Last year, Facebook acquired Parse for $85 million in a stock/cash deal. Parse is a cloud services company that provides developers with the tools to use a unified back-end for their apps. The move signals the social network’s intent to establish itself in mobile platforms, with the likely end goal of enabling more of its 1.06 billion users to shop through the site’s applications.
The Menlo Park company’s purchase of Parse technology enables apps available on the social networking site to work on other mobile platforms including Apple gadgets, Android tablets, and the Windows Phone. It helps to standardize the back-end tools across the mobile ecosystem.
On the surface, Mark Zuckerberg is helping third-party developers monetize their apps through Facebook’s immense user base, while providing the latter with an extra revenue stream (such as games).
There’s a much bigger strategy at play beyond monetizing $5 games. The holy grail of online revenue streams has always remained ecommerce and web-based transactions. According to a January 2013 study by eMarketer, social networking apps (such as Facebook and Pinterest) now rank second only to major retailer apps (such as Amazon) in helping users make online purchase decisions. More than half of young adults now have a shopping app on their mobile devices.
Given the rise of shopping dollars being transacted on mobile platforms, app developers are adapting old retailer formulas to the new ecosystem. For instance, Mavatar is pioneering discount shopping on mobile. Another example: there is now a Bitcoin-based payment system through “mobile wallets”. Soon, Facebook users browsing retailer products through their smartphones may use apps that allow them to use virtual coupons. Or, how about this: the ability to send virtual birthday gifts (such as Bitcoins) to your Facebook friends.
The list of potential innovations is endless.
With its strategic investment in Parse, Facebook wants to ensure that it doesn’t get left out in the cold – technologically-speaking – with creations started elsewhere (such as the iPhone).
Is there other evidence that Zuckerberg is serious about mobile shopping? Last year, it was disclosed that Facebook will enable brick-and-mortar and Internet stores to track users’ shopping habits. Privacy concerns aside, the social networking site will tailor its online advertisements based on its users’ purchasing decisions. In short, Facebook is forming “data partnerships” with some of the world’s biggest retailers.
The acquisition of Parse should signal to the marketplace some of the closed-door discussions that have been going on in Menlo Park.