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Facebook eyes up the connected home space

Facebook Portal

Facebook has seemingly taken its first steps towards the connected home market with the launch of Portal.

As it stands, Portal is being marketed simply as a video calling product, though with partnerships with various content streaming channels and a tie-in with Amazon’s Alexa, the future could see Facebook enter the fray as a competitor in the smart home hardware segment.

Two products will be released to start with, Portal and Portal+. Portal will feature a 10-inch 1280 x 800 display, while Portal+ is a larger model with a 15-inch 1920 x 1080 pivoting display. Powered by AI, Facebook claims the smart camera automatically pans and zooms to keep everyone in view, while smart sound features minimize background noise and enhances the voice of whoever is talking. How effective the AI remains to be seen, however now the idea of smart communications products have been normalised in the home it won’t be too long before some pretty impressive products will start hitting the market.

Such a venture could prove to be a very useful gander for the Facebookers, as diversification is going to need to happen sooner or later. With younger demographics searching elsewhere for their social media fix, Snapchat and Facebook-owned Instagram benefiting, pressure will soon start to mount on the advertising business.

Shareholders are used to exceptional year-on-year growth figures, but it wouldn’t be a surprise to see these flatten; people are becoming less engaged by the platform, therefore spending less time exposed to adverts, while recent figures have shown key markets are not boosting total subscription numbers. Sooner or later a threshold will be hit; only so many adverts can be placed in front of users. Perhaps this is where the Portal products can help.

Unlike the other internet giants Facebook hasn’t really done an exceptional job of diversification. It has added more advertising products (i.e. different ways to engage users on the platform), but this isn’t genuine diversification. If the audience for the core product declines, Facebook’s business suffers; it doesn’t matter how many products there are if no-one is one the other side of the screen to see them.

Google or Amazon however have supported their core business with outside bets. Think of the cloud computing businesses they own, or the content platforms, or ventures into the grocery sectors. These are ventures which diversify enough to ensure negative impacts on the core business do not have a significant impact, however, close enough to lean on the brand and expertise.

With the Portal products, Facebook could make a play for the focal point of the smart home. This has a couple of interesting benefits, one of which will be controlling the gateway and therefore access to the consumer. By operating a window to the consumer, the owner of the window can charge access to gaze through. Partnerships are already in place with the likes of Spotify Premium, Pandora, and iHeartRadio, as well as Food Network and Newsy. This is a business model which could certainly be successful should Portal offer scale.

It is a simple, but effective idea. The window owner would also have the opportunity to launch new services and products which be installed as default, offering an entry-point to the data economy, in the same way Google dominates the mobile OS space with Android.

The focal point of the smart home is still an on-going battle, though Amazon and Google do seem to be winning with their smart speakers. The telcos have a chance with the router, though the proactive nature of the internet players is wrestling the ecosystem behind the speakers. However, today’s generations demand screens. Amazon has been trying to launch its own smart device with a built-in screen for months, though a difficult relationship with YouTube has not helped the situation.

Should Facebook be able to launch a video-orientated product, with high-enough specs, deep connections to the smart home ecosystem and smart enough AI applications, it could make a dent in the market. No-one has really produced a product which grips onto the space, and priced at $199 and $349, it isn’t out of the question for the Portal and Portal+.

Unsurprisingly, Facebook has made a point of security. AI applications are stored on the device, meaning data will be processed locally not transferred to the cloud. It’s almost as if Facebook has accepted it has a terrible reputation for data collection and management, and is offering an alternative to trusting the team with your personal information.

The big question is whether people trust the Facebook brand enough to give the business such prominent influence over so many different aspects of their lives. Even with a physical cover for the camera lens, users might be sceptical, though if there is ambition for additional services, there is a lot of work which will need to be done. The brand is not in a very good position when it comes to credibility and trust.

Another area which might prove to be a stickler for the product is that you have to have a Facebook account for it to work. This might not prove to be an issue at all in the long-run, though considering there will be people who don’t have and don’t want a Facebook account, or people who have intentionally deleted theirs as a result of recent scandals, it might be immediately ruling out a number of potential customers.

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