Don’t call it the Facebook phone. For the past few years, rumours have been bouncing around the industry about the social networking giant’s imminent move into mobile. Of the more than one billion people who use Facebook each month, 680 million check their friends’ status updates or sift through their photos using a mobile phone.
But Facebook has been unable to capitalise on this - something that has become even more pressing since it went public last year with a chaotic IPO. While Facebook has been here before with 2011’s HTC Chacha and Salsa, Facebook Home has loftier ambitions, namely to be ‘the next version of Facebook’.
Home effectively works in the same way as an Android skin. Consumers can access updates and photos from a cover feed that sits on the phone’s lock screen. They can text and send messages to friends via ‘Chat Heads’ that pop up over apps. And notifications also appear on the phone, regardless of what is currently being used.
What is most interesting about Home is how Facebook and Google’s wars online have finally broken into a brand new front. Home builds a fence around Android – while you can still access all your Google apps, Facebook will offer apps of its own, and easier. Why use Google to search when Facebook’s search, bolstered by its new Graph Search function, will be much closer to use? And Facebook will be able to sell adverts off your browsing history, not Google.
Victor Basta, managing director of Magister Advisors, said: ‘The clear strategic threat is that it could dramatically reduce the value of Google’s investment in Android, and Google has zero say in this, since unlike Apple, they do not control what happens within the Android eco-system.
‘The bigger picture is that Google, Facebook and Apple are now all effectively competing for the same sources of value, and therefore the market valuations of all three companies increasingly represent the ‘pie’ from which each company is taking a slice. In future, what drives Facebook’s valuation up is more likely to drive Google and/or Apple down. This is a three–way fight in which everyone else marginalised.’
Who needs hardware?
Despite the company’s astronomical valuation (around $64bn at time of writing), many agreed that placing its own funds into building a literal Facebook phone was a bad idea. Geoff Blaber of CCS Insight said: ‘Facebook could only ever cater to a fraction of its 680 million active monthly users on mobile with its own hardware. Facebook’s enormous user base, combined with an abundance of struggling manufacturers looking for strategic partnerships, means the social networking giant has no reason to enter the mobile phone manufacturing business.’
Thankfully, it has several smartphone big hitters willing to partner with it. It has been in talks with HTC for a year about preloading the forthcoming First with Home. Samsung owners will be able to get their hands on Home soon, and Facebook is confident future Android devices will come preloaded with it.
The social network’s move reinforces predictions that it is the content and software being carried on a device that will separate the winners from the losers in the smartphone market. Home hit the US last Friday (12 April), along with the HTC First. Global markets will follow. Facebook’s rivals, whether digital or smartphone companies, will be anxious to see how many people ‘like’ Home.
Facebook Home winners and losers
EE bags the exclusive The First is yet another 4G exclusive for Britain’s biggest operator. And being a mid-tier device, EE hopes it will entice more customers onto its 4G network.
Rare good news for HTC By building the flagship Facebook device, the launch of Home is a nice boost to the beleaguered Taiwanese phone maker, after its One launch was hamstrung by delays and the admission it did not have the pull on components that the big boys do. Home also offers a neat UI that goes beyond HTC’s existing Sense overlay.
Zuckerberg cracks mobile When Facebook’s CEO makes a change to the social network, it is usually greeted with howls of derision and threats of boycotts from its hundreds of millions of users. Home is crucially an optional twist on how Facebook does things and has not been subject to a legion of groups on the site attacking the change.
A slap in the face to Google Home does virtually everything Android does, but without letting you into Google’s mobile operating system, including running apps. Google could be left feeling sore if Home catches on among Facebook’s one billion active users.
Manufacturers’ innovation All manufacturers, even those who partner with Facebook, are trying to build new software into their smartphones in order to drive revenues and tie consumers in to their ecosystems. As Home is viewable from the home screen, consumers may never get to see them.
Over the top of operators Facebook’s suite of messaging services mean that customers can bypass text messaging. While operators may be buoyed by the potential increase in data usage on devices running Home, what if Facebook eventually offers VoIP calls?