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Facebook IPO details strategy and its vision of itself

Social network eyes expansion into China, hopes to boost mobile experience

Facebook's IPO filing lays out a pretty good image of where CEO Mark Zuckerberg wants to take the company: He sees the social network as having significant historical value to the economy, governments and -- he hopes -- to every person connected to the Internet around the world.

"There are more than 2 billion global Internet users, according to an industry source, and we aim to connect all of them," the company said in its S-1 filing with the SEC on Wednesday.

And, it seems that Facebook executives - Zuckerberg in particular - not only have some very specific plans on how it will string its influence around the globe. The company's co-founder also has some thoughts on Facebook's importance right now.

"At Facebook, we're inspired by technologies that have revolutionized how people spread and consume information," Zuckerberg wrote in a letter included the company's IPO filing. "We often talk about inventions like the printing press and the television -- by simply making communication more efficient, they led to a complete transformation of many important parts of society.... Today, our society has reached another tipping point."

Zuckerberg went on to note that his social network aspires to build the services that enable users to communicate and transform core institutions and industries around the world.

"We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services," he added. "We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time."

Patrick Moorhead, an analyst with Moor Insights & Strategy, noted that while Zuckerberg has some lofty visions of Facebook's place in the world, he's making a good sales pitch to potential investors.

"The letter of the CEO in an S-1 filing is where you can puff. And Zuckerberg puffed really big in this one," he added. "And I think that, in his head, this is what he thinks Facebook is going to be. When he sees what happened in Egypt and he realized that it was his creation that helped overturn a government there, he's going to take part ownership of that action because it was his baby."

So how do Zuckerberg and other Facebook executives plan on expanding the social network's reach and clout?

Part of their plan seems to be to figure out how to move into China, which has historically restricted access to global Internet companies. Early in 2010, for instance, Google pulled its business out of that country after announcing that an attack against its network came from China. The attack, Google said, had forced it to rethink its willingness to agree to China's mandates on censoring data for Chinese users.

In its SEC filing, Facebook reported that it basically has 0% penetration in China. The company, though, was quick to note that China remains a large potential market for Facebook, and that Facebook needs to grow its user base where penetration is low.

Dan Olds, an analyst with The Gabriel Consulting Group, said paving a way into the huge and lucrative Chinese market could be a tough challenge for a company founded on the idea of openly sharing information.

"I think that they'll absolutely look to spread more into Asia -- not just China, but all of Asia," said Olds. "Facebook is an online gathering place. I'm not sure what approach is going to work with China. What would a Facebook that's going to play ball with China look like? On a Chinese version, the government would know who's on your friends list and there would be people you can't be friends with? In China's Facebook, the government will decide if some friends are too unsavory for you to have?"

But Moorhead said China is such an untapped resource that Facebook may not be able to avoid trying to work out a deal there. "I think between China and India, they're Facebook's future," he noted.

But expanding its user base in Asia is far from Facebook's only plan.

According to the SEC filing, Facebook also wants to focus some of its attention on pulling in more mobile users.

Out of the company's 845 million worldwide users right now, 425 million monthly active users are using mobile devices to access the site, the filing reported. That's a lot of mobile users, Olds said.

But in an age when people are increasingly connected with their smartphones and tablets, and when mobile connectivity is on everyone's agenda, it's just not enough, said Moorhead.

"I think Facebook has missed the mark many times with mobile and they're still missing the mark," he said. "Essentially, their mobile solution right now is taking the desktop solution and cramming it onto a phone. It's slow. It's confusing. It's not working."

Aside from updating Facebook's mobile experience, he also pointed out the company needs to try again with a daily deals feature.

While local daily deals are making a big name and a lot of money for companies like Groupon, Facebook hasn't made a mark in that area yet.

"They're having a hard time with this," he said. "Facebook should be the biggest restaurant guide. Who do you trust more about restaurant recommendations than your friends? To tie that into deals and promotions is a multi-billion business that they're missing. They need to shore up their mobile strategy."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her e-mail address is sgaudin@computerworld.com.


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