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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.