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Facebook Inc.'s Messenger Unbundling Strategy is Backfiring

KPCB Internet trends 2014 from Kleiner Perkins Caufield & Byers.

There is a broad trend unfolding with the evolution of app design, one that favors single-purpose stand-alone apps. Single-purpose apps are better suited for mobile use since they offer a faster and more efficient way to accomplish specific tasks. No one wants to spend extra time digging around in a multipurpose app to find what they're looking for.

As Facebook  (NASDAQ: FB  )  CEO Mark Zuckerberg told The New York Times in April, "In mobile there's a big premium on creating single-purpose first-class experiences." In no uncertain terms, Zuckerberg laid out a strategy for "unbundling the big blue app" into distinct single-purpose apps. That's why it shouldn't have been much of a surprise when the company said last month that it would force users to download a separate Messenger app, unbundling that functionality from the core Facebook app.

200 million and counting

On the last earnings conference call, Facebook noted that users send over 12 billion messages per day on Facebook, and that Messenger has now reached 200 million monthly active users, or MAUs. That doesn't include the over 500 million MAUs for recent Facebook acquisition WhatsApp. Facebook has added numerous functions to Messenger, including voice calls and group chats. The app has now risen to the No. 1 free spot in Apple's App Store charts.

Source: Screenshot of iOS App Store.

Unfortunately, users aren't responding very well to the required switch, which collectively boasts a mere one-star rating.

Why so low?

There are two recurring themes among the app's critics: People are uncomfortable with some of the permissions that the app requests, and they absolutely hate the fact that they're forced to download it in the first place.

Some of the fear regarding permissions is misplaced, though. For instance, in order to make voice calls or video chats you naturally must grant the app access to your device's microphone. Yet some fear Facebook is indiscriminately eavesdropping. Facebook explains exactly why it needs these permissions, but National Security Agency-invoked privacy fears are still at the top of everyone's minds these days.

Why so serious?

Facebook is taking Messenger very seriously as part of its broader messaging strategy, which is why the company just poached David Marcus from eBay's PayPal division to run Messenger. Zuckerberg even hinted that eventually Messenger would have some type of overlap with Facebook's payments business, which makes perfect sense given Marcus' background.

The $19 billion price tag for WhatsApp is further evidence of just how important messaging is to Facebook's global ambitions. Facebook will operate two distinct brands and services, and Messenger and WhatsApp cover different bases. WhatsApp is more popular in emerging markets as a true SMS replacement, while Messenger is a cross-platform service that offers different usage models.

Facebook will also compete with other tech titans. Apple continues to build out iMessage and will begin syncing SMS messages to Macs in OS X Yosemite. Google also recently consolidated all of its disparate messaging services under Hangouts. None of these companies have monetization strategies in place for messaging services, but the WhatsApp deal still shows there's quite a premium just for users.

Is unbundling a mistake?

Despite user backlash about Facebook's unbundling, this trend isn't going to disappear anytime soon. Facebook says users can receive messages 20% faster by using the Messenger app, as opposed to the core Facebook app. Even LinkedIn is following in Facebook's footsteps, launching a single-purpose Job Search app earlier this summer.

There will always be skeptics to changes in the status quo, particularly when that involves shifting away from familiar usage models. That doesn't mean the strategy is inherently incorrect. While I may have initially doubted Zuckerberg's status as a visionary leader, the young CEO has proven he is exactly that. Despite the backlash, unbundling is the right way to go for a mobile company like Facebook.

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  • Report this Comment On August 12, 2014, at 10:18 AM, GaryGoulding wrote:

    People do not like being forced to download the Facebook messenger app. But, people get their panties in a know when Facebook changes anything, from the layout of its website to the actions buttons. With that being said, no one stops using it. Sorry, but the messenger app controversy of 2014 will not affect Facebook stock.

  • Report this Comment On August 12, 2014, at 11:45 AM, anash91 wrote:

    This is the way social media is going. Messaging is more private and you can send pictures to people you want commenting on it. Everything is more instantaneous and that is removing the friction that facebook had. This is the only way facebook can survive in a changing landscape.

  • Report this Comment On August 12, 2014, at 9:02 PM, ezsal wrote:

    Not only will I never download the Facebook messenger app,but I uninstalled the Facebook app altogether ! I dont like being forced to do anything for one thing ! End when I ever read the permissions ?? Its insane !! Fb wants complete access and control of your device ! Things there is NO conceivable reason for them to have,like controlling my wallpaper !! I have convinced a number of people who have also backed out of fb apps altogether ! People need to become fully aware of the invasive access and control fb seeks,because its wrong ! There is a reason Facebook is forcing people to download that app,and its NOT for the users benefit !! A person has to be a complete fool to agree to such violations of their privacy and freedoms ! I would urge everyone to read those terms very closely before agreeing ! And certainly do nnot take facebooks word for why they need complete access AND Control ! Of your device !! And they definetly do want to control your device !!

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Evan Niu

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.

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