Today, Facebook (NASDAQ:FB) threw the tech world and Wall Street a curveball by announcing that the much-anticipated Facebook Phone was, in fact, not a phone at all.
Instead, the world was treated to “Facebook Home” — a highly integrated Android app that will be available for download on April 12 and also integrated into a new HTC phone — the “First,” which will retail for $99.99.
As usual, Mark Zuckerberg touted his latest innovation as a game-changer, specifically saying about Facebook Home that it will make it so that apps are no longer at the center of mobile phones, but “people.”
(Though, to be more accurate, it’s Facebook that Zuckerberg is trying to put at the center of mobile phones.)
Here’s how the app works: When you launch an Android phone, you will get instant access to a Facebook “Cover Feed,” which will feature large updates from your friends that you can swipe to make comments. Chat will now be through a system called “chatheads,” in which photos pop up directly on the screen and allow you to tap it to access chat. And in addition to the various Facebook features, you’ll also have access to your Android apps from this interface, such as the Google (NASDAQ:GOOG) Chrome browser.
Wall Street seems to be impressed (or maybe relieved that Facebook isn’t actually building a physical phone), as FB shares have headed about 3% higher.
Still, Home is a clear sign that Facebook realizes it has a new threat: the emerging chat app operators. These include hyper-growers like Snapchat, Line, Kik, Whatsapp, KakaoTalk and WeChat. They have become extremely popular as users want to have real-time, private communications with friends — not necessarily public status updates.
In light of Facebook’s massive user base — which includes over 650 million mobile users — Home should get immediate traction. But the company still has a problem in that it seems to be losing its cool factor. And by suddenly providing a huge validation of chat programs, it’s just raising awareness of the category — and possibly alerting users to other approaches than the traditional Facebook way.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.