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Proof That Facebook, Inc.'s Unbundling Strategy Was The Right Call

Do you remember when Facebook unbundled its Messenger app from the "big blue" core app, and people freaked out ? Facebookers lashed out at having to download a separate app, and immediately bashed Messenger down to 1-star reviews only because they had to download another app. None of the complaints at the time had anything to do with the app's actual functionality.

They also failed to see the bigger picture that single-purpose stand-alone apps are far more efficient for mobile devices. Who wants to dig around through a bloated app to find a single feature when you can access that feature directly from the home screen? Well, Mark Zuckerberg just got some vindication that his unbundling strategy was absolutely the right call (not that he needed it).

We're No. 1! We're No. 1!

Market researcher Nielsen has just put out a report on the top smartphone apps of 2015, and Facebook was able to grab 3 of the top 10 spots. No. 1 was the core Facebook app, which had an average of 126.7 million unique users. But here's the good part as it relates to unbundling: Facebook Messenger grabbed the No. 3 spot with 96.4 million average unique users, an increase of 31% from 2014.

As far as all that user backlash, it's mostly faded away. Negative reviews these days actually relate to the app's performance itself, or point out existing bugs that Facebook needs to address. Facebookers have gotten over the "forced" download.

Even Facebook's own numbers show that Messenger is doing very well. In August 2014, the social network had about 200 million monthly active users on Messenger. As of June 2015, it had 700 million, growing to over triple the user base in under a year. Nielsen's data appears to only incorporate U.S. users, which may explain why its estimates are much lower.

The initial vocal outcry has been replaced by impressive user growth, which also means that Facebook is progressing to the point of monetizing it. In fact, it's highly likely that Messenger's incredible growth has is directly related to its unbundling. Earlier this year, Facebook even took this idea a step further, unbundling Messenger from Facebook itself . You don't even need a Facebook account to use Messenger anymore. You can now sign up with just a phone number, making Messenger a potential SMS replacement.

Separately, the third Facebook app to make the list is Instagram, coming in at No. 8 with 55.4 million average unique users. Technically, Instagram wouldn't qualify as part of Facebook's unbundling strategy, since it was always a stand-alone app that Facebook just purchased, but Instagram is really starting to look like the best $1 billion it ever spent .

When unbundling fails, it still succeeds

None of this is to say that unbundling is a surefire success. Facebook just recently shut down its Creative Labs division earlier this month, which had built a handful of stand-alone apps like Slingshot, Rooms, or Riff, among others. There's a good chance you've never heard of any of those apps, which is part of the problem.

More recently, Facebook just announced that it is discontinuing support for photo syncing, and will require users to download its Moments app instead. Much like the Messenger unbundling, it's a risky move that may draw criticism, but it might just work.

But none of this means that the strategy itself is incorrect. If anything, launching unbundled stand-alone apps minimizes the risk associated with each app, so they can fail cheaply. Best case scenario, an app like Slingshot successfully replicates and displaces Snapchat. Worst case scenario, it fails and quietly dies at minimal cost. Sounds like a pretty good risk/reward ratio to me.

The next billion-dollar iSecret

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The article Proof That Facebook, Inc.'s Unbundling Strategy Was The Right Call originally appeared on Fool.com.

Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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