Research Notes

10 good reasons why Facebook ought to purchase Opera – a company that was created in heaven!

During the past days we have been hearing a number of rumours about Opera being purchased by Facebook. Strand Consult knows Opera very well and we have been following Opera for many years. We believe that Facebook and Opera are the perfect match. We do not have any inside knowledge about this possible takeover, but over the years we have published many research notes about Opera and how they have been doing business. Many of our mobile operator customers around the world have been very satisfied with their cooperation and partnerships with Opera.
We have compiled a list with 10 good reasons why purchasing Opera would be a very good move by Facebook.1. Facebook has a great deal of mobile traffic on their platform, but is having trouble converting that traffic to revenue. Opera can convert that mobile traffic to revenue. This is exactly what they are already doing with their many agreements with mobile operators around the world. By purchasing Opera, Facebook will immediately gain commercial relationships to many of the world’s largest mobile operators.

2. Opera grew up in the mobile world, so Opera understands the mobile world and how it ticks. Facebook has very little understanding of the mobile world and a very limited relationship with market players in the mobile industry. In practice, Facebook could give Opera the responsibility of handling large parts of their mobile activities, thereby giving Facebook the mobile DNA they have been missing so far.
3. Opera does not only have one, but a number of browsers that work across many platforms including feature phones, smart phones, tablets, PCs, TVs, set-top boxes etc. In practice, Facebook could launch their own browser if they wanted to, just like Yahoo is currently doing. If Facebook purchases Opera they will from day one own a browser that is already installed on many different devices across the whole world. Yahoo on the other hand will need to convince all their customers to try their new browser.
4. Opera has made a number of acquisitions over the past years. Some of those activities are starting to generate turnover and earnings for Opera. In practice, Opera has understood how to build new business on top of their browser. They view their browser as a shopping mall and by adding shops they have been able to take advantage of the mobile traffic passing through the Opera browser.
5. With their purchase of AdMarvel two years ago and more recently Mobile Theory and 4th Screen Advertising, Opera has ensured that they are well placed on the mobile advertising market. This is a good position that Facebook can further expand and also a very interesting part of Opera’s business that can take advantage of the mobile traffic that Facebook already has.
6. Opera has built a very successful App Store. They have created their App Store with very few resources and in a close cooperation with partners that know this market well. If you compare the number of downloads and what it costs to operate their App Store, with the size of the revenue and earnings it is generating, it is a huge success. Today Opera has one of the major App Store businesses in the mobile world. By acquiring Opera, Facebook will thereby also acquire a mobile app store that they can expand the distribution of via Facebook.
7. Opera has a global presence and a great deal of knowledge and experience about the emerging markets. In practice Opera knows about what is going on in countries like India, Russia, Brazil and regions like Africa and Asia. Facebook on the other hand is very US centric and does not appear to have any greater understanding of the many users they are acquiring in emerging markets.
8. Opera is being run by a professional management team. They have managed to develop and expand a browser business on a market where browsers are free. Opera has grown to become a business that is seeing growth in their customer base, turnover and earnings from customers using services that are available on their browser.
9. Opera is the world champion of the mobile disciplines that Facebook honestly admitted in their IPO material that they did not know much about. The largest challenges that Facebook currently face are in the business area where Opera has centre stage.
10. Opera’s shares are currently relatively inexpensive. With the money Facebook just acquired and the additional funding they have available, purchasing Opera would not be a problem, even if they had to pay a high price for the Opera shares.
In our opinion the two companies Opera and Facebook are the perfect match that almost appears to have been created in heaven! If I was asked to advise Facebook I would not hesitate for one second in stating that purchasing Opera would be a perfect move for Facebook – and a move that can add great value to Facebook.
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