Here's Why Facebook Will Succeed With Drones

After Amazon (NASDAQ: AMZN  ) announced that it wanted to enter the drone space, Facebook (NASDAQ: FB  ) also declared the same intention. Facebook wants to use drones to bring the Internet to impoverished areas. However, analysts feel the company might not be in the drone game purely to bring Internet services to those who would otherwise not have them. The prospects in a drone network, the potential for more advertisement revenue, and the possibility of converging the drone project with financial services will allow Facebook to benefit in the long run.

The prospects in a drone network
Facebook reports that its efforts at beaming the Internet from the sky have doubled the number of people in the Philippines and Paraguay who use mobile data. Facebook's partnerships in the project let 3 million new people access the Internet. Recently, Facebook acquired Ascenta for $20 million. The new company joins Facebook in working on a connectivity aircraft project. Facebook says more than 5 billion people worldwide have yet to be connected to the Internet. If more than 1 billion people access Facebook through the effort, the company will benefit.

Online payments
Facebook's representatives are said to have been in talks with several money services to make a Facebook payment platform a reality. The convergence of a drone network, social media, and financial services should see a profound shift in how people view their capital. Gartner
expects the global mobile transaction volume and value to average 42% annual growth from 2011-2016. If everything goes to plan, Facebook users will apparently be offered the chance to store and transfer money on the site.

Advertisement revenue
Drones will be important in the future. Companies that have a wide range of products to offer different businesses will do well. With a network of drones blanketing the planet, Facebook will have the ability to collect all sorts of data and target users for an increase in its advertisement revenue. According to The Guardian, the global ad market was worth $500 billion in 2013. Its growth is expected to be 5.3% this year and almost 6% in 2015 and 2016.

Competitors
Amazon's reasons for entering the drone space are directly related to growing its businesses. The project will enable Amazon to increase its revenue by offering immediate delivery of products. Amazon has already tested its fifth and sixth-generation aerial vehicles. Signs point to the expansion of the mail order sector.  The global mail order market is forecast to reach $835 billion by 2015, according to a research from Global Industry Analysts.

Google has been working on its own unmanned technology for some time now. The tech giant seems to be focused on using the technology for the development of a driverless car. Eight of its 12 acquisitions in the last 12 months have something to do with robotics. With the drones project, Google could benefit on a long-term basis. IHS Automotive predicts that 9% of cars will be driver-less by 2035. 

Foolish takeaway
Facebook said its interest in the drone sector is confined to providing Internet access to impoverished areas. However, it might not be in the drone game for purely altruistic reasons. The prospects in a drone network, the possibility of more advertisement revenue, and potential with an online payment business will allow the company to improve its top line.

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  • Report this Comment On April 30, 2014, at 1:53 AM, Clint35 wrote:

    Wonderful. That's what impoverished people need most is internet service. Who needs food, water, or shelter when you've got internet. Yes, I was being sarcastic.

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