Facebook’s Mobile Failure: A Compare/Contrast With LINE

Facebook is in the news for an imminent Android-related announcement; speculation is heavy that this is fabled Facebook phone.

Techcrunch:

Facebook just invited press to an event at its headquarters on April 4th to “Come See Our New Home On Android”. Sources tell us it will be a modified version of the Android operating system with deep native Facebook functionality on the homescreen that may live on an HTC handset. The evidence aligns to say this is the Facebook Phone announcement people have been speculating about for years.

One source recently told us to be on the look out for a Facebook mobile press event in early April where the social network would reveal an altered Android OS running on HTC. It’s said not to be a full-on rewrite of Android, but rather a “flavor” that will have all sorts of extra Facebook functionality built in. We’ve also heard it referred to as an “application layer”. Imagine Facebook’s integration with iOS 6, but on steroids, and built by Facebook itself. It could have a heavy reliance on Facebook’s native apps like Messenger, easy social sharing from anywhere on the phone, and more.

Coincidentally, the Wall Street Journal had another, seemingly unrelated article on Wednesday about the rise of Mobile messaging apps:

Messaging apps—with funny names like WhatsApp, WeChat and KakaoTalk [and LINE, named in the opening paragraph]—have become an indispensable form of communication for hundreds of millions of people world-wide.

They are also rankling technology giants from Silicon Valley to Seoul. That is because when users like Mr. Dijkland send messages using LINE, his mobile carrier Vodafone Group and iPhone maker Apple Inc. don’t directly profit from the interaction.

And as Mr. Dijkland’s use of the free app LINE grows—he estimates he spends three to four hours a day on LINE sending dozens of messages and stickers—his time using other conversational channels such as social network Facebook Inc. has declined.

It’s difficult to overstate how massively popular these messaging apps are. Most folks have heard of WhatsApp (not coincidentally, it’s based in Silicon Valley), but the really interesting developments are happening with Asian apps – LINE and Kakao Talk in particular. They are social networks that are built for mobile in everything from business model to use case, and they are absolutely eating Facebook’s lunch.

I’m most familiar with LINE, so I’ll use that to illustrate what I mean. Here are five ways in which LINE is a superior experience to Facebook on mobile:

  1. LINE has better, faster, and more fun means of communication on mobile — Beyond standard text and pictures, LINE includes “stickers” that let you express a surprisingly wide array of emotions and reactions without typing a thing. For example, here I am telling my wife that my plane has arrived, I’m rushing through the airport, and waiting for the train:

    Line Sticker Example

    Three clicks, and a lot more fun to boot. More critically,while typing on a phone is a pain for English-speakers; it’s much, much worse for character-based languages like Chinese and Japanese. LINE’s central feature is not just about being cute; it has very real functional gains relative to Facebook.1

  2. LINE has a mobile-based monetization model that *enhances* the user experience — The app comes with a default pack of stickers, and the characters in that default pack are quickly becoming iconic in many Asian countries; however, you can buy new sticker packs for $1.99 using in-app purchase.

    LINE Sticker Store

    Advertising is tolerable on PC’s because there is screenspace to spare; not so on mobile. LINE’s monetization model enhances the the user experience (more stickers!); Facebook’s detracts. Moreover, the fact that LINE is a much smaller company means their revenue needs are much lower.

  3. LINE is inherently personal, like your phone — Messaging is a natural fit for your phone, which is always on your person, is not shared, and has a small screen, and it’s LINE’s core competency. Facebook, on the other hand, is about being public and sharing. Were Facebook a piece of hardware, it would be much more akin to a 27″ iMac. Sure, both can stretch in the opposite direction – LINE has a Windows 8 app, for example – but the best experience is a fusion of app and form factor.
  4. LINE plays nicely with platform owners — I already noted that LINE being a small company (albeit one backed by Naver, the massive Korean portal) means they need less revenue; it also means their ambitions are not in conflict with any of the major platform owners. They are happy to abide by Apple’s rules, for example, and strive to be as cross-platform as possible. Facebook is much more likely to butt heads, particularly if they build their own hardware.
  5. LINE is building a platform on top of App Stores — I’ve only talked about the LINE messaging app; there are actually multiple LINE apps in the store, including photo-editing apps, painting apps, and most importantly, games. All are fully integrated with the core messaging app, and all monetize through in-app purchase. All encourage you to advertise the app to your friends (“Get more coins by telling a friend”), and all are massively popular (keep in mind that Facebook’s penetration in Asia was almost completely driven by Facebook games).

    After being told about a new game, I'm prompted to download it. The game uses the LINE messaging app to authenticate. The game monetizes through in-app purchase.
    After being told about a new game, I’m prompted to download it. The game uses the LINE messaging app to authenticate. The game monetizes through in-app purchase.

Each of these factors makes LINE better than Facebook on phones, especially in Asia where mobile is even more likely to be the primary form of computing, particularly for young people. Facebook engagement is steadily decreasing throughout the region, and apps like LINE are the primary reason why.

The broader lesson extends far beyond LINE; Facebook’s weakness on each of these points is directly related to the fact that Facebook is the last great PC company. The same things that made them such a formidable force on the desktop are fundamentally limiting on mobile, yet mobile is the place where the growth is occurring. And so the things that Facebook sees as a problem (Apple control, for example, which limits the utility of the Facebook platform), LINE sees as a positive (super low friction in-app purchases).

Like other PC companies flush with cash, there is a certain allure to brute-forcing a mobile solution that deals with these constraints by, in effect, taking your ball and building your own game.

I highly doubt anyone else will want to play.2

UPDATE: I no longer think of Facebook as a mobile failure. See this article: Mobile Makes Facebook Just an App; That’s Great News. I was, though, right about Facebook Home.

  1. LINE is the first app that really made me wish for a larger iPhone. A sticker takes up almost all of the messaging space on my 4S, especially when the keyboard is up []
  2. Some more problems, because why not?
    – Will the Facebook phone be fully compatible with Android, offering full access to the Play store (including apps like LINE)?
    – If the Facebook phone is expensive, why would someone buy it instead of an iPhone (who values greater Facebook integration instead of a better App Store)?
    – If it’s cheap, how cheap will it be? HTC has never competed on the very low end; moreover, cheap gets you no where in the U.S., where the carriers obstruct the true cost of superior phones []