Mike Isaac

Recent Posts by Mike Isaac

Facebook’s $120 Million Onavo Buy Comes With Lots of Upside

Facebook made news on Sunday night, snapping up the Tel Aviv-based mobile app analytics company Onavo.

And the price paid is nothing to sneeze at; multiple sources said that Facebook ended up paying somewhere in the neighborhood of $120 million for the company.

Here’s the most interesting part: Yes, Facebook postured the move as a way to bolster Internet.org, Mark Zuckerberg’s initiative to bring the entire world online. But Onavo’s assets can bring more spoils than just supporting the altruistic movement — it could help boost Facebook’s bottom line.

Onavo sells a few products. “Count” and “Extend” are apps that help customers minimize smartphone data consumption (which fits nicely with Internet.org’s goals).

But the added value of those apps is that they beget Onavo’s analytics biz, which gives app makers the ability to gauge how their apps fare on the open market, as well as giving more insight into how people actually use the apps after they’ve downloaded them. It’s certainly valuable data for any company to own and mine.

Let’s take that a step further. Facebook can use that download and user activity data to spot trends in apps that are up and coming, potentially spotting at a very early stage the types of apps that are gaining traction with the public.

From a corporate development standpoint, that’s invaluable information. Facebook’s corp dev team can then check out these companies and enter partnership deals early on in the game — or perhaps just outright acquire them.

That’s also a way to catch up to companies like Apple and Google, which control the vast majority of the mobile app market and, as such, have had a major advantage in being able to spot download trends and spikes much earlier than other companies.

Moreover, it’s a way to further measure ROI for developers. Right now, Twitter is trying to prove to app makers that it, too, can deliver downloads with an expansion of its “Cards” technology. If Facebook proves its ability to drive downloads is superior to Twitter’s — well, that’s just another win.

Or perhaps Facebook makes a huge move, and offers the data compression service as a part of the Facebook app itself. The way Onavo’s apps work, it requires basically getting information across all of your smartphone’s actions. So in a nutshell, if Facebook can extend that sort of deep analytics to the billion-plus users on its network, that’d give the company a massive amount of insight into how people use their smartphones.

That’d be a pretty big move to make, however, at the risk of freaking people out over privacy issues — a well-worn path for Facebook after all its folly since past.

The big unknown here is whether Facebook plans to continue Onavo’s app analytics business. As of Sunday evening, a Facebook spokesman left that future up in the air: “We are beginning to evaluate the next steps for the Onavo integration,” the spokesman told AllThingsD.

At the very least, however, Facebook will have all of Onavo’s retroactive data to play around with, and I imagine all the information to be received from Onavo’s current customer contracts.

Not a bad deal, even for a hefty $120 million or so.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work