Facebook Home Needs Some Repairs

by Brad Moon | May 16, 2013 12:46 pm

A month ago, we asked if Facebook (NASDAQ:FB[1]) Home was the next Google (NASDAQ:GOOG[2]) Nexus or MySpace Mobile[3].

stockoftheweek Facebook Home Needs Some Repairs[4]It’s only been seven weeks since Mark Zuckerberg and company made the dramatic announcement of Facebook’s attempt to hijack Android smartphones, and just more than a month since the feature was actually released. The accompanying HTC First smartphone, optimized for Facebook Home and unveiled as part of the April 4 media event, was released at the same time.

Since then, Facebook Home has proven it’s no Nexus.

Let’s look at the HTC First[5]. As its name implies, this was the first smartphone that was optimized for the Facebook Home experience. It’s a midrange smartphone with a big display, multiple case color options, 4G support and it comes with Home installed and ready to go.

That price and pre-configuration was intended to make the HTC First a hit with a wide range of Facebook fans. It targeted older users who might not be as tech-savvy; teens who want a big, colorful Android phone; and budget-conscious buyers who want a smartphone but don’t want to shell out $199 for an Apple (NASDAQ:AAPL[6]) iPhone 5 or Samsung (PINK:SSNLF[7]) Galaxy S4.

According to BGR, AT&T (NYSE:T[8]) moved less than 15,000 HTC First phones in the first month of sales[9]. To give some point of comparison, AT&T was selling around 300,000 Android smartphones per month this year[10], meaning the First — which launched with incredible fanfare and media coverage — represented 5% or less of AT&T’s Android sales. When you include iPhones and Windows phones, the First failed to move the sales meter at all.

The carrier knocked down the phone’s price to 99 cents[11] in an effort to get stock moving (the same discount as a 2010 vintage iPhone 4). Despite the discount, BGR reports that AT&T is still planning to discontinue the phone, although Forbes says AT&T’s PR department is disputing that the decision has been made[12]. Either way, the Facebook First has been a resounding flop.

What about Facebook Home itself? While it recently passed the 1 million mark for downloads through Google Play, the stats clearly show that a bunch of people rushed to download it on release and have since slowed to a trickle.

According to TechCrunch, as of May 10, Facebook Home had dropped to the No. 338 most downloaded app[13] on Google Play in the U.S. and is falling out of the top 500 in some countries. It’s also poorly rated by users[14], with over 9,000 giving Facebook Home one star (the lowest possible) compared to 3,100 or so rating it as five stars.

Not everyone hates Facebook Home, though. People who are seriously into Facebook are using the service even more after installing Facebook Home[15]. But that’s a small positive amidst a sea of negatives.

While Home’s stumble is obviously a concern to Facebook, it’s better news for Apple and Google.

Apple was under pressure over its locked-down operating system that made a Facebook Home implementation virtually impossible on iPhones — at least not the “take over your phone” version released for Android. Given Home’s user complaints and fading interest, iPhone users don’t seem to be feeling so left out.

Google has to be breathing a sigh of relief too. Its open Android OS is key to spreading its apps to as many users as possible, driving mobile search revenue. Facebook Home’s hijacking of Android relegated Google’s own apps to second fiddle, threatening that revenue. If Facebook Home in its initial release version had been a smash hit, Google likely would have faced copycat tactics from other services, putting its entire Android strategy at risk[16].

Don’t expect Facebook to give up on Home. It might not be a hit, but it’s still no MySpace Mobile. The initial release has taught the company a few lessons and with some retooling, Facebook Home could still become a successful product.

For one, it needs to dial back the concept of completely taking over a user’s smartphone experience. That alienates many smartphone owners and raises the hackles of companies it really doesn’t need to be picking fights with, like Google.

Facebook appears to have learned this lesson and is reportedly working on a release which would let users keep their favorite apps at the bottom of the screen at all times[17] — a big win for Google, since this is more like stock Android behavior (and would no longer require navigating out of Facebook Home to reach Chrome, Maps or YouTube). Doing so might also make the Home experience more transferable to iOS without dumbing it down.

Hardware is a tough business, and if Facebook chooses to partner with a hardware OEM again to release a “Facebook Phone,” it needs to pay more attention to demographics and to find more hooks than just having Home pre-installed.

Finally, if it wants Home to be widely adopted, Facebook should consider dialing back the features or making some optional. It, like Google and any other Android app developer, is dealing with a highly fragmented user base[18], and requiring the latest version of Android immediately limits Home to a small percentage of Android smartphone (and tablet) owners.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Endnotes:
  1. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  2. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  3. MySpace Mobile: http://investorplace.com/2013/04/facebook-home-the-next-google-nexus-or-myspace-mobile-part-ii/
  4. [Image]: http://investorplace.com/hot-topics/stock-of-the-week/
  5. HTC First: http://www.htc.com/us/smartphones/htc-first/%23specs
  6. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  7. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  8. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  9. 15,000 HTC First phones in the first month of sales: http://bgr.com/2013/05/13/htc-first-discontinued-att-facebook-phone/
  10. around 300,000 Android smartphones per month this year: http://www.guardian.co.uk/technology/2013/may/14/facebook-home-app-htc-problems
  11. knocked down the phone’s price to 99 cents: http://www.att.com/shop/wireless/devices/htc/first-black.html%23fbid=TYXRGsd-R83
  12. AT&T’s PR department is disputing that the decision has been made: http://www.htc.com/us/smartphones/htc-first/%23specs
  13. the No. 338 most downloaded app: http://techcrunch.com/2013/05/11/facebook-home-is-losing-steam-in-the-charts-fast/
  14. poorly rated by users: https://play.google.com/store/apps/details?id=com.facebook.home&feature=search_result%23?t=W251bGwsMSwyLDEsImNvbS5mYWNlYm9vay5ob21lIl0.
  15. using the service even more after installing Facebook Home: http://thenextweb.com/facebook/2013/05/09/minor-facebook-home-update-incoming-today-as-it-hits-1m-downloads-in-its-first-4-weeks/
  16. putting its entire Android strategy at risk: http://investorplace.com/2013/04/facebook-uses-androids-openness-against-google/
  17. let users keep their favorite apps at the bottom of the screen at all times: http://www.theverge.com/2013/5/9/4316358/facebook-home-first-feature-updates-chat-head-friend-list-app-dock
  18. highly fragmented user base: http://investorplace.com/2013/04/google-must-tame-the-fragmentation-monster/

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