Facebook Creating its Own Operating System Points to Telco Strategy as Well

Some might argue operating systems now are irrelevant, or nearly so, as barriers to consumer use of applications and services. Operating systems clearly continue to matter for app, device and platform suppliers, though. Which might explain why Facebook is now working on its own operating system, apparently for use with virtual reality or augmented reality products.

As Apple now designs its own chips and Google and Amazon design and market their own hardware, so Facebook is thought to be readying its own chip designs to support the new operating system and might design its own eyewear computing appliances.

Apple long has had its own audio services and now has moved into the video streaming business as well, as well as long having its own operating systems. 

Such moves into other parts of the ecosystem are hardly new. Google the supplier of leading consumer applications also became a hardware supplier, an internet service provider and an operating system platform as well. 

Amazon designs and builds its own hardware, is a cloud computing services supplier, provides its own video and audio streaming services and builds its own servers and server chips. 

The strategy of moving into new parts of the internet and consumer products ecosystems therefore has been underway for some time. 

There are implications for connectivity providers, whose historic and unique role in the ecosystem--network connectivity--is under assault by others in the internet ecosystem. Others in the ecosystem are gradually occupying multiple roles in the value chain, sometimes to reduce costs, sometimes to create product distinctiveness, sometimes to gain strategic leverage over potential or present competitors. 

At least in principle, such moves might also make future “breakup” efforts more difficult for regulators and policymakers, or at least create potential new revenue streams in the event of any successful breakup efforts. Licensing of core technology might be a necessary part of any such efforts, even if key applications are separated. 

Connectivity providers have not been comatose in exploring ways to enter other parts of the value chain, but it has proven quite difficult. The existential danger is that, over time, value in the ecosystem will continue to shift to appliances and devices; applications and platforms; marketplaces and commerce. 

That is why some believe “connectivity alone” will not continue to be a viable revenue model for telcos, despite the obvious danger in attempting major transformations. As the old saying suggests, telcos are between a rock and a hard place; certain decline or demise and possible decline and demise. 

Even as 5G, edge computing, internet of things, augmented, artificial reality and network slicing create new potential roles and revenue streams, the decay of legacy connectivity provider revenue streams is obvious and significant. 

Also, at a high level, connectivity budgets--consumer or organization and business--are not unlimited. Even if new products are developed that replace older products, customers are unlikely to spend much more than they do at present, for all such services. 

Big new revenue opportunities therefore almost by definition must come from outside the traditional connectivity ecosystem. It will be risky. But it might be a necessary risk.