Zuckerberg explains the three tiers of Facebook
With an app hierarchy, CEO Mark Zuckerberg tries to quell Wall Street's appetite for additional revenue from Facebook's latest ventures.
Not all Facebook apps are created equal.
This decree comes directly from Mark Zuckerberg, the chief himself, who Wednesday stratified the company's ever-expanding collection of mobile applications in an attempt to rationalize Facebook's approach to working on single-purpose applications. With the established hierarchy, Zuckerberg also tried to quell Wall Street's appetite for additional revenue from Facebook's latest, craziest ventures.
Unsurprisingly, sitting in the top spot is the Facebook mobile app you know (and love?), which now has an audience of more than 1 billion people each month and is contributing to the company's bottom line in a major way. Mobile sales totaled roughly $1.34 billion for the first three months of 2014, accounting for 59 percent of advertising revenue.
So of course you should believe Zuckerberg when he says that this tried and true Facebook app will continue to be the center of the company's business for years to come. "The Facebook app, by itself, is...not only the most used app, it's the core of our business," he said.
Situated on the second tier are Instagram, WhatsApp, and Messenger, or the crop of Facebook apps that are extremely important to the social network's continued quest for world dominance. With this bunch, which range in size from 200 million monthly users to 500 million users, size trumps substance.
"These are apps that are now at a pretty big scale, and the immediate priority is getting them to a billion people," Zuckerberg said, "so [we're] continuing to focus on that before focusing on monetization."
Read his remarks as: WhatsApp, Instagram, and Messenger are super popular but they are not, nor will they be, profitable -- at least not for a very long, long time.
Finally, on the bottom rung, are a group of highly experimental mobile applications that may or may not last. We're currently only privy to just one of these apps: Paper. The iOS news app, developed by a group that Facebook calls its "Creative Labs," was released earlier this year and has an unknown number of users, though apparently those who do use it read 80 stories per day.
What we do know, based on Zuckerberg's statements, is that some of these test-tube app babies, which Facebook plans to release rapidly and refine after launch, will dabble with more private forms of expression, and none of them will be money-makers.
"It will probably take a few years for those to even get to the stage that Instagram, Messenger, and WhatsApp are at," Zuckerberg said. "Our next priority will be to grow them to 100 million people before we start developing them into significant businesses."
So there you have it. In a nutshell, the native Facebook mobile application is where the money is. Everything else is just gravy.