Facebook Moves into a New 'Home' in the Mobile Market

By Amanda Ciccatelli April 04, 2013

Today, the much-anticipated Facebook Home has finally been unveiled. This is a move that comes as a fast-growing number of the social network’s more than one billion users access it on mobile devices.

"Today we're finally going to talk about that Facebook phone," said Mark Zuckerberg, Facebook CEO, as he took the stage at his headquarters in Menlo Park, Calif., to reveal Facebook Home, a new launcher that the social network will offer for Android phones. More accurately, the company will show off a way to transform your Android phone into a Facebook device.

The company is not building a phone. "A great phone might sell 10 or 20 million units at best, but our community has over one billion people. Even if we built a really good phone, we'd only be serving 1 percent of Facebook users,” said Zuckerberg.

So, Facebook is aiming at the home screen of your phone with a launcher that works with apps that are already in your phone. Simply, tap your face and you can get options to go to the app menu, or straight to a messaging app – or to Facebook.

Coverfeed lets you scroll through updates, with huge, upright-oriented photos. If a post has comments, you can tap to see all of the comments, and respond to comments inline. There is also a notification pane, with SMS, messages and the most important posts appearing there. And, Chatheads is a persistent messaging widget that appears in other apps.

Facebook demonstrated a Chathead over a New York Times app, and showed how a whole conversation can happen without leaving the app.

This is not, however, the first time that the industry has been speculating about a Facebook phone. Similar speculations flooded the Internet last year, but it turned out that the company was preparing to announce its Graph Search Engine, a tool that could enable consumers to search and build diagnostics based on this tool.

“Facebook would like to be, literally and figuratively, as close to its users as its users are to their phones, within arm’s reach when they are searching for information, news, time wasting, shopping, communication,” Rebecca Lieb, an analyst with the Altimeter Group, told The New York Times.

Two thirds of the company’s users across the world log in to the social network on mobile devices every day. In fact, a recent IDC study found that those users checked their Facebook pages (mostly their news feed) an average of 14 times a day; users checked in two-minute bursts adding up to about half an hour every day. So, the new Facebook phone will use a modified version of the Android software displaying the Facebook popular news feed.

Though mobile ads have been a huge concern for Facebook's investors since before the company's public offering last May, some of that worry has subsided as Facebook moved into the market. The company is now offering a native mobile experience to help it engage with its global user base, while keeping its investors happy. Last year, it started showing ads to its mobile audience by splicing corporate sponsorships into news feeds, including updates from friends and brands they follow. One of the reasons why the company stumbled on its IPO were doubts about its mobile future, but mobile is crucial to Facebook’s ability to make money, and Facebook’s ad sales on mobile phones are looking up. According to EMarketer, Facebook will gain $965 million in U.S. mobile ad revenue in 2013, more than double the $391 million it brought in the year before.

Image via Yahoo.com

The mobile ad market is growing quickly. eMarketer expects U.S. mobile ad spending to increase 77 percent this year to $7.29 billion, from $4.11 billion last year. Overall, more people are accessing Facebook on smartphones than on desktops. And if Facebook can become the primary communication platform for a smartphone, it could increase its daily engagement with users by six times.

Facebook expects to reap $965 million in U.S. mobile ad revenue in 2013 – about 2.5 times the $391 million in 2012, the first year that Facebook started showing mobile ads.

“They want to have all the services that consumers want to use in the mobile world,” said Karsten Weide, an analyst with IDC. “They want to be the major consumer Internet platform.”

Today's announcement is centered on the integration of Facebook and the Android operating system – as Facebook works to evolve from its Web-based roots to a mobile-first company. "What Facebook wants is to put itself at the front of the Android user experience for as many Facebook users as possible and make Facebook more elemental to their customers' experience," said Forrester Analyst Charles Golvin.

Facebook's rival, Google, makes the Android software that Facebook and HTC would be using. By partnering with HTC, the social network is making an international push, according to Michael Pachter, an analyst with Wedbush Securities. “The more people you get to use it on phones, the more ads you can deliver.”

Roger Entner, lead analyst and founder of Recon Analytics, said, “With Facebook entering more forcefully in the mobile space is another clear sign of the mobile competition heating up. Occupying the Android home screen on their new device developed with HTC gives Facebook access to mobile information like only Google, Facebook's arch rival, who makes the phone's OS Android has. As Facebook's users are more and more mobile it is imperative for Facebook's success to have a massive mobile presence.”

"They have tried this before with little success," analyst Jeff Kagan added. "This previous model was with HTC as well. So, this time around, it seems as if Facebook is after the 750 million Android devices out there (actually, that number was released in March, odds are that there are significantly more activated Android devices at this point). As long as the device has access to the Google Play store, it'll have the opportunity to become a Facebook Phone."

HTC and AT&T will release the first phone with Home pre-installed, starting with HTC available for download on April 12.

Edited by Braden Becker

TechZone360 Web Editor

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