Facebook’s Measured Smart Home Entry

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By Jonathan Collins | 4Q 2018 | IN-5282

Embedded with Alexa and video calling capability, Facebook’s Portal devices provide smart homes with an extension of Facebook’s core businesses and services. Consumers may overlook recent security concerns in favor of pricing and utility, especially during the fourth quarter when spending tends to increase.

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Facebook’s New Portal Devices Sidestep into the Smart Home


Facebook has launched its first branded hardware and the two new devices also represent the company’s first foray into the smart home. The video call-centric devices—the Portal and the Portal Plus—aim to be the center point of home communications, enabling video Facebook Messenger calls to friends and family made by voice command, but they also include Amazon’s Alexa smart home voice control platform. It is the inclusion of Alexa that really positions these devices as part of Facebook’s long-awaited smart home efforts, but the devices themselves and Facebook’s wider smart home potential are worth consideration.

Resembling the Amazon Echo Show, while Targeting Mobile Device Video Calling


Launched only in the U.S. market initially, the Portal devices are priced at US$199 and US$349, respectively. Both feature a High-Definition (HD) screen, four embedded microphones, and near 180-degree-capable video cameras. Facebook developed the hardware, software, and Artificial Intelligence (AI) within the devices, which include functionality that detects where a speaker is located, so that the camera can focus and follow their location during a call. It can also detect if there are multiple speakers in a room and change direction and focus according to who is speaking.

Although the devices have Alexa embedded within them—and for the Portal device, at least closely resemble the Amazon Echo Show in appearance and video calling capability—the devices are more squarely aimed at competing against Apple Facetime and other video calling options on mobile devices. The hands-free, camera tracking capabilities aim to provide a higher quality picture, better communication, and a hands-free alternative to mobile device calls.

The calling capabilities are an extension of Facebook’s Messenger platform and require both parties on a call to be Messenger subscribers. While bringing Facebook into the smart home realm, similar to smart home entries from other technology giants like Amazon, Apple, Google, and others, the devices fundamentally extend and strengthen Facebook’s core business and services.

Facebook in the Smart Home


The Facebook Portal offerings are the company’s entry into the smart home space and the Portal devices speak to several developments in the evolution of the consumer and smart home markets. These Portal devices push Facebook into the smart home space where a land-grab has been underway for some time among some of the largest companies in the world. Those players are all looking to gain a commanding install base and all derive, or plan to derive, value from the ability to track and understand the lives and home environments of their customers. These devices place Facebook more intimately within the home environment and closer to the heart of people’s lives. That alone helps Facebook maintain its core value, but, in addition, it brings the increasingly valuable voice interface into the Facebook realm. While Facebook is adamant these devices are about enriching its offering and not a significant new revenue stream for services like advertising, there is every chance that a significant Portal user base could be leveraged to create additional revenue streams should Facebook deem that its customers would accept such a change and the company decides to explore the opportunities.

Consumer buy-in is clearly crucial. Launching during the high-spending fourth quarter, the company is clearly hoping the functionality combined with its enormous user base will help pull the company into homes and weave its services more closely into its subscribers’ lives. However, after years of speculation regarding Facebook’s long-awaited move into the smart home market, these devices come to market hot on the heels of a 50 million user security breech. With that breach following a few years of concern over the reach and intrusiveness of Facebook’s end-user data availability, analysis, and manipulation, it is fair to question how much these devices are likely to appeal to consumers.

There is certainly a constituency of consumers concerned about privacy and security breaches, but even so, there remains a significant market for whom such concerns are factors considered after others, such as pricing and utility. Portal could well be an example where concerns about Facebook are outweighed by the familiarity and acceptance of its core offering will help push adoption of this new device range. Even so, the company has included a hardware cover for the Portal lens, as well as the ability to turn off any cloud connection for voice and video to allay some consumer concerns. In addition, it is architected to store non-call-related data locally on the device.

Embedding Alexa into the Portal devices opens a smart home role for these devices and eases Facebook into the smart home market. It also enables Facebook to piggy-back on Alexa’s success and recognition within the smart home and the wider consumer market. It should also help consumers accept the devices not as direct competition to an Amazon Echo device, but more of a direct personal communications device with Alexa functionality. It is a smart move by Facebook. Developing a range of successful hardware devices to scale is a significant undertaking and it remains to be seen how well Facebook has done once the devices reach consumer hands, but developing its own Facebook Alexa-type platform would have been a significant task and would have meant tackling the success Amazon has had in building out the Alexa ecosystem, as well as Amazon’s established install base. Embedding Alexa also makes the Portal devices more usable and useful in a smart home context straight out of the box. It also suggests the company is prepared to share data about its users with Amazon, whereas Google with its Google Assistant platform is likely to be too much of a direct competitor to embrace.

Last year, the fourth quarter saw a boom in the sales of voice-control front-end devices, such as the Amazon Echo and Google Home units, driven by a combination of consumer interest, widespread promotion, and very low pricing by Amazon and Google. Facebook is entering the fourth quarter this year with the market a little more crowded than in 2017, following the Apple HomePod launch in January of this year, but a significant potential market still exists. The pricing of the Facebook devices should certainly appeal to many households and individuals. In addition, the key to long-term adoption of these devices will be Facebook’s ability to drive a network effect. The reach of the Facebook user base and the ability to market and update contacts to show they have a Portal device offers the company a phenomenal resource to leverage and help build adoption of these devices.

At present, Facebook is adamant that its entry into the smart home is a natural extension of its core offering of enabling communications between people. Whereas its initial offering focused on breadth of communications, these devices target deeper, closer relationships and aim to improve those. Even so, there is scope for the company beyond such a limited role within the home and these devices could well be the foundation for a far wider drive into the smart home space that can include content and service delivery, as well as a host of other opportunities. The ability of the Portal devices to help create that initial space for Facebook in the home is likely to be a crucial part of how that strategy develops.



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