By David Edwards
Facebook Home pushes the social media giant’s services front and centre on the mobile device – and will thereby accelerate carriers’ ongoing SMS revenue declines, according to Ovum chief telecom analyst Jan Dawson.
Available only on Android, Facebook Home is neither an operating system nor a phone, contrary to early speculation. Rather, it is a suite of apps that, once launched, overhauls the device’s home-screen to provide users with a range of Facebook functionality, including a scrollable news feed. It is largely viewed as an attempt by the company to increase advertising revenue by having users spend more time on the social media website.
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| Facebook Home features chat heads, a way to keep chatting even after other apps come on |
The HTC First is the first Facebook Home-optimised phone, launching exclusively on the AT&T network in the US on 12 April. Android users in the US will be able to download the Facebook Home app from the Google Play store on the same date. An international launch is expected just days later.
Dawson said that the biggest threat to telcos, specifically, is that Facebook Messenger is now integrated with the core messaging functions in the device, which will enable users to send Facebook messages just as easily as texts: a phenomenon Ovum describes as the “social messaging cannibalisation of SMS revenues.”
“In general, we forecast that social messaging such as Facebook Messenger will cause $32.6 billion in lost [global] revenue to telcos in 2013 and over $86 billion in 2020. So this is a big deal. In addition, the voice and video functions of Messenger are likely also more integrated, which would threaten telco voice revenues too,” he said.
However, Telsyte analyst Alvin Lee said that there are similar opportunities for carriers partnering with mobile vendors to create their own customised home pages, thereby aggregating information and “providing content through a single hub rather than individual apps.” “The arrival of voice calls over Facebook chat is likely to have the greatest disruption if this comes to the Australian market,” he added.
Telstra spokesperson, meanwhile, told CommsDay that the company welcomes “any innovation that lets customers get more out of their mobile.” “The rise of social networking on mobile underscores what we’ve known for a long time: customers need a great-performing network to take advantage of increasingly sophisticated apps,” he added. Other carriers were reluctant to comment at this early stage Dawson told CommsDay that the Facebook Home offering will likely not impact Android market share, nor will it substantially affect smartphone uptake in general.
“This will be most appealing to people who live their lives through Facebook… for whom Facebook is therefore so central to their lives that they also want it to be central to the smartphone experience. That might be 1% of overall Facebook users, so I expect the appeal to be limited,” he said.
Lee agreed that the Facebook Home release will not have an immediate or direct impact on Android market share in the short-term. “At this point in time iOS has its own integration with Facebook but a home page take over is unlikely. In terms of availability of Home on iOS, it will highly depend on whether Apple will benefit from this type of partnership,” he told CommsDay.
PRIVACY CONCERNS
Dawson added that the Facebook Home offering may potentially have an impact of user privacy, given that “we don’t know what data the application will be collecting about user behaviour, or how Facebook will use it.”
“We also don’t know the specifics of Facebook’s long-term plans for advertising through Facebook Home. All they said today is that they will start showing ads through the ‘Cover Feed’ at some point, though not immediately. All of that has privacy implications, but is an outgrowth of the overall tension between users and Facebook.
Users want as much privacy as possible and as little advertising as possible, while Facebook wants as much information about users and to serve up as much advertising as possible,” Dawson said. Lee added that because the Facebook Home launcher is potentially always running, the social media firm will therefore be able to capture a range of additional data on the user. “Location data captured islikely to enhance Facebook’s advertising targeting,” he explained.
FACEBOOK PHONE?
As for the next move for Facebook from here, Dawson said it would probably “never make sense” for Facebook to do hardware, with its current partnership with HTC and others being sufficient in the short-term. “Those hardware vendors will take all the risks and struggle to make margins as every device vendor but two (Apple and Samsung) already does. Facebook’s strategy has to be as broad as possible, and that means software rather than hardware has to be the focus,” he said.
“I could see them going a step further and creating their own version of Android like Amazon has, if this strategy seems to be working. They could then go even further than they already have with Facebook Home. The challenge then would be getting device vendors to install it, and carriers to sell it.” For his part, Lee said it was unlikely Facebook will ever play in the hardware market, given the “high level of competition and low profitability of most suppliers.” – www.commsday.com
