Wednesday, April 2, 2014

Facebook's New Strategy

Last week, Facebook acquired Oculus for $2 billion. In February, Facebook acquired WhatsApp for $19 billion. These acquisitions appeared haphazard and spontaneous to users and news outlets. Articles such as "After WhatsApp and Oculus, Is there Anything Facebook Won't Acquire?," "Virtual reality? Drones? Is Facebook losing its focus? Not so fast," and "Facebook Inc’s purchase of Oculus raises questions" questioned whether Facebook is losing its mission in its search for a profit. 

However, Facebook's recent call to investors regarding the acquisition of Oculus unveiled a new strategy. Mark Zuckerberg announced:

For almost the last year, I've framed our strategy as three high-level goals over the next ten years- connecting  everyone, one;  two, understanding the world;  and  three, building  the knowledge economy.
With this acquisition, now each of those initiatives has an ambitious long-term bet associated with it, in addition to our important near-term work as well.
For number one, connecting everyone, for the long term we have, our initiative to make free basic internet services available to everyone in the world. And for connecting everyone, we also have our near-term efforts for our messaging and growth.
For number two, understanding the world, we have our ambitious AI Research Group, which is trying to build a unified model of how every person [inside] the world is connected to each other. In the near term, our efforts here are in search and newsfeed, and will help your network surface more  useful  information  to you.

And for number three, building the knowledge economy, that's really about building future technology platforms. And we now have Oculus joining us, which long term can be one of the next important computing platforms. And of course we will continue to focus on our extremely important work of building out our advertising platform as well, as part of this.
So with this in place, you should now have a clearer view of what our full strategy looks like over the next three, five and ten years. I look forward to updating you on our progress in each of these areas during our regular quarterly update.

This newly defined three-tiered strategy establishes a connection to Facebook's recent activity. In acquiring Whatsapp, Facebook is fulfilling its goal of universal connections. In acquiring Oculus, Facebook is betting that virtual reality will be the next major technology platform. Facebook has been accused of ignoring the impact of mobile computing; acquiring Oculus is a step toward investing in future platforms that can affect operations.

This connects to last week's readings, as a company's actions need to be closely defined to its strategy. It's strategy is connected to the goals and mission of the company. In the case of Facebook, its goals for the future are driving its surprising acquisitions as it seeks to make strides in achieving its five and ten year goals for the company. Additionally, Facebook is thinking widely about competitors. Connecting to this week's readings, Facebook is position itself (through strategy) to work against not only direct competitors, but competitors that can affect its future operations.


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