Facebook Strengthens Its Position with Centralized Messaging Service

| Nov 17, 2010 | Consumer Services - U.S.
| Analyst: Deepa Karthikeyan

Event Summary

November 15, 2010 - Facebook announced Facebook Messages, an update to its existing messaging service that incorporates email, SMS and instant message chats into a single service. The new Messages feature relies on the user’s friend lists and related connections to intuitively prioritize messages and filter out messages from people who are not in the friends list to the “Other” folder. Facebook Messages will work with the social network's mobile apps. Messages will be presented in a threaded style, so users will see all incoming messages combined into one conversational format. A user can keep a message for as long as they wish.

Quick Take

Analytical Summary

• Current Perspective: Positive on Facebook’s new Messages service that integrates multiple messaging types into one user interface as it grants more control to users and allows them to have a seamless messaging experience, despite using different technologies to send and receive messages. Facebook’s Messages is revolutionary and its personal-touch features such as intuitively filtering messages allow users to see messages from their contacts in one folder, appealing to young and tech savvy consumers. While Messages is unlikely to impact the usage levels of traditional email services in its current format right away, it is definitely a new take on the service and will especially be appreciated by on the go mobile users for its simplicity and ease of use factors.

• Vendor Importance: High to Facebook, because its new Messages initiative will further endear it to its users and encourage them to spend more time on its Web site. By allowing external users to partake in conversations, Facebook is expanding the boundaries of its site and more eyeballs equates to greater ROI for advertisers, which in turn leads to greater revenue for the company.

• Market Impact: High on the U.S data service market as the Messages service attempts to redefine how users communicate using multiple media. While competitors such as Gmail already offer a few of the touted services (e.g., the capability to intuitively prioritize mails by senders), the fact remains that in its entirety Messages has no competition in its present form. While traditional email providers such as Gmail and Yahoo need not lose sleep over the launch right away, they need to keep a close eye on its traction and work on improving and differentiating their services to counter upcoming competition from related players in the market.

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