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Why the Facebook Phone Is so Good for Google

Stocks in this article: FB GOOG

Android was already catching up on iOS over the past year. One year ago, it was almost always the case that the hottest new apps became available on iOS first. Now, iOS may still have a lead, but it is slight. Zuckerberg's endorsement of Android is like to push Android over the top in Silicon Valley's developer community.

I spent the past few days talking to developers in Silicon Valley, where the vast majority of the hottest app companies are based. I couldn't find a single one who disagree with the assertion that Android is gaining on iOS in the developer community, and is likely racing ahead imminently.

Developer support is the oxygen the drives an ecosystem. The Facebook phone just injected Android with critical oxygen, sucked right out of Apple's ecosystem. This is a huge deal, and it doesn't matter whether the Facebook phone itself turns out to be a success or not.

2. Let's assume the Facebook phone is a success.

OK, let's assume people actually want this thing. This could either be the optimized phone, made by HTC, or just the new app, which you can download from Google Play. Let's start with people just starting to use it. What happens now?

The first and most important thing you must realize is that 100% of these people are now departing Apple in favor of Android. One hundred percent. Whatever Google gets or doesn't get, one thing is a stone-cold truth: The Facebook phone experience means you're no longer using Apple. Apple does not get one more penny from these people, ever. Good-bye.

I can't emphasize that enough: For every person Facebook captures, it's one person Apple doesn't get, or outright loses. Facebook has just become Apple's worst enemy.

3. What happens after people start using the Facebook phone?

Once people have either bought the Facebook phone, or downloaded the Facebook phone software, there are three factors we need to consider:

A. Do people like the experience?

B. How much do they use the Facebook phone software?

C. How will Facebook monetize this situation?

Let's deal with these in turn:

A. Will people like the Facebook phone experience?

2 of 3

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