Hey everybody! Microsoft's discovered social networking

Fashionably late? Orange and Facebook are already loved up

Analysis Warren Buffett, the world's most famous investor, may have diluted his usual hostility to hi-tech stocks by betting more than $10 billion in IBM, but he remains averse to social networking companies (as well as to Apple) because he thinks it is "extremely difficult" to determine their value and understand their future plan.

Few share his cynicism about the social boom, especially as it gains new momentum in combination with mobile devices and location awareness.

Major web firms' interest in social location has led to a bonanza for start-ups in this area, the latest being Katango, which Google acquired this month. And Microsoft is reported to be the latest to take on Facebook, with leaked plans that it is preparing to launch its own social network.

This is no mean feat, as Google knows, although it does now claim 40 million users for its third attempt, Google+. But Microsoft knows its future power will rest in web and cloud services spanning all kinds of devices, not in tight control of a single client operating system as in the past, so it will need to expand its Bing search engine into a full web platform – a goal also targeted by Facebook.

Speculation that Microsoft's social move might be imminent came when it accidentally published a website called Socl.com, described as a 'social search' service which would allow users to "find what you need and share what you know".

The software giant dismissed the web site as "an internal design project from one of Microsoft's research teams which was mistakenly published to the web", but it has now granted The Verge an exclusive look at the private beta site – while not admitting it will ever necessarily go public.

The site has echoes of Facebook, but is more heavily focused on the search box – a nod to Google – and relies heavily on tagging, to make it easier for customers to identify topics of interest and receive social updates on them. There are also video chat and shared YouTube 'video party' elements, but none of this seems to add up to a radical rethink of the search or social experiences, unlike technologies like Apple's Siri virtual personal assistant.

Microsoft may do better to intensify its existing partnership with Facebook and bring that more closely into Bing. The social network leader has proved amenable to creating versions of its product for specific platforms, device and user experiences, and this has helped put it at the center of many mobile apps strategies. A simple, responsive Facebook experience is one of the most effective ways to drive mobile web usage, hence the release of a string of 'Facebook phones', optimized for the social app, from vendors like INQ, Nokia and HTC, and from operators like Orange and 3.

Orange in Android, Facebook threesome

This week, Orange launched three new low-cost Android smartphones with Facebook at the heart of their user interfaces, seeing this as a key tactic to encourage consumers to upgrade from featurephones to smarter devices with data plans. The French-owned cellco says about half of its customers across Europe and Africa have smartphones, but it thinks it can boost that percentage by another 10 to 15 per cent in the near future by reducing the price of the devices, and the ease of use – in particular, focusing on a single 'killer app' that appeals to non-techie users. It believes that, once consumers are happy with using Facebook, they will gravitate towards other apps too.

"There are over 400,000 apps in Android market, which is mind boggling," said Orange Group's VP of devices, Patrick Remy, in an interview.

"We believe that there is a certain point where that level of choice will become a bit too much for our customers, that they'll become a bit lost with that level of complexity."

The carrier surveyed its userbase about the features which would most encourage them to upgrade to a smartphone, and "one name kept coming back on a consistent basis - Facebook," Remy said. The operator worked with Facebook itself and with Chinese phonemaker TCL (which uses the Alcatel brand) to create its own-branded line of social handsets.

The first, the Orange Vancouver, will launch first in Romania priced at €100 with a €9-a-month plan which includes 50 minutes, 200 texts and 60Mbytes of data, plus unlimited Facebook usage on top of that. Two other Android Facebook phones, at even lower price points, though with only 2G connectivity, will be launched early next year and the trio will be extended to all its markets – though not all of them will get the unlimited Facebook deal.

This has been confirmed for Romania and Tunisia but in more developed markets, users may have to add a separate unlimited social plan, though Orange says it will be important to avoid the complexities of metered data. Also looking to social networking to help attract new users is HTC, which believes the social network could help build a larger market for midrange to high end handsets in China, where many OEMs are focusing almost entirely on the huge mass market.

The Taiwanese company is teaming up with Chinese social media firm Renren to launch a handset with that software integrated, and it has also announced a similar device in cooperation with Sina's Weibo microblogging service. And with all this momentum, Facebook itself has grand plans for the mobile world.

"We expect our next billion users will come primarily on mobile," said the company's VP for partnerships and corporate development, Vaughan Smith, at the GSMA Asia Congress.

"When we look at what we should be talking about, we think that mobile is much more powerful when you add social. And we think the confluence of those two trends are the most important thing going on in technology over the next 10 years."

Facebook currently has 350m of its 800m users around the world accessing the service on mobile devices.

Facebook - the untouchable?

Outside specialist markets like China, which has its own social players, many believe Facebook is untouchable, but Google refuses to believe that. The search giant has got very serious about social networking, especially on the mobile platform, and has made a string of purchases to bolster its platform. The latest, Katango, brings it a set of algorithms to improve mobile social media interactions, which were initially the basis of an iPhone application, released in July (and now removed from the App Store).

The start-up's app, and its underlying technology, automatically sort social contacts into groups and then allow different levels of access for different groups, determining which contacts receive certain updates and photos. This mirrors the key differentiator that Google has claimed for its own social network over Facebook – the ability to categorize friends in 'circles' and share different items with each group.

Last month, Google CEO Larry Page said Google+ had signed up over 40 million users. He has also said that mobile systems – the main focus for Katango – will be the biggest source of growth for social systems, especially when they are linked to location services.

The price paid for Katango was not revealed. The start-up had previously raised $2 million in venture capital in a round led by Kleiner Perkins Caufield & Byers.

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