Large companies often have trouble breaking into new revenue-generating vertical markets. As Facebook barrels into its much-anticipated initial public offering today, the question for investors and analysts will be: How does Facebook start making money from its huge mobile presence? While it may seem like Facebook has completely dropped the ball on mobile monetization, there is plenty of time and avenues for the social behemoth to make money from its mobile eyeballs.
To understand where Facebook is with its mobile products, one must understand the problems that big companies deal with in rolling out new revenue-generating products. There are four phases, which author Geoffrey Moore calls “horizons,” for revenue-generating products at any given company:
- Horizon 1: Established products that are generating revenue.
- Horizon 2: Go-to-market products that are out of the research and development phase and are making the painful birth into a new revenue category for the company.
- Horizon 3: Products that are in R&D and may or may not constitute the future of the company.
- Horizon 4: End-of-life products that have long been revenue generators for the company but may have outlived their usefulness.