Facebook Inc (NASDAQ:FB) reported an exceptional quarter. The revenue growth was what truly astounded investors and analysts alike over the past quarter. The reason for growth in revenues was primarily driven by Facebook Inc (NASDAQ:FB)’s strong growth in both mobile and international. Facebook Inc (NASDAQ:FB) maintains its position as a prominent advertiser against the likes of Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT)’s Bing.
While Facebook Inc (NASDAQ:FB)’s earnings per share figures fell below analyst estimates, the company was able to sustain some strong revenue growth. The company’s revenues grew from $1.058 billion from the year ago period to $1.458 billion in the first quarter of 2013. The company’s growth in revenues was driven by the mobile platform.
Mobile users were 751 million on March 31, 2013; basically year-over-year growth of 54%. The growth in mobile users easily dwarfed the daily active user statistics which grew by 26% year-over-year. The growth in the company’s monthly active user statistics was 23% year-over-year. Currently Facebook Inc (NASDAQ:FB) has 1.11 billion monthly active users. Growth was driven by foreign markets as the United States is heavily saturated.
Facebook Inc (NASDAQ:FB) was unable to grow earnings for the quarter, reporting $0.09 EPS, with the previous year’s EPS at $0.10. EPS remained unchanged due to the company’s expenses increasing by 60% over the same period. Facebook is investing aggressively back into its business in an attempt to generate growth going forward.
Competitive landscape
Google Inc (NASDAQ:GOOG) has made steady advances with its Google+ services. According to Business Insider, Google Inc (NASDAQ:GOOG) has been able to increase its user figures by 33% from the end of June 2012. Google+ has 135 million active users when compared to Facebook’s 751 million mobile active users figure.
I don’t anticipate Google Inc (NASDAQ:GOOG) to make any significant advances into social marketing as the economies of scale heavily favor Facebook over Google Inc (NASDAQ:GOOG). Facebook has access to both demographic and psychographic data versus Google Inc (NASDAQ:GOOG), which relies on search queries to determine user preferences.
Google Inc (NASDAQ:GOOG)’s growth is likely to be limited in the social space. Google Inc (NASDAQ:GOOG)’s primary avenue of growth is the ad-words and ad-sense business which grew revenues by 21% year-over-year.
Microsoft Corporation (NASDAQ:MSFT) has been generating a lot of buzz in the media with the latest advertising catch phrase “Scroogle”, setting up some heat underneath rival Google’s dorm room mattresses. I can imagine there is some healthy angst and anger between the two technology giants. The rivalry continues.
This shouldn’t discourage investors from owning Microsoft Corporation (NASDAQ:MSFT). In fact, Microsoft Corporation (NASDAQ:MSFT) has been able to grow revenues by 18% year-over-year in the first quarter of 2013. The growth in Windows was able to offset the negativity surrounding declining desktop shipments as reported by IDC for the first quarter. Bing’s market share hasn’t actually seen any significant improvement against Google search.
On the bright side, Microsoft Corporation (NASDAQ:MSFT) should be able to sustain growth through its cloud related software services, Skype, the Windows refresh cycle, and this Fall’s Xbox 720 launch paired with additional Xbox Live subscriptions. The company’s robust product portfolio remains intact in both the consumer electronics and network PC space.
Facebook Home
While I did download Facebook Home, I’ll be the first to admit, I uninstalled the application after using it for ten minutes. After using Facebook Home, I wasn’t that enthused by it; it just seemed like another unnecessary mobile app, and it felt as if I was being hindered from using my Android device in a way that I wanted to. With that said, Facebook had a legitimate reason for launching Facebook Home on Android rather than Apple Inc. (NASDAQ:AAPL).
Facebook Home is too awkward of an experience to reach mass market acceptance. The Android App store gave Facebook Home 3/5 stars- meaning the product is likely to be shelved as a product disaster.
Apple destroys Facebook Home
Apple Inc. (NASDAQ:AAPL) prides itself on being a user-driven experience. Comparing the user-experience of Apple iOS to that of Facebook Home was like comparing Whole Foods Market, Inc. (NASDAQ:WFM) to Safeway Inc. (NYSE:SWY), with Apple being the Whole Foods Market, Inc. (NASDAQ:WFM) and Facebook Home being the equivalent of a Safeway Inc. (NYSE:SWY). Facebook’s ability to replace the standard graphics user interface of an Apple iPhone or an Android based smart phone is long ways away.
Apple Inc. (NASDAQ:AAPL) is known for simplicity and elegance. Apple products have that extra bit of attention to detail that not even the software engineers at Facebook could even fathom to replicate- at least not yet. In fact, Facebook Home fell short of the graphics user interface Google offers for its Android users. Meaning that if Facebook falls short of Google, and Google falls short of Apple, it just shows how difficult it is to perfect artistic software design like Apple does. I have never come across a software application that runs as smooth as iOS, which is why Facebook didn’t even bother to design a Facebook Home app for the Apple store.
According to the latest ComScore figures, Apple saw a 3% gain in market share in Smartphones. In essence, user interfaces matter a lot, and will continue to.
Conclusion
The fundamental case to buy Facebook remains intact. Social networking will remain Facebook’s greatest strength. Sister network Instagram follows closely in Facebook’s footsteps, currently with 100 million users. Facebook should focus more on figuring out add-on services that may help to better monetize Facebook from a business to consumer standpoint rather than blowing up cash on side projects like Facebook Home.
The article iOS Demolishes Facebook Home: Microsoft Says Scroogle Google originally appeared on Fool.com and is written by Alexander Cho.
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