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Summary:

Rapid adoption of OS X Mountain Lion would clearly threaten Microsoft. But after digging into Apple’s new operating system, Edward Aten of Swift.fm thinks it poses a threat to another, less obvious, company — the current leader in the consumer cloud, Facebook.

Aten_Mountain Lion_image

Before he passed away, Steve Jobs made his final goal clear: make Apple the backbone of the consumer cloud. First Apple launched cloud features within Mobile.me. Then it updated cloud-enabled versions of iOS. With the OS X Mountain Lion preview last week, we can finally see how Apple plans to change our world again.

Any move by Apple is obviously watched closely by Microsoft. But after digging into Mountain Lion’s features and philosophy, I think Apple’s new operating system poses a threat to another, less obvious, company — the current leader in the consumer cloud, Facebook.

Many companies have learned the hard way not to underestimate Apple. For Microsoft and Facebook, now may be the time to make bold moves to ensure their continued relevance in the consumer cloud.

Facebook and Apple, a rocky road

Ever since the last-minute removal of Facebook from Apple’s Ping launch, Apple and Facebook haven’t been on the best terms. The delayed Facebook iPad app, rumors of a Facebook phone and the inclusion of Twitter integration in iOS 5 all add to this division.

With the launch of the developer preview of Mountain Lion, Facebook is notably absent once again. If you believe, as I do, that integrations within operating systems will be critically important for social services going forward, this development is more than a slight – it’s a potential catastrophe for Facebook.

The good news for Facebook is that it already has a friend in the OS game (a friend with $240 million in goodwill) — one it may want to get even closer to.

A friend in Redmond

Rapid consumer adoption of iOS and OS X in any form clearly threatens Microsoft. But OS X Mountain Lion’s social cloud features, including messaging and photo storage, create an entirely new set of competitors beyond operating systems.

Apple has chosen a few strategic partners in Flickr, Vimeo and Twitter, but this isn’t necessarily great news for those companies. Remember, Apple has no qualms about mimicking successful apps from their app store (just ask Instapaper).

The only companies that are worse off are those not involved from the start.

Suddenly, Facebook and Microsoft find themselves on the same side of the table. If I were at either company, I’d be considering huge moves — all the way up to an acquisition or merger.

I realize how crazy this might sound at Facebook, so here is a bit of perspective: The most valuable company in the U.S. has just declared war on you. They want your users’ photos on their system. They want your users’ eyes and attention in their ecosystem and not focused on your site.

Oh, and they have $100 billion in cash, the largest mobile operating system and the fastest growth in personal computer share.

The Mountain Lion roars

The list of Mountain Lion’s features shouldn’t have come as a surprise to anyone. But in its totality, it offers fascinating insight into Apple’s view of the future, one where all content, connections and experiences aren’t tethered to websites, but to the cloud – the cloud as defined by OS X.

The move is such a game changer, it’s easy to miss by looking at features alone. In my estimation, it’s even larger than Om said last week, when he discussed the move to cloud-based operating systems:

“It doesn’t matter whether we use Windows, Mac, Linux, Android or iOS: we can do all the things we like to do as long as the Internet is there.”

Yes, Apple’s upcoming OS gives us a window to the Internet and other services using the cloud, but now our Apple devices will automatically know who we are, who our friends are, the content we care about and all the apps we use. With your reminders, contacts and photos automatically synced between each of your devices, you’ll never feel the Internet.

And you won’t miss it.

In other words, many of the reasons we love Facebook will be baked into all of our online devices, but that content won’t be controlled by Facebook. It will be controlled by Apple.

Of course the Internet will still play a role, but it will take a backseat to features and connections built into the cloud-based OS X Mountain Lion.

Only from Apple

Apple is the only company that can do this alone right now. To create a cloud OS that’s relevant, you need to hit a few critical tipping points:

  • Hundreds of millions of active users at several access points (desktop and mobile)
  • Billions of pieces of personal information and content generated on your system
  • Control over your ecosystem to mandate these changes and force people to get on board en masse

Microsoft barely has a mobile installation base and barely any network, but it does have access to hundreds of millions of desktops.

Facebook may have nearly a billion users, but it is just a website/application at the mercy of the operating system.

But, together, the two form one of the only plausible challenges to Apple’s next move.

If I was at Microsoft, here’s what I’d be looking at:

  • OS-level social collaborations: Office in the cloud has been in the works for years. But without a reliable network to tap into, it has failed to gain critical mass. Facebook’s 800 million members (with 100-plus connections each) could definitely help.
  • Identity: Facebook probably has the most reliable database of personal information outside of the government. Imagine buying a Windows 9 computer or phone, logging in with your Facebook ID and finding all your content, connections and games installed automatically.
  • Social data into Bing: Wholesale collaboration between Bing and Facebook could finally create a legitimate challenge to Google’s search dominance (at a time when Google is showing its first signs of weakness).
  • Hooks into the Web: Microsoft was notoriously late to the Web and even later to the social Web. Short of an acquisition or merger, it seems impossible for a Microsoft branded “like” button to make any meaningful headway. This  kind of social curation is imperative to Bing’s success.
  • Personal cloud data: As we document more of our lives on our mobile phones, Microsoft’s lack of a meaningful mobile presence puts it at a huge disadvantage. The company will have an increasingly difficult time acquiring users’ photos without a major player in cloud photo storage, such as Facebook.

