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With 1 billion active users, Facebook prepares to grow as mobile-first service

After several months as the Internet's punching bag, Facebook finally has something to brag about: 1 billion active users.

If Facebook were a country, it would the third largest, behind China and India.

And the list of products used by 1 billion people is probably pretty short: McDonald's. Coke. Maybe Microsoft?

But what's interesting is not how it got here but where it goes next — and what that says about the future of computing.

The future is, in a word, mobile, and Facebook is in the midst of a radical transformation to become a mobile-first service, as it aims for the next billion users, and the next.

And the fact that the world's most popular Internet service is heading in this direction is the clearest signal yet of just how profoundly mobile computing will change our conception, and experience, of the Internet.

PCs are not dead, of course. They will continue to sell. But in this new computing era, the PC is no longer at the heart of our computing systems. More and more, it is mobile that defines where and how we work, how we socialize, and how we connect with each other.

Until now, conventional wisdom has held that this is Facebook's Achilles' heel. It doesn't make much ad revenue off mobile.

But Mark Zuckerberg is not looking at things from quarter to quarter. He's taking the long view. And he sees clearly that mobile use of Facebook is growing faster than desktop use. And in an interview with Bloomberg BusinessWeek, he said the next 4 billion Facebook users will be using the service on their phones.

"A lot of it over the next few years is going to come down to mobile," Zuckerberg said. "There is this funnel that I think is pretty clear and in our favor, which is there are going to be more people using mobile devices. There are already 5 billion, so that's where the user growth is going to come from."

Whatever Facebook looks like when it's used mostly by people on mobile devices, it's going to look very different from the way it does today.

Investors remain skeptical; its stock is hovering in the low 20s, far off its IPO price of $38.

So why is Zuckerberg so optimistic? He began laying out this argument a few weeks ago when he appeared on stage at TechCrunch Disrupt in San Francisco. He points out that when we consume information and media on a mobile device or tablet, we are actually more engaged with it. It's not as easy to flip back and forth between different browser tabs or different applications like it is on a desktop computer.

We are less distracted on mobile devices, in other words. And that, in turn, will make us more valuable to advertisers.

"What we are seeing already, even with the early mobile ads that we have, is that they are performing even better than the right-hand column ads on desktop," Zuckerberg said. "Mobile is a lot closer to TV than it is to desktop."

Sounds like spin, perhaps. And it might be.

But there is also some promising evidence that users might be more engaged on mobile platforms, such as tablets, though not as much on smartphones. Last month, Ignition One, a firm that tracks mobile advertising, released a report showing that tablet users spent 30 percent more time on each site they visited than PC users. In comparison, smartphone users spent 4 percent less time on a site, making this still a tougher platform for advertising.

Still, Zuckerberg insists that people who use Facebook on smartphones or tablets spend more time using the service than people on PCs.

While Facebook still must devise appealing advertising to reach this tablet and smartphone audience, it's interesting to see how the evolution of these devices continues to reshape our behavior.

With Facebook running out of new desktop users on the planet (unless it cracks China's borders), the company is banking on the rest of us using the service even more. And it's betting we'll do that on the devices we carry with us every moment of the day.

If Facebook succeeds, it will be because the world Zuckerberg envisions, where we are constantly on our mobile gadgets, interacting nonstop, comes to be. That would be a win for Facebook. Whether the rest of us want to embrace that future remains to be seen.

With 1 billion active users, Facebook prepares to grow as mobile-first service 10/05/12 [Last modified: Friday, October 5, 2012 8:30pm]
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