HolidayBuyer's Guide

What's next for Facebook?

The past year was full of announcements of advanced ads and mobile apps, as well as blockbuster acquisitions. Where's it all going?

Looking at the dizzying pace of announcements, acquisitions and new initiatives, you could be forgiven for wondering when Facebook employees will sit back and take a break.

Quite the contrary, one of the mottoes floating around the company's Menlo Park, Calif., offices is that Facebook is only 1 percent through its "journey."

The company has already begun laying the groundwork for the next 99 percent with initiatives like Internet.org, which is attempting to ensure an Internet connection is available to everyone in the world who wants one. Facebook has also invested heavily in new computer technologies, such as virtual reality.

Sure, these efforts aren't the headline-grabbing ideas Google has touted, such as self-driving cars, contact lens sensors or efforts to expand an average person's life span. But they're focused on the future of Facebook, and how people around the world will connect with one another.

What's been confounding for some investors, and subsequently moved Facebook's shares, is how long Facebook says these investments could take to bear fruit. Mark Zuckerberg, Facebook's CEO, said in October that the investments he's making could take a decade before becoming "meaningful businesses in their own right." For a product to truly begin to matter, in Facebook's eyes, it needs to be used by about one-seventh of the world's population.

"Over a five-year time frame," Zuckerberg said, "we have a number of services which we think are well on their way to reaching 1 billion people: WhatsApp, Instagram and search are a number of them. And once we get to that scale, then we think that they will start to become meaningful businesses in their own right."

Over the past year in particular, Facebook has asked its investors to be patient and take a long view similar to Zuckerberg's. Even with advertising, Facebook has said it's taking a measured approach and that any analysts or shareholders expecting anything different are wrong.

So what will come over the next year?

More advertising

A video promoting King.com's Candy Crush Soda Saga was one of the most successful Facebook ads this year.Photo by King

Facebook's advertising engine appears to be firing on all cylinders. The company has begun offering video ads to companies, and the results are already turning out better than expected.

Part of the reason is Facebook's advertising team, the Creative Shop. This group has helped companies like McDonald's come up with advertising programs such as "Fry Futbol," in which the fast-food chain produced 30 videos re-enacting key moments from the 2014 World Cup soccer matches using french fries as players. The company also worked with Candy Crush Saga game maker King.com to create a video ad that reached 100 million people in a day. By comparison, Fry Futbol took a month to reach 125 million people.

Facebook has also been pushing hard on the mobile-device front. It created new technology for its Atlas advertising platform that effectively helps marketers send individualized ads using Facebook's algorithms on any website or in any app.

The move is a key win for Facebook, whose advertising business still ranks second to Google in global advertising revenue, according to eMarketer. But it's growing fast. Two years ago, when Facebook went public, about 5 percent of advertising worldwide was spent on mobile devices. By the end of 2014, that figure is expected to have reached 22 percent

Hey big spender

Facebook's hoard of $14 billion in cash and marketable securities may seem tiny compared with Apple's more than $164 billion, but the company isn't afraid to use it. In the past year alone, Facebook has made two blockbuster acquisitions: a messaging service called WhatsApp for about $19 billion and virtual reality device maker Oculus VR for $2 billion.

The company hasn't said it's shying away from spending big in the future either. Facebook has warned its shareholders that 2015 will be a banner year in part for all the money it'll be plowing into hiring, acquisitions and future initiatives.

"We believe that we have very substantial growth opportunities in front of us, and we plan to invest aggressively to capitalize on those opportunities," said Dave Wehner, Facebook's CFO, on an October conference call. "As such, we plan on 2015 being a significant investment year."

Photo by Jason Cipriani/CNET

More apps

This past year has been the year of Facebook apps. Nearly all of the mobile programs the social network now offers for iPhones, iPads and Android devices came out over the past 12 months: Paper, the reimagined way of looking at the newsfeed; Groups, a way to interact with Facebook's groups feature; Slingshot, a new take on mobile messaging; Rooms, an old take on social networking remade for the 21st century; Mentions, an app for celebrities; and Hyperlapse , the app from Instagram that helps you take better-looking time-lapse videos.

"One theme that should be clear from our work on products like Messenger, Groups and Instagram is that our vision for Facebook is to create a set of products that help you share any kind of content you want with any audience you want," said Zuckerberg on a January conference call.

Of course, Facebook isn't alone breaking its features into separate apps. Google, Apple and Yahoo are just some of the companies that have embraced this strategy. And you can be certain you'll see more of this from Facebook. So, fire up that app store and look out.

Virtual reality

One of the more unusual efforts at Facebook is Oculus VR, the virtual reality startup the company bought in March. Virtual reality has long been a domain of science fiction, particularly in early '90s movies like "The Lawnmower Man." The technology had practically no commercial success until two and a half years ago, when the Oculus headset was announced.

Photo by Dan R. Krauss, Getty Images

The device has spawned an entire industry, filled with games, apps, movies and competing products. PlayStation maker Sony announced in March its intentions to launch virtual reality headsets with its own device called Project Morpheus . And just three months after Facebook announced it was buying Oculus, Google showed its own VR contraption, made out of cardboard.

Oculus VR has also partnered with Samsung, the world's largest smartphone maker, to integrate its technology in a mobile virtual reality headset called "Gear VR." The device launched in December.

Project Morpheus and the Oculus headset are both expected to be released in the coming year, though neither company has publicly committed to a launch date. But the larger question is whether these devices will catch on with the broader public.

But even if the devices don't succeed initially, don't expect Zuckerberg to retreat. "One of the things I care really deeply about, on kind of a 10-year arc for the company, is having a different relationship to whatever the next set of computing platforms are and investing accordingly now to make sure when the next set of computing platforms get defined, we can help define what the next generation of computing is going to be," he said in a July conference call. "I think virtual reality, augmented reality, vision, some of the AI work that we're doing is all going to play into this in an important way."

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