Facebook Targets Emerging Markets With MediaTek Deal

Any social networking business grows on its user base, and Facebook, the world's largest social networking site, is no exception. The Web site, with more than 800 million users, is now targeting emerging economies to enhance its user base.

The company, which was co-founded by Mark Zuckerberg, has signed a deal with Taiwan-based software and chip designer MediaTek Inc., to let users in emerging markets access Facebook via affordable mobile devices.

MediaTek is one of the world's largest mobile chipset platform providers and shipped more than 500 million units in 2010 for assembly into a wide range of mobile phones distributed worldwide.

The partnership is expected to develop a social networking app for cheaper feature phones that should help Facebook penetrate the emerging markets, where many customers cannot afford a smartphone, a tablet or a personal computer.

The partnership will also allow users of handsets powered by MediaTek's Runtime Environment (MRE), the firm's middleware technology designed for mobile developers and application providers, to deploy services and content for Smart-Feature phones.

The MRE solution provides millions of users in emerging markets with the ability to enjoy rich online experiences previously available only on smartphones. MRE-enabled devices will enable many users to access leading Internet services, such as Facebook, for the first time.

We believe this move shows that Facebook is being proactive about attracting new users and that it recognizes the impact of tapping these users longer term, stock analysis firm Trefis wrote in a note to clients.

As the world's largest online social network, Facebook competes with social networking arms of Google, Yahoo and MySpace in addition to local competitors in international markets.

Why Developing Markets Matter to Facebook

Developing markets like India are central to Facebook's future due to their population growth and wide user base. India, for example, has a population in excess of 1 billion and presents an enormous opportunity. With that population base and increasing Internet penetration, Indian Facebook users are expected to outnumber American and Indonesian in the near future, the Trefis note said.

The U.S., currently, has the largest user base, with approximately 156 million users. Indonesia and India are second and third, respectively.

Meanwhile, emerging markets would account for 60 percent of the mobile market by 2013, according to media research firm Informa Telecoms and Media. The fact that 70 percent of mobile handsets sold in emerging markets are feature phones the Facebook-MediaTek deal is expected to offer users across the world a easier gateway to access Facebook.

Last year, phones powered by MediaTek chipsets accounted for more than 40 percent of the Indian handset market. With the launch of this global partnership, MediaTek expects more than half of its customers in India to adopt its MRE solution.

Our new partnership with Facebook further reinforces MediaTek's focus on providing differentiated services and value for handset brands, giving them the means to offer affordable, compelling and differentiated mobile solutions to consumers in key emerging markets such as India, said Cheng-Te Chuang, Corporate Vice President of MediaTek.

MediaTek is currently working with leading handset brands, including Spice Group and Micromax in India, Cherry Mobile in the Philippines and Nexian in Indonesia, to roll out mobile solutions in these key markets.

In emerging markets, MediaTek's chips have been behind the ability to offer features such as color interfaces, cameras, video recorders, QWERTY keypads and dual SIM capability at compelling price points.

With MediaTek's new MRE solution, we are in a position to redefine the mobile landscape and give our users their first mobile browsing and social networking experience on a handset that costs less than US$50, said Dilip Modi, Managing Director of Spice Mobility.