Facebook isn’t making a phone, it's partnering with HTC, AT&T and others to offer Android phones with integrated social networking apps suite.
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Facebook on Thursday introduced a suite of mobile applications that enhance social interaction on Android phones, a move likely to allay investor concerns about the company's ability to thrive in the mobile era.
In keeping with reports preceding the event, Facebook has partnered with mobile hardware maker HTC and AT&T, as well as other phone makers around the world. The social networking and advertising company has taken advantage of the flexibility of Google's open source Android operating system to integrate social interaction more deeply into the mobile user interface.
"Today our phones are designed around apps and not people," Facebook CEO Mark Zuckerberg said at a press conference at the company's Menlo Park, Calif., headquarters. "And we want to flip that around."
In practical terms, Facebook has assembled a suite of mobile apps called Facebook Home that includes Cover Feed, Notifications, Chat Heads, App Launcher and Instagram. These apps have been integrated into the Android interface make phone usage unavoidably social. It's more than interface cosmetics but less than a full-blown operating system.
Cover feed is a newsfeed that presents a stream of updates on the lock screen. Notifications assembles app events and messages from friends. Chat Heads is a new mobile interpretation of Facebook Messenger. App Launcher is a Home Screen app that replaces the generic Android launch experience. And Instagram is Facebook's popular photo sharing app.
"We're not building a phone and we're not building an operating system but we're also building something that's a whole lot deeper than an ordinary app," said Zuckerberg, adding later, "We wanted this to feel like system software and not just an app that you run."
In the simplest terms, Facebook wants more user attention, which it can translate into ad revenue at some point. "The Home Screen is really the soul of your phone," said Zuckerberg. "You look at it about 100 times a day. It sets the tone for the whole experience."
The first phone to ship with Facebook Home will be, appropriately enough, the HTC First. HTC CEO Peter Chou and AT&T CEO Ralph de le Vega took turns speaking at the media event to endorse the concept of a social phone. Available in four colors, the HTC First is powered by a Qualcomm Snapdragon 400 processor with dual-core CPU and it supports 3G/4G world and multimode LTE. It comes with Android 4.1 (Jelly Bean). It includes 1 GB of RAM, 5-MP rear/1.6-MP front cameras, and a 4.3-inch screen.
The phone will be available for $99 on April 12 through AT&T. The Facebook Home software will be available to U.S. Android users through Google Play the same day. Users of the existing Facebook app on Android will be able to install Facebook Home as an update.
Facebook Home works with the HTC One X, HTC One X+, Samsung GALAXY S III and Samsung GALAXY Note II, as well as the forthcoming HTC One and Samsung GALAXY S4. Support for other phones is likely to follow.
Zuckerberg suggested that whether or not Facebook Home comes to Apple iOS devices will depend on Apple's willingness to allow it. Asked about whether Facebook Home will affect search, he said, "It's an Android phone so you can use whatever you want."
In an email, Roger Entner, lead analyst and founder of Recon Analytics, characterized the announcement as another sign of increasing mobile competition. "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," he said. "As Facebook's users are more and more mobile it is imperative for Facebook's success to have a massive mobile presence."
Facebook Home debuts at a time when the company appears to be shifting its focus away from social advertising toward a more traditional ad model augmented by social data. The company recently brought its FBX ad exchange out of beta, allowing it to sell ads targeted using data provided by clients in users' News Feeds. It also acquired an ad serving company, Atlas, and has partnered with consumer data aggregators like Acxiom to target ads based on retail purchases.
Jan Dawson, chief telecoms analyst at Ovum, said in an email that Facebook Home is a great experiment for the company. "It's much lower risk than developing a phone or an operating system of its own, and if it turns out not to be successful, there will be little risk or loss to Facebook," he said. "If it does turn out to be successful, Facebook can build on the model further and increase the value provided in the application over time. The biggest challenge will be that it can't replicate this experience on iOS, Windows Phone or BlackBerry, the three other main platforms."
Adoption of Facebook Home is far from a sure thing. Consumer electronics shopping site Retrevo.com on Monday published the results of a survey that found little interest in a Facebook phone. The survey, conducted online using the Bizrate Insights platform, asked 3,269 online shoppers about interest in phones from Amazon and Facebook. Some 82% said they would not consider buying a Facebook phone.
Facebook's decision to launch with HTC rather than Samsung could limit adoption too. In 2012, according to Gartner, HTC unit sales accounted for just 4.7% of the smartphone market, down from 9.1% in 2011. Samsung, the leading smartphone maker in terms of unit sales, meanwhile saw its share of the smartphone market in 2012 reach 30.3%, up from 18.7% in 2011. Apple held on to the number two position, with 19.1% of the market in 2012, up from 18.9% a year earlier.
However, Facebook already has the attention of mobile phone users. According to a study published by mobile metrics company Flurry on Wednesday, the second most popular activity on mobile devices is using Facebook, behind gaming. Users spend 20% of their device time on Facebook and 32% of their time playing games.
Facebook is the number two mobile ad publisher in the U.S. behind Google, according to eMarketer. The company collected 9.5% of mobile ad revenues last year and is projected to take in 13.2% in 2013.
Facebook won't immediately be monetizing Facebook Home. "There are not ads on this yet," said Zuckerberg. "I'm sure at some point there will be."
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