What Facebook gets:

  • Real stickiness: Make no mistake about it, the world is gunning for Facebook. From Pinterest to Tumblr to RunKeepeer, social threats to Facebook’s dominance emerge daily. OS-level integration would create a significant barrier for competitors, or at least require them to play on Facebook’s terms in the Windows sandbox.
  • Top-level integration: By seamlessly integrating messaging across handsets, desktops and tablets, iMessage is a great example of an OS-level integration that threatens Facebook. Yes, Facebook messaging works across all of those devices now, but it’s at a disadvantage to native apps.
  • Cash: Microsoft has nearly half of Facebook’s IPO value on hand in cash (or equivalents). If Facebook is going to take on Apple or Google (or both), Microsoft’s substantial financial assets could definitely come in handy.

Bonus: The FB Phone 2, powered by Windows Phone

Facebook strategically understands the need for its own handset, but building off of the Android platform is less than ideal, for several reasons. Microsoft has a great mobile OS and quality hardware partners, but it lacks the differentiation needed to make a dent in the market. A Facebook-branded, Microsoft-subsidized and -engineered phone could be the only legitimate competitor to iOS and Android.

Throw in Facebook’s friendship with Zynga, and the partnership could lure talented developers away from their focus on Apple apps.

Time to act

OS X Mountain Lion is a different kind of operating system, and as such threatens different types of companies than operating systems ever have before.

For Microsoft and Facebook, now may be the time to bring their social and OS expertise and users together — before it’s too late.

Edward Aten is the founder of Swift.fm, a social music distribution service. Follow him on Twitter@edwardaten. The views expressed here are personal and do not necessarily reflect those of any Company with which he is or has been affiliated.

Image courtesy of Flickr user ingridtaylar.

  1. Apple as one of their path to a conversational system is to get rid of files. FB is already on its way with file less organization but lacks in other ways.
    For example does anybody in the apps [users] world think about “green-man-with-blue-suit.jpg” or do users think St. Patrick’s day party where Joe came in with a blue suit?
    Of all companies still thinking and organizing files, FB is the last which will collide with Apple. Organizing the worlds information as long as it’s captured in files is a much bigger target along with countless startups and old enterprise companies.

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    1. Smart comment. At last a post which shows someone really does understand the value of Apple’s file-less strategy. Now, which of the big guys is going to hire you to educate them? Because I really don’t think they get it yet. It’s a hugely powerful concept that no one is talking about.

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    2. I think you’re ahead of the game there. Facebook and iOS both have piss poor search experience. The first thing you do if you’re trying to mimic natural language is to perfect natural language search.

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      1. If you’re interested in how far we have come:

        Neurons discriminate among signals based on the signals’ “shape,” (how a signal changes over time), and Forger and coauthors found that, contrary to prior belief, a neuron’s preference depends on context. Neurons are often compared to transistors on a computer, which search for and respond to one specific pattern, but it turns out that neurons are more complex than that. They can search for more than one signal at the same time, and their choice of signal depends on what else is competing for their attention.[1]

        “Second, we found that the optimal stimulus is context-dependent,” he said, “so the best signal will differ, depending on the part of the brain where the implant is placed.” [1]

        Question here is: If we understand context in mathematical terms and an avg. neuron with 10k dendrite are all connection points equal? Of course not, so why would we model it as a multidimensional array with all points equal. That’s why Jeff[2] calls me anything from a smart cookie to cowboy and I’m more often on MS research (for which I have a lot of respect) psychological speaking shxt list than not, but better than talking to a narcissistic company. On the other hand we can do much more than model human speech.
        Point is I’m not the only one, there’s a small club of cowboys out there trying to go where “not one” has gone before.

        1. Scientists Discover How Best to Excite Brain Cells
        http://www.sciencedaily.com/releases/2011/07/110708124538.htm

        2. G2 | Sensemaking – One Year Birthday Today. Cognitive Basics Emerging.
        http://jeffjonas.typepad.com/jeff_jonas/2012/01/g2-sensemaking-1-year-birthday-today-cognitive-basics-emerging.html

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  2. If anyone is going to create the first truly cloud os its google not apple. iCloud is nice, but is nowhere near as robust as Google’s cloud offerings -which the author oddly never mentions…

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    1. Thanks for the comment Alex. Google is an important player but has the opposite approach – remove as much OS as possible (hence the chrome book). They are interesting but including them was a bit outside the focus of this post.

