With social networking services from Google (NASDAQ:GOOG) and Twitter Inc. continuing to grow, Facebook (NASDAQ:MSFT) is planning acquisitions to help improve the site’s design and advance mobile features in order to better compete. Facebook plans to make 20 purchases in 2011, up from 10 last year and only one in 2009.
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Facebook’s planned focus on design is intended to make the Facebook experience more pleasurable, and entice people to spend more time on the site. New mobile services will cater to the growing number of people who do the majority of their web surfing on their smartphones, with more than a third of its users already accessing the site from mobile devices. Facebook will also need to keep its service reliable and running smoothly as it continues to add more users and features.
Google (NASDAQ:GOOG) as a whole is significantly larger, with $39.1 billion in cash, though its new social-networking platform, Google+, is still relatively new and has only a fraction of Facebook’s users. However, Google+ had already attracted 29 million people by the end of July after having been launched in June — a much faster growth rate than when Facebook was first starting out. See “Is Google+ the First Real Competition for Facebook?”
But with a market value of $72.5 billion, Facebook can use cash and stock for its many acquisitions, which tend to be small start-up companies with one or two employees. Facebook can also sell shares in the secondary markets if it needs to raise additional funds.
Many of Facebook’s acquisitions have been in pursuit of talent rather than technology, with the company continually adding to its staff. “The idea of bringing in new talent, smart talent, people who have created interesting products that Facebook can capitalize on, is going to be important to them,” says Debra Aho Williamson, an analyst at EMarketer Inc. Competitor Google (NASDAQ:GOOG) recently announced plans to hire 6,000 people globally by the end of this year.
Facebook’s main concern will be with mobile development, as people are spending more and more of their time online on smartphones and tablets. Just this month, Facebook introduced an application that handles messaging on Apple’s (NASDAQ:AAPL) iPhone and phones using Google’s Android operating system.
Of course, with the many new services Facebook has been adding to its site over recent months, keeping the user interface simple and navigable will be a challenge, and the company has already made multiple design-related purchases this year, including that of Sofa, a software and user-interface company, and Push Pop Press, which offered publishing software for touch-enabled devices.
Facebook has grown its user base by more than 50% in the last year, from 500 million users in July 2010 to over 750 million, and in that time has exponentially grown its applications and products offerings, both increasing the complexity of its computer systems. While the company opened a new data center in Prineville, Oregon earlier this year in order to help with that problem, it has yet to make any computing acquisitions that would help strengthen its system with new technology or talent.