Facebook Inc Bets on This $7 Trillion Opportunity -- Will It Pay Off?

By Markets Fool.com


Source: Parse

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Perhaps Facebook was feeling a little left out, or maybe it is the fact that the IDC expects the Internet of Things to be worth $7 trillion by 2020. Either way, the social media giant announced at its F8 developer conference last week that it is entering the Internet of Things (IoT) space through its Parse mobile development platform.

Parse, which Facebook bought back in 2013, released several new software development kits (SDKs) that allow developers to create apps that will pull data from connected home devices, allow users to control those devices via mobile, and even receive push notifications.

On its blog, Parse co-founder James Yu said, "With these SDKs, your device will be able to receive push notifications, save data, and take advantage of the Parse Cloud."

It is Facebook's way of getting in on the growing IoT trend, but it may not be a big enough step.

The IoT platform space is filling up
It is not surprising that Facebook is trying to tap into the Internet of Things, but I question how well this current strategy will play out. Here is why: the company is focusing on the backend of IoT where developers live, instead of focusing on the consumer side of IoT where the biggest tech companies are competing.

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Apple, Samsung, and Googleare already fighting to be the main platform for connected homes, while Facebook is simply helping developers create IoT apps.

Apple HomeKit wants to tie connected appliances to iPad and iPhones, so the future of the connected home is run from iDevices. Meanwhile, Samsung purchased SmartThings and its connected hub system to allow home IoT devices to communicate with each other and their users. Similarly, Google purchased smart thermostat maker, Nest, last year and now has the Works with Nest system that allows connected home appliances, and even some new Mercedes-Benz vehicles, to easily communicate with the Nest hub.


Some new Mercedes vehicles come equipped with Works with Nest communication. Source: Nest

The problem is that Facebook Parse does not appear to have any unique system that will directly benefit Facebook in the long run. There are plenty of tech companies that already have their own SDKs for IoT development (Broadcom being one of them) and offer some of the same advantages as Parse.

The Verge mentioned that Facebook may eventually pair IoT apps built on Parse with Facebook Messenger or its News Feed. With over one billion users, that would certainly make developers consider using Parse to make IoT apps. But I do not think push notifications from IoT devices to Facebook apps would be a game-changing move in the Internet of Things space, especially when compared to efforts from Apple, Samsung, or Google.

A slow start
Obviously, I cannot fault Facebook for trying to enter the connected home space. Gartner projects that by 2022, the average household could have up to 500 connected devices. Clearly, no mobile company wants to miss out on that opportunity.

But the Facebook Parse announcement is a very small step toward the Internet of Things. There are plenty of other companies that have SDKs for app developers to make IoT applications, and Facebook has yet to lay out a clear IoT strategy. While this may be the first of many moves for Facebook into the space, it is not a big enough one just yet. Investors should hope the social media juggernaut has grander plans coming down the pipeline.

The article Facebook Inc Bets on This $7 Trillion Opportunity -- Will It Pay Off? originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, Gartner, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). 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.