Facebook, Inc. (NASDAQ:FB) is preparing to join every other big tech company in the race to dominate the home with smart speakers. For months, rumors have been growing surrounding the Facebook smart speaker initiative. And this week a new report from DigiTimes claims that Facebook is developing two models code-named Aloha and Fiona.
Both are set to arrive in July, and both will reportedly sport 15-inch touchscreen displays.
The question is, will consumers be willing to pay a premium for a smart speaker that’s focused on social interaction and sporting a laptop-sized display? Either way, their reaction is going to have an impact on FB stock.
Aloha and Fiona, the Facebook Smart Speaker Challengers
DigiTimes report finally provided details of the Facebook smart speaker plans we’ve been hearing about for the past few months.
According to its supply chain sources, there are two versions, code-named Aloha and Fiona. Both include a 15-inch touchscreen display to facilitate video chat between friends and family members. The company has also reportedly signed licensing deals with several major labels, ensuring the Facebook smart speakers have a native source of music content.
The Aloha model — which will be released as the Facebook Portal — is equipped with sophisticated facial recognition technology that would let users access their Facebook account without having to manually sign in. It is also expected to offer voice command capabilities. An earlier report from January put the price of Portal at $499, more than double the price of Amazon’s Echo Show.
The Facebook Portal in particular is attempting to offer some key high-tech features that consumers seem to like. Facial recognition has been popularized by Apple’s iPhone X. Voice commands are a virtual must-have in a smart speaker. And the Echo Show with its 7-inch display kicked off the concept of smart speaker as a video conference hub and a handy screen for viewing content (other than YouTube videos).
Why Release a Facebook Smart Speaker?
All the big tech companies have smart speakers. Amazon.com, Inc. (NASDAQ:AMZN) kicked things off with the Echo and remains the dominant player in the market. The other big presence is Alphabet Inc’s (NASDAQ:GOOGL) Google Home series. Microsoft Corporation (NASDAQ:MSFT) put Cortana in the Invoke smart speaker just before Christmas, and Apple Inc. (NASDAQ:AAPL) just rolled out the HomePod.
With Facebook launching its ‘Building 8’ consumer hardware division last year, it was clear the company was looking to boost user engagement, revenue and FB stock by selling devices. That’s the path Google went down to ensure customers keep using its services. And Amazon’s hardware division is doing pretty good business selling smart speakers, e-readers, tablets and video streamers, all of which help drive business back to Amazon.
With the stampede to sell consumers smart speakers and red hot market that could see unit sales of the devices double in 2018 compared to last year, it was probably inevitable that Building 8 would set its sights on a Facebook smart speaker.
Odds of Success
The market won’t exactly be easy to break into.
Amazon still holds onto around 70% of it and Google controls most of the rest. Like Apple, Facebook missed the holiday shopping season, when Amazon and Google both moved millions of units to build their user bases even further.
And the reported $499 price for the more advanced Facebook Portal sets a new price threshold. Considering the complaining over the $349 price tag for the Apple HomePod, that could turn out to be a real barrier to adoption.
Will the Facebook smart speakers succeed?
There’s a lot riding on them. The investment in R&D has to be substantial. Facebook is also losing young users. This is a concern for FB stock, but this is also a demographic that loves their music. And a smart speaker that serves as a video calling hub offers stickiness that could help people get even more engaged through Facebook.
But there are still many unanswered questions.
Will Aloha and Fiona be able to control smart home devices? That’s a big part of the smart speaker appeal. Will Facebook launch its own music streaming service, or have its smart speakers support services like Spotify? Are those 15-inch displays be too big and too expensive for mainstream adoption? Will teens buy a Facebook smart speaker when they could pick up a Google Home for under $50? Will consumers buy into the idea of Facebook having even more access to their lives with a camera and microphone in their homes? What happens if the displays turn into 15-inch ads…?
If DigiTimes is right, we should start getting answers about the Facebook smart speaker and its reception by the end of July.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.