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  3. Microsoft not having a network? Have you not heard of Xbox live or hotmail? Your article has been poorly researched I would have expected better to be honest. Usual blog writing…

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  4. If games were developed for the Mac and upgrading PC’s wasn’t so easy, I would switch to Apple in a heartbeat. Until then, despite the tangible differences between PC and Mac, I still have to go with the PC.

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    1. Also factor in that a PC is $1000 cheaper than a comparable mac and the decision is easy. Get a PC.

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      1. Factor in the fact that when a PC crashed it takes a geek to put it back together again, get a Mac.

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      2. Jeepers Patrick, where have you been in the last 5-10 years? (Don’t forget, you used the word “comparable”.)

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  5. I don’t disagree that MSFT and FB would be making a smart move working together now that Apple has drawn a line in the sand (twitter integration) but sometimes I think tech writers underestimate how typical users think. Most are not using Macs and are passionate Facebookers who couldn’t spell twitter or google+. It will take some time before either situation changes.

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    1. Lets not jump the gun, it is worthy to note that FaceBook may indeed do the deal with Apple but maybe that info is to dangerous to release in Beta or terms are not completed.

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  6. My Windows 8 DP can do all the thing mention, Im a windows user but I own a Mac pro for final cut, if mac is beter than windows is that they have final cut, but adobe is coming with some new programs for video that they say will be better than final cut apple cost alot back in the days when i buy my pro i would hope to know how to make a Hackintosh its allot less and it works the same, now the hardware they are the same mac use’s intel and windows use AMD and Intel motherboard are the same grafics card same i think that windows is and will be #1 now that consumer PB is coming out u shud try it befor u talk so much about mac, u shud make a report about how my windows phone, xbox 360 and my windows 8 sync data, pictures, music, videos, and much more espesaly sins windows CP is coming out,

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    1. Lost me at your first comma and then scanning after “Im” became impossible, Diego.

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  7. I love my Macs and my iPhone and everything Apple, but if you ask me, Apple vs. MS and FB is a battle they will lose. I would not expect that Apple will initiate that battle. If there is a battle at all, I expect it to be Apple and MS vs. Google. They winner there is up for grabs. I think it would be great if all of them would cooperate. But I should know better.

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    1. A very poor article that smacks off Apple fanboyism. In case you didn’t know, Apple’s iCloud runs on Microsoft and Amazon services. I guess the Mountain lion domination is currently limping on one foot.

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      1. Correct, iCloud is nothing more than Azure with some magic on-top…. most people miss that though.

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  8. A very poor article that smacks off Apple fanboyism. In case you didn’t know, Apple’s iCloud runs on Microsoft and Amazon services. I guess the Mountain lion domination is currently limping on one foot.

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    1. Are you not aware of Apple’s mammoth new data center in Maiden, North Carolina that was built to support iCloud?

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  9. MS, FB, Google- these companies are the mass market leaders. Apple caters to an affluent niche. In a great year, OSX is barely 10% of PCs. Apple hates social. Apple cash-cow fashion accessory iPhone keeps falling further, further behind Android.

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    1. So out of hundreds of pc makers apple has barely 10%
      Doesn’t that mean they are they biggest?

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    2. I think you’re forgetting the iPad.

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    3. Um, the early 2000′s called. They want your comments back.

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    4. Oh, Tim. You should read more. Like this article from Business Insider titled “Android’s Market Share Collapses As Apple Surges Thanks To The iPhone 4S”

      http://articles.businessinsider.com/2012-01-09/tech/30606530_1_new-iphone-android-sales-verizon-customers

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  10. Wow. This is John Gruber with a side of MG Siegler level fanboy-ism. What you are saying makes sense if a user is an all-Apple customer and only interacts with other all-Apple customers. But simply looking at the number of iPhones and iPads vs. Macs implies there are a LOT of cross-ecosystem customers out there, and that’s where your arguments break down.

    “It doesn’t matter whether we use Windows, Mac, Linux, Android or iOS” – Um, yes it does. If you’re not using Mac or iOS you don’t get the full experience of Apple’s cloud services.

    “In other words, many of the reasons we love Facebook will be baked into all of our online devices, but that content won’t be controlled by Facebook. It will be controlled by Apple.” – But that misses one of the biggest reasons we “love” Facebook: It’s cross-platform.

    “Facebook may have nearly a billion users, but it is just a website/application at the mercy of the operating system.” – A website, at the mercy of the operating system. What?

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    1. This is exactly why iCloud is a joke. There cannot be one cloud to rule them all, and thus inter-operability is critical. That’s not a quality that Apple seems to have.

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      1. +1

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    2. I guess the author is saying that you get to the website via the OS and if the OS shapes or nullifies the need to go to FB then you by pass it. But then again we hardly ever visit the FB website, we usually access it via an App (of sorts) and if this is the case then how will FB get their marketing dollar?

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      1. “we usually access FB via an app”…or not at all!

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