Facebook acquired Parse, a toolkit and support system for mobile developers, in 2013. At the time, the social network’s ambitions were high: Parse would be Facebook’s way into one day harnessing developers to become a true cloud business, competing alongside the likes of Amazon, Google and Microsoft.
Those ambitions, it seems, have fallen back to earth. On Thursday, Facebook said it plans to shut down Parse, the services platform for which it paid upwards of a reported $85 million.
“We know that many of you have come to rely on Parse, and we are striving to make this transition as straightforward as possible,” Kevin Lacker, co-founder of Parse, said in a blog post. “We enjoyed working with each of you, and we have deep admiration for the things you’ve built.”
Most of what Parse does involves things most people will never see. Parse helps developers with support and tools, so that independent programmers can spend more time writing code and less time on keeping up the back end. Developers who use Parse include those at Quip, a productivity app, and Expedia’s Orbitz, a travel website. Facebook would make money from Parse by storing data from developers and sending customers product notifications.
Achieving that goal, however, would be no easy feat. Microsoft, Google and Amazon have similar developer offerings, along with a much richer set of other computing tools and services that developers need. Amazon Web Services, in particular, has in the past two years stressed both its developer tools and analytic services, so companies can think about what to build next. In every case, these companies can also benefit by selling other computing services, like complex commercial databases, which Facebook does not provide.
At one point, Facebook was willing to take those risks. When Facebook bought Parse in 2013, Facebook’s stock was below its initial public offering price of $38. The company had not grown a robust mobile advertising yet, and Facebook was eager to seek out other lines of business in hopes of future profits, according to two people with knowledge of the company’s plans at the time who requested anonymity because they were not authorized to speak for the company.
Parse seemed like a good opportunity for expansion. At the time, Internet businesses were in the midst of a major industry change, as users were shifting away from desktop computing and increasingly relying on mobile devices. Parse, the thinking went, could provide Facebook the opportunity to be the foundation of a whole new generation of developers building mobile apps in the age of the smartphone.
Things have changed. Facebook is generating record profits and its mobile advertising business is booming; 80 percent of the company’s advertising revenue now comes from mobile devices. As Facebook’s fortunes have turned, it has shown less interest in pursuing other lines of business outside of what it does best. Instead, the company appears intent on building things that somehow, someday, will feed Facebook’s core ad-based business — and those bets are going to have to get bigger and weirder
Facebook also would have had to invest untold millions of dollars in capital and, more importantly, engineering talent, to get the Parse business fully off the ground to have a better chance at making a dent in competitors like Amazon, Microsoft and Google.
Moreover, Facebook has already made two big, risky bets in Oculus, the virtual reality platform, and WhatsApp, the messaging service. Neither service currently generates material revenue for Facebook.
Parse may have touched millions of people through the apps that developers built there, but that mattered little against Facebook’s size. With more than 1.5 billion registered users, a population of even 15 million customers is not 1 percent of Facebook’s audience. Building up Parse, it seems, eventually became more of a distraction than it was worth.
“Moving forward we want to dedicate more resources to high-impact products and services in areas like analytics, monetization, discovery, and authentication,” Michael Kirkland, a Facebook spokesman, said in a statement. “As a result, we’ve made the difficult decision to wind down support for Parse.”
Other Silicon Valley companies have encountered similar difficulties. Inside Cisco Systems, in its heyday, there was pressure to build businesses that yielded $1 billion or more in revenue, since anything less could not affect the overall company. Facebook, which unlike other clouds has not sought to rent computing and software to businesses, must essentially find this from social networking.
Developers who used Parse will have a set of tools and a year-long window to be able to migrate their data off of the platform to other services.
“We’re proud of what we’ve accomplished together with the Parse community, and we thank them for their support,” Mr. Kirkland said.
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