Analysys Mason: Facebook launches 'Home' in bid to control the smartphone communication experience

Tools

Industry Voices

Ronan de renesse

Ronan de Renesse

Facebook announced its Home software for Android phones on April 4. Home became available for free through the Google Play store in the U.S. from April 12, and would come to other countries shortly after. The software comes pre-installed on the HTC First handset and will initially be available for download on the following Android smartphones: HTC One X, HTC One X+, Samsung Galaxy SIII and Samsung Galaxy Note II. It will also be available for the forthcoming HTC One and Samsung Galaxy S4. Facebook is partnering with several operators that will retail the smartphones with the pre-installed Facebook Home software. AT&T is the exclusive launch partner in the USA, and the HTC First will be available from AT&T from 12 April for $99 on a two-year contract. The HTC First with Facebook Home will also be available from France Telecom (Orange) in France and from Everything Everywhere (EE) in the U.K., for which pricing and launch date have not yet been confirmed.

Facebook Home brings Facebook content to the phone's home screen and provides a simplified way of interacting with friends. The "Cover Feed" feature integrates Facebook news feeds as a series of full-screen images that users can swipe through and perform actions such as "comment" or "like." Facebook notifications appear as an overlay over the content in Cover Feed and users can access the content by tapping on it or skip it by swiping it away.

The chat heads feature allows users to chat with friends while using another application without having to leave that application. Small icons displaying a photo of the person who is sending a message appear on top of the application, and users can respond by tapping on the icon. Chat heads display any kind of messaging service in the same style, be it Facebook messages or SMS.

Our analysis
Home is Facebook's largest and most ambitious move in mobile to date. Facebook has one of the largest addressable markets for over-the-top (OTT) services on mobile, with more than 680 million monthly active users worldwide at the end of 2012. However, Facebook's business model is based on advertising, and it is therefore more sensitive to actual user engagement than adoption levels. Facebook needs to be more "native" and more focused on communication features to increase customer engagement.

  • According to our research, two-thirds of daily smartphone usage corresponds to pre-installed applications--applications that have been installed on the device before its purchase (for more information, see Analysys Mason's report Consumer smartphone usage: mobile apps and entertainment consumption). Facebook created the "Facebook Home Program" for handset manufacturers to preload and better integrate Home with specific handset models.
  • Facebook could increase its app engagement (that is, the daily usage per user) six-fold if it were to become the default communication platform for telephony, messaging and email. Facebook IM and Facebook's recently launched VoIP feature are examples of the company's effort in the mobile communications space, and these are to play prominent roles in Facebook Home. According to our Connected Consumer Survey, only 14 percent of smartphone users in Western countries currently use Facebook's messaging features.

Android is tactically important for Facebook to increase both its reach on mobile and customer engagement with its apps. Android is the largest smartphone operating system, representing nearly 60 percent of worldwide smartphone shipments in 2012. Furthermore, Android dominates the low-end smartphone segment, in which most future growth will occur. The openness of Android to such custom developments as Facebook Home has the ability to drive software innovation for the corresponding smartphone platform, but it also creates some serious competition to Google's own set of services, such as Google+.

Facebook CEO Mark Zuckerberg indicated that Facebook Home is "for every person on every phone," but we believe that it will be a long time before that goal can be fulfilled. It will be very difficult for Facebook to expand Home to other smartphone platforms such as iOS and Windows Phone, because the owners of those operating systems want to maintain control over the user experience. Privacy concerns and mobile data connectivity are other key factors that are likely to hinder adoption.

Ronan de Renesse is the lead analyst for Analysys Mason's Mobile Content and Applications and Mobile Broadband and Devices programmes. His primary areas of specialisation include rich media applications and services on mobile, application store forecasting, mobile broadband, tablets and smartphone adoption. Ronan holds a PhD in Telecommunications from King's College London.

Comments