Project Spartan and Commoditizing iOS

June 17th, 2011

MG Siegler says that Facebook is working on an HTML5-based mobile platform, and are targeting Apple:

Imagine loading up the mobile web version of Facebook and finding a drop-down for a new type of app. Clicking on one of the apps loads it (from whatever server it’s on depending on the app-maker), and immediately a Facebook wrapper is brought in to surround the app. This wrapper will give the app some basic Facebook functionality, as well as the ability to use key Facebook elements — like Credits.

One thing the App Store has nailed is an easy payment system. Facebook has been attempting to build the same thing with Credits, but so far hasn’t done much in the mobile space. With Project Spartan, they intend to have Credits built-in to alloy developers to sell apps and offer in-app purchases. This will be vital for a partner like Zynga, for example.

Siegler’s sources say that Facebook’s intention is to disrupt Apple’s control over application distribution on iOS. If they can pull it off, it’s rather brilliant.

Up until now, if you’ve wanted to make money through mobile applications, you had two choices: native applications for iOS and Android. These were your only two real choices because (1) they’re the two largest platforms, and (2) their app stores allow for mass-market distribution (which is helpful if you’re using advertising) and especially on iOS, make purchasing applications or in-app purchases ridiculously easy.

The reason we haven’t seen a successful web-based app distribution scheme yet is for those same two reasons: they don’t make mass-market distribution easy and there’s no built-in way of making payments. If this is what Facebook is building, they’d change that completely.

Facebook has hundreds of millions of users, so it has the distribution part covered, and because their system would be web-based, it could conceivably work on almost any mobile platform. And if they can make credits a widespread thing, they’ll have payments covered, too.

The right way to think about this is that Facebook is attempting to commoditize Apple’s platform. At the moment, people buy iOS devices so they can use applications from the App Store. That’s good for Apple because they control both parts—the devices people purchase and the App Store they purchase the devices for. Not only can Apple make money on both the hardware and software sales, but their customers are also tied-in to their platform; native iOS applications only work on Apple devices, and thus once someone purchases a number of applications, they are much less likely to leave the platform for another one.

If web-based applications become popular, though, that won’t matter. The physical device will only be the screen you view the application on. If all of your applications are from Facebook, you could switch to Android today and you wouldn’t notice much difference—all of your applications could still be used. Apple, then, would become just another hardware manufacturer, like Samsung or HTC. Facebook would be the platform that matters.

And that’s what Facebook desperately wants. They not only want to be the most important social network on the web. They want to be the web. Look at what they’re doing: they want a person’s identity to be stored in Facebook, so when people log in to other services, they use their Facebook account; they want to be where games and other applications go for social integration; and now they want to be an application platform that spans across all mobile devices.

That’s what Facebook is trying to do. Apple might be building a walled garden, as some have decried, but if Facebook succeeds, there’ll be no need for a wall. You won’t be able to leave even if you want to.