Will Users Like Facebook Home?

The Facebook Home software works as an Android overlay making its social network the centre of the phone experience. Facebook hopes to grow its mobile ad revenue by capturing the attention of the user on the home and lock screens, with a deeply-integrated user-interface overhaul. This is possible only on a platform as open as Android and unlikely to be rolled out to other operating systems. The mobile advertising market is something that Facebook, like many of its competitors, has been looking to gain momentum in. A smartphone centred around Facebook is a major advantage for the company over its rivals in capturing this revenue.

However, Facebook Inc’s Home will only be available on small set of high-end devices released within the past year. This means that its popularity will be largest in developed markets where the presence of these phones is the highest. Global smartphone volume sales grew almost 43% in 2012, but this growth has been mainly driven by low-cost smartphones in emerging markets. The overlay is targeted at users who have a high-end smartphone and