 "Mark Zuckerberg")
Mark Zuckerberg, Facebook's co-founder and chief executive, is clear about his vision for his company: He wants to triple the size of his social network, which now has 1.6 billion members.
But to reach that new audience, he has to find a way to change telecommunications networks to make connecting to the Internet more affordable, since many of those would-be Facebook users live in developing countries.
That could be bad news for the companies that make equipment for those networks, whether they are Silicon Valley giants like Cisco Systems or little widget makers that produce the parts to tie different pieces of the network together.
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"There is definitely going to be some pressure, some consolidation" for many tech equipment suppliers, said Akshay Sharma, research director at the technology advisory firm Gartner. "If you're in hardware, you're going to reduce head count from thousands to maybe 10 people, a hundred at most."
No doubt, Zuckerberg's grand - some would say grandiose - vision could take years to realise. But if he manages to make the way people connect to the Internet more affordable, it would be just the latest instance of how the company has quietly upended the traditional economics of the technology industry.
Facebook has changed the way people interact with their friends on the Internet. But less understood outside tech circles is how the social network has come to be perhaps the most aggressive example of a growing number of companies that are unwilling to pay top dollar for products made by traditional technology suppliers.
Zuckerberg has embraced so-called open-source concepts, which have helped him play catch-up with the giant computer networks of companies like Amazon and Google.
Open source typically refers to freely shared code or even development plans that companies and people collectively create at a fraction of the price of traditional tech products. Bits of open-source technology can be found in all sorts of things, including Google's Android operating system and web browsers.
Companies like Facebook often contribute to open-source projects since they don't make money selling products - instead, they have to buy products that help them offer their service. Keeping tech costs down helps the bottom line.
This sort of enlightened self-interest sounds simple, but its impact has been dramatic. In 2000, for example, Sun Microsystems was worth $110 billion thanks to demand for its computer servers and workstations. A decade later the company was sold for $7.4 billion. Sun fell to cheaper competition from Linux, the popular open-source code that now runs many of Facebook's servers.
When Facebook reveals the financial results for its most recent quarter on Wednesday, investors will no doubt scrutinise how much the company is spending, particularly since Zuckerberg has promised to invest more money in searching for new users. One big key to keeping those costs down has been open-source technology.
Increasingly, Facebook does its own work on planning the computer hardware and software that it uses to deliver its services. It even released as open source the design of the racks where its servers operate.
It should not be surprising, then, that Zuckerberg is relying on open source to reduce the price of building and running the world's telecommunications networks, a business estimated to be worth about $150 billion a year.
"Our rule is 10 times faster or 10 times cheaper or both," said Jay Parikh, Facebook's vice president for engineering. "We want to get a full Facebook experience to every end user, whether that is video, or eventually virtual reality."
Established telecommunications companies are moving fast to adjust. Nokia, the Finnish company, joined Facebook in February at the announcement of the Telecom Infra Project, or TIP, a Facebook-led group that is trying to reduce telecom costs. Cisco Systems intends to start donating software to TIP, hoping to profit from heavy overall usage on the world's big telecom systems.
"There is a new force in the system," said Dave Ward, Cisco's chief architect. "We'd rather be on the train than in front of it."
In the future, Zuckerberg imagines that "a physical thing, like a TV, will just be a $1-app" inside a virtual reality on Facebook, he recently told a conference of software developers building apps for his firm. But that may be 10 years off, by Zuckerberg's own admission. People who do not work at Facebook might say it is a fantasy.
Facebook even appears willing to turn the price-crushing model on itself. To get virtual reality to every place in the world, Facebook's Oculus VR headsets, currently $600, may have to cost $5, said Mike Schroepfer, the company's chief technology officer.
Is that another fantasy? For Facebook, getting those costs down could mean controlling the next big communications platform, since Zuckerberg believes virtual reality may eventually supplant smartphones as a primary connection to the online world.
"The world is making enough phones. It's better for the world if there are fewer devices," Schroepfer said. "It's not totally obvious how all this shakes out - whether we'll have lots of consumer products, or it all disappears into a couple of VR headsets."
How much profit this new audience will yield Facebook is an open question. But Facebook would rather control a crucial technology than have to build on top of another company's products, as it has had to do with PCs and smartphones.
"It's more opportunity to show ads," said Danny Sullivan, founder of the technology website Search Engine Land, who is a close watcher of the industry. "It's more opportunity to gather data on what we do or who we are connected with. It's more opportunity to build a new platform where Facebook serves as the broker of connectivity."
At the same Facebook developers' conference there were talks on the latest open-source efforts, including an urban wireless network that checks its performance 125,000 times a second, and a long-range wireless system that Facebook says can send a gigabit of data a second, about 10 times the rate of today's good-performing networks and enough for virtual reality.
Both technologies, Parikh said, will be tested this year, with an eye to releasing them as open-source projects. "We'll be into all this stuff," he said. Facebook does not want to own or sell the gear, he added, but plans to work with "hundreds" of local phone companies worldwide on cheaper high-speed connections.
Facebook isn't alone in tackling the economics of connecting to the Internet. Google is aiming its Fiber service at radically cutting prices compared with what cable companies charge. Inside Amazon's cloud computing business is a company called Twilio, which supplies inexpensive phone and video services.
But others dismiss some of Facebook's efforts as hype. "We are connecting 700 million to 1.5 billion people a year via smartphones and tablets," said Ulf Ewaldsson, chief technical officer at Ericsson, one of the world's largest makers of telecommunications hardware.
"They say they can do a 90 per cent cost reduction, but that is from phone bills for high-cost customers," he said. "Poor people need to be covered, and the industry is working on that."
©2016 The New York Times News Service
