Vodafone's ZYB Acquisition: More Mobile Social Networking

(Business News & Technology News, 22 May 2008)

Vodafone recently acquired ZYB, a Danish company that has developed a social networking and online management tool for backing up and sharing contact and calendar information online, for Euro31.5 million. This acquisition represents part of an intelligent effort by carriers to facilitate the movement of social networking services from PCs to the mobile phone.

An increasingly important function of social networking services is to serve as a form of ad hoc unified communications for the general population. Consumers are using social networking services in order to maintain presence on a network, and mobile phones are an obvious extension of this effort. Services like Twitter and Jaiku were the first to gain widespread consumer adoption, and large generalist social networking services like Facebook quickly followed suit.

"Consumers will increasingly be able to move seamlessly between the PC and the mobile phone, keeping their friends and contacts aware of their movements as they choose," says Ri Pierce-Grove, analyst at independent market research firm Datamonitor. "This has a number of positive consequences for providers like Vodafone. It increases consumers' use of data plans, and, potentially, provides a new source of revenue via advertising. Both mobile providers and social networking services are competing to find the right mix of platforms and partnerships in order to meet consumer demand."

ZYB's upcoming Phonebook application is a clear move to ease consumers' movements between PC and mobile devices, as well as to deliver some of the benefits of unified communications. One of the great advantages of social networking services is that they significantly reduce the effort of keeping in touch with friends and keeping contacts updated. By allowing users to share and backup content when they are on the move, to share calendars, and to make it clear when they are available for a phone call, services like ZYB are likely to meet with positive reception. Enabling consumers to automatically communicate their location to their contact base is a risky move, and one which is meeting with initial resistance due to privacy concerns. However, with the right safeguards, presence-based social networking applications can succeed.

Whether or not this particular acquisition will succeed is not obvious; this market is still in its early stages and competition is intense. However, by moving into the social networking sphere, Vodafone is demonstrating that it understands which way this market is going.

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