Pressed to respond to the rising popularity of online services that let people broadcast their location, Facebook mostly hit the right notes with the initial design of Places, although it's too early to declare the service will be a sure success, according to several experts.
Competitively, Places adds a necessary feature to Facebook, now that Foursquare, Gowalla and others have proven there is a nascent but growing demand for so-called location-based services, which let people share their geographic location online by "checking in" through these applications upon arrival.
Because many of the locations people "check into" are commercial establishments, like retail stores and restaurants, Places will boost Facebook's efforts in local advertising.
In addition, Places deepens Facebook's already strong link between its social network and mobile devices, a link that Facebook has correctly identified as critical for its current and future usage growth and engagement.
While tending to these inescapable competitive realities, Facebook is being considerably considerate with its smaller location rivals by partnering with several of them and by designing Places also as an open platform that all external developers can tap.
Facebook, no stranger to privacy controversies, is striking an adequate balance with a friends-only default setting for Places and with granular controls that allow people to establish custom settings of access to their location data, including making it available to everyone on Facebook or, at the other extreme, turning off Places completely.
That's the general consensus of several industry observers, although they also warn that some questions remain, that some details need to be filled in and that it's likely that unforeseen issues will crop up and will need to be addressed as people start using Places.
For now, the launch of Places is a big step for Facebook that, sooner or later, will have a major impact on the average social-networking user.
"This has the capacity to mainstream the location 'check-in' phenomenon in a way that Foursquare and Gowalla haven't," said industry analyst Greg Sterling from Sterling Market Intelligence in an interview.
"The awareness level for this type of service is still fairly low, so Facebook is bringing this to a mass market of 500 million people," Sterling added, referring to the size of Facebook's user base.
Michael Gartenberg, an analyst with Altimeter Group, also sees this potential: "This takes the idea of location services from an enthusiast market of the digerati to the mainstream of Facebook users," he said in an interview.
That Facebook kept Places as a straightforward service that lacks the elements of play of smaller location players, while actively partnering with some of them and offering APIs (application programming interfaces) for all external developers, surprised Chris Hazelton, an analyst with The 451 Group.
"I expected Facebook to go at it alone," he said.
Although Facebook didn't big-foot them out of existence, these smaller players have to sharpen their focus and services, now that the basic location-identification functionality has become a commodity.
"These location services are really a feature. It's hard to see how this is a standalone service, so it makes sense for Facebook to integrate this," Gartenberg said. "Places is just one more bit of social information users can share with each other."
"If you're running a location-based service, you need to figure out very quickly what your value added is to consumers and demonstrate some differentiation. It has to be more than niche things like gaming elements," Gartenberg added.
While Places lacks bells and whistles right now, that doesn't mean Facebook will necessarily refrain from making its feature-set more sophisticated and rich in the future, Sterling said.
"This is Facebook's first step in a larger location play," he said. "This gives them a foundation for expanding."
Of course, broadcasting one's physical location involves potentially sensitive information that users should be in control of. Facebook stopped short of making Places a service to which people have to opt in, which will likely upset some privacy advocates. However, Places' friends-only default and ability to turn it off completely have been generally well-received, although with some caveats and caution.
"Facebook has dotted the i's and crossed the t's to make sure very granular controls are in place," Gartenberg said.
Although the general reaction from Facebook users to the privacy settings isn't yet known, "it is evident that Facebook has learned from past privacy mistakes," wrote Forrester analyst Augie Ray in a note sent to reporters via e-mail.
Gartner analyst Ray Valdes characterized the privacy design for Places as "a better-than-expected effort," although he still sees "room for improvement."
"Beyond dials and controls, there are edge cases that need to be addressed: What if a place changes ownership? What if there is a restaurant that users check into, that later becomes a strip club, without changing its name?" he wrote in a blog post.
"What if someone creates a place that is actually my house, can I delete it if I did not create it? Facebook staff did not have specific answers to these questions, other than to say that all of this would have to be worked out, via appeal," Valdes wrote. "Although the privacy controls could use improvement, I think that the broader issue will evolve and mutate over time, along with people's behaviors and expectations."
Facebook, which has failed to hit a home run yet with its various attempts at "social" advertising, may get a golden chance to tap into a vibrant source of local-advertising revenue through Places, although the company is playing down that aspect initially.
"The implication this has for brands and retailers is huge. There's no doubt that will be an integral component of this going forward," Gartenberg said.
Knowing where a person is or where they're going can be of huge value for marketers looking to match their ads to users' commercial intent, he said.
Hazelton concurs: "This target market of Facebook users is very attractive. You'll see a lot more interest from advertisers in this model."
Places will also help Facebook grow its already strong base of mobile users. Among the 500 million Facebook users, about 150 million also access it from their mobile phones.
"Location is a critical part of that intersection of mobile and social," Gartenberg said.
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