% of its users— accessed Facebook only on mobile.
Interestingly, an increasing number of these mobile-only users are coming from emerging markets, like India. They don't have iPhones or BlackBerrys. They are logging on using varying grades of basic phones, at best an entry-level smartphone. "The big technical challenge is what a $600 Android phone can do and what a $40 Android device can do," says Marra, who left Google to join Facebook about a year ago. "Processing capability, memory and carriers — all impact the Facebook experience."
On a top-of-the-line phone, with a fast processor and a large screen, a user can download easily, see high-resolution images and multi-task. But at the lower end, downloads are slow, images are a nonstarter and multi-tasking is not possible. Between those two extremes, there's a whole lot. Facebook is trying to be relevant to all three sets—by offering each of them a different Facebook. "We are starting to divide the experience," says Marra. "What you get on a Lava phone will be different from what you get on Samsung or Apple."
For example, on an iPhone or a Samsung Galaxy Note, a full feature-rich Facebook site, complete with location services and video capability, is available. However, on sub-Rs 5,000 phones, like a Lava Iris 349 or Micromax X272, ads do not appear, news feeds are limited, and the location feature, videos and list of friends on chat are all missing."We overcome these challenges by having different versions of Facebook," says Marra.
Facebook has eight basic versions: for desktops, smart-phones, feature phones, Android, app, iPhone app, Windows app, BlackBerry and 2G phones. When a user logs on to Facebook, its backend recognises the operating system, device specs and network, and chooses one of its eight versions.
For example, if a feature phone has a low-resolution screen, Facebook will not send it high resolution graphics. "Features that don't make sense, we just remove," says Marra. So, if a feature phone does not support GPS, the user won't be offered features like 'nearby' (a map-based location search). Likewise, if a user is on a 2G or 3G network, and paying for data, the system stops downloading every thing at full resolution. "But if we see that you are at a cafe on WiFi, we can take advantage of a temporary boost in connectivity to catch more information," says Marra.
India, its global lab
Facebook is looking to recognise user choices better and slice its offerings more finely, much beyond the eight basic versions. The logic: the more finely Facebook tailors itself to a user's device and network, the better the user experience. The longer a user lingers on Facebook, the greater the company's ad revenues. Easier said than done on a mobile, more so in an emerging market like India. It's easier to tackle the technology challenge for computers, where there are two operating systems and about five web browsers, and limited hardware configurations. On mobile phones, the problem amplifies as types of devices, operating systems, browsers, memory and networks spawn thousands of different combinations.
For universal coverage, in India alone, Facebook has to make its service usable on about 4,000 types of phones, with numerous variations. And they are nothing like what is found in the US, which is where 90% of the Facebook staff sits, brainstorms, writes code and creates user interfaces. The US market is about handsets that cost $600, while India is about less than $50 (Rs 2,500). "The new trend we are seeing (in India) is the use of inexpensive Android phones," says Marra. The US is post-paid, India is pre-paid. The US is single-sim, India is multiple-sim. The US is more data and less voice, India is the other way around. The US has high carrier loyalty, India has little. The US has 4G networks that log speeds of 100 mbps, India is still mostly 2G.
In a sense, India is a microcosm of many emerging markets, which present Facebook with greater room for expansion today. For example, in US and Canada, which accounted for 75% of the company's revenues in 2012, 47% of the population of those two countries is already on Facebook. That figure for Europe, another major market currently, is 36%.
By comparison, Asia is just 7.7% and the rest of the world 18%. While poverty and low levels of development is a barrier for people in these geographies to get on to Facebook and spend time there, the mobile is emerging as a powerful equaliser. Facebook is using India to see how it can harness that equalisation process. China is the world's most populous country, but Facebook is not present there for political reasons. Elsewhere,Brazil, its third-largest user base, is a PC-driven market. "India, almost more than any other country, is a mobile-first country," says Marra.
"For Facebook, the challenge of access to the larger population is not only in India, but the whole emerging world—from Asia to Africa to Latin America," says Ashvin Vellody, partner, management consulting, KPMG India, an audit and professional services firm. "India provides an ideal research and trial ground for internet access and managing scale with diversity."
So, those dozen handsets are headed for the Facebook Library at its US headquarters. Each handset will be kept in a container like the ones used to keep cookies—in the company, they call them 'bins'—and stacked on shelves. At any point of time, about 300 phones lie in these 'bins'.
About 2,000 engineers can access these devices. Also housed in this library are labs that simulate global network environments—1G, 2G, 3G, WiFi, 4G, LTE. "At the library, our engineers get an opportunity to know multiple devices in use, operating systems, styles, models, memory and network environments," says Marra. "Every month, we come out with a new version of the app. Things we learn help us upgrade."
Focus on basic phones
At a time when phones are becoming better by the day, Facebook is looking to swim in the other direction—towards basic phones and feature phones that have largely disappeared in the Western world. "Four things need to converge to make the Internet and a Facebook experience good on a phone: chip speed, number of cores, mobile networks and software," says Khalid Zamir, associate vice-president, manufacturing, Videocon Mobile Phones. "With each newer generation of phone, this convergence is improving and, by 2014, it will be possible to get a laptop kind of experience on a phone."
According to Lalitesh Kartagadda of Google India, the market is shifting from feature phones to smart-phones. "A Rs 3,000 smart-phone in three years will have the same competence as a Rs 10,000 smart-phone today," says the country head, products, Google India. "That will take care of some of the hardware challenges like clicking high-resolution photos and uploading them quickly on any site."
Marra says the rate at which Facebook is growing and the arc of its progression to mobile, the time is now. The company is adding 100 million subscribers in anything between four to seven months, including about two million new users a month in India. "With that kind of growth, each month is pretty long for us and we can't wait for devices to improve," he says. "Also, in India, people don't change phones for three to four years, so we have to focus on low-end devices as well."
That reading might have credence, given the internet usage numbers of Bharti Airtel. According to a senior marketing official of Bharti who did not want to be named, of its 48 million data users, 25 million are regular users. But of this, only 5 million access Internet on 3G networks, while the rest use 2G or basic-feature phones. Bharti has just rolled out 4G networks in some cities, but only a handful of devices—like iPhone 5, HTC 1 and Samsung Galaxy Note 2—support these superior Internet services. In Hyderabad, Marra and his team—each representing some aspect of Facebook, like news feed, mobile, search and messenger, among others— spent time interacting with students at the Women's College in Hyderabad University. They met officials of handset companies (Nokia, Micromax and Lava) and mobile-service companies (Bharti Airtel).
Elsewhere, they met villagers and students in organised meetings. They struck conversations with strangers to glean insights about what Indians do with mobiles. "For instance, voice and FM radio use is popular," says Kevin D'Souza, country growth manager, Facebook India. "People click pictures, but don't know how to share them or what to do with them. Lot of problems in downloading pictures or chatting are due to device limitations."
Kartagadda of Google believes the gap between hardware and software is narrowing, and the greater challenge to reach the next billion in Internet users is language and giving a visually rich experience on entry-level phones. "The hardware on a Rs 10,000 phone is as good as a laptop four years back. Devices will improve," he says. "But for users, you need more bandwidth on entry-level phones that can enable visually rich content to be delivered and a simple user interface." Adds Vellody of KPMG: "Facebook needs to focus on models that encourage wider adoption.
That includes dialects and devices to significantly impact adoption." Facebook is available in nine Indian languages, using translation tools and crowd sourcing, and plans to add more languages as per demand. "Facebook on desktop and laptops was primarily in English," says D'Souza. "Most existing users prefer English, but we are seeing a shift on mobile, with local languages picking up."
Ads will follow users
According to D'Souza, though Facebook has 78 million users in India, this is less than 10% of the country's mobile user population. "That's why the continuous focus on local innovation," he adds. For example, last year, it installed a dedicated key for one-click access on the Nokia Asha 205 phone and launched an SMS-based access service (*325# services) to access Facebook on feature phones. This February, borrowing from sachet-marketing techniques of FMCG companies, it offered data packs for unlimited Facebook usage in partnership with Reliance (Rs 16 per month) and Airtel (Rs 5 per day).
It's been doing similar things at a global level as well. In 2011, it launched 'Facebook for every phone', for 2G networks. Last week, this service crossed 100 million users in countries like India, Mexico, Vietnam, Indonesia and Brazil.
Only 25% of Facebook's revenues come from outside of US, Canada and Europe, but that is not its main focus. Even as it moves the pieces to monetise better—for example, in India, country head Kirthiga Reddy is reportedly in the process of relocating from Hyderabad to Mumbai, ostensibly to be closer to advertisers and customers—it is pressing new levers to add users.
"Being in a monopoly kind of situation, they are not too bothered about advertising," says Rahul Khanna, managing director, Canaan Partners, a venture fund. Adds Asheesh Raina, research analyst, Gartner: "With a focus on feature phones, Facebook is targeting the masses. Advertisers will come. They just need to focus on scale and that's what they are doing." Especially on the mobile, with India as their lab.
Sourse : Times of India