It's a feature not a bug

Facebook just came up with a great new way to make money—and it’s too late

April 26, 2013
Obsession
Mobile Web
April 26, 2013

Facebook just made it much easier for advertisers to target those poor souls who still use “feature” (i.e., non-smart) phones. That seems like a sensible move. As we’ve explained before, much of Facebook’s growth, in terms of users at least, will come from the developing world—places like Indonesia and India and Brazil, where smartphones are scant. All those freeloaders accessing Facebook through their feature phones—and yes, people do that—have been getting away with contributing next to nothing to Facebook’s revenue.  Now they can be properly monetized, as the lingo goes.

There’s just one problem.

Tap image to zoom
Mobile phones sales by quarter.

That’s right. Pretty soon, there aren’t going to be that many feature phones left to monetize. Sales of smartphones worldwide overtook feature phones for the first time in the quarter just gone. Of a total of 418.6 million phones shipped this quarter, 216.2 million were smartphones, a good 14 million more than their less smart counterparts.

At just over 200 million, that’s a lot of feature phones still being sold. But the trend is clear and it’s dropping pretty quick. The chart shows that the number of smartphones shipped this past quarter was nearly the same as in the quarter before—the October to December period, when holiday shopping boosts sales—which means it’s going to rise sharply in the coming months.

That’s partly the result of data packages getting less pricey and the proliferation of better network infrastructure, such as the rollout of 3G and LTE. But it also has to do with the cheap, often locally made smartphones flooding emerging markets. ABI, a market research firm, forecast just this week that cheap devices will go from less than a third of total smartphone sales to a little under half by 2018.

Facebook may as well try to squeeze what little it can out of the feature phone market. But it’s too bad it didn’t think of it several quarters earlier.

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