The shift of usage away from the web and to mobile is going on in full force. About half of the US population now has a smartphone and that penetration is rapidly growing. That shift has been widely cited as a problem for Facebook. But generally the problem is stated in terms of a smaller advertising opportunity on mobile devices as a result of screen size. That goes back to Facebook’s own amendments to their IPO filings, in which they stated:
"Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven."
The real problem, I am beginning to think, is more dramatic: the shift to mobile may make Facebook less relevant altogether.
Why? Mobile devices are doing to web services what web services did to print media: they unbundle. On my phone another app is just a button push away and there is relatively little that fits on each screen. So it is just as much effort to go to another part of the Facebook app as there is to go to a different app altogether. So Facebook for mobile may not be Facebook at all but rather a combination of say Instagram, Kik, Twitter, Foursquare and others.
Facebook seems to realize this to some degree already. They launched a standalone messenger app and of course more importantly they acquired Instagram. There are also persistent rumors of Facebook working on a phone. Even if they come out with their own phone on all other phones they will have to compete with best of breed point applications. So the challenge here is what Facebook can do to make its own individual apps be part of a suite that together is more compelling. That may turn out to be a tough nut to crack.