Facebook's earnings win for the fourth quarter of 2015 is a testament to its advertising success, but the company's future will depend on far more than newsfeed ads and corporate branding campaigns. The infrastructure supporting Facebook's digital communications and media empire is a big part of what will enable the company to compete successfully over the next decade.
In beating analyst estimates for Q4, Facebook executives rightly shined a light on the company's ad business. Advertising was responsible for $5.6 billion out of the total $5.8 billion in revenue Facebook earned last quarter. Overall, Facebook far exceeded Wall Street's expectations, which pegged the company at $5.4 billion in sales for the final three months of 2015. Analysts also predicted that Facebook would announce earnings of $0.68 per share, but the company blew past that number with an earnings-per-share figure of $0.79. Facebook stock rose more than 5% in after-hours trading.
For all of the focus on the company's advertising business, however, Facebook has repeatedly demonstrated that it also understands the importance of the IT infrastructure that underlies its operations. CEO Mark Zuckerberg, just back from paternity leave with his first child, highlighted the company's newest data center under construction in Ireland on the Q4 earnings call, the latest of six operated by Facebook around the world.
And on the same day that earnings were reported, the Open Compute Project , founded by Facebook, unveiled a major new telco project which extends open source infrastructure development beyond the enterprise and into telco data centers -- the heart of consumer connectivity, and a critical piece of the puzzle in Facebook's mission to connect the world. (See Major Telcos Join Facebook's Open Compute Project.)
Zuckerberg also had some interesting notes of emphasis on the quarterly earnings call around where he sees Facebook innovating next. "Video is an important part of the Facebook experience," he said, explaining that the company is "exploring ways to give people a dedicated place on Facebook for when they just want to watch videos."
The Facebook CEO also proudly cited the company's progress in virtual reality, and Facebook's plan to ship its Oculus Rift VR headset to more than 20 companies before the end of March.
Artificial intelligence was another point of pride for Zuckerberg. The Facebook leader mentioned a prototype AI system his engineers have developed that can look at a picture and immediately answer questions on the image in conversational format. In this next wave of AI development, Facebook is in a race with Google (Nasdaq: GOOG) for early dominance. (See Google on the Verge of Mobile AI Devices.)
The one thing all of Zuckerberg's plans have in common is a reliance on robust and flexible networking, storage and computing architectures -- a hallmark of any webscale company today, and further sign of the importance of emerging New IP technologies.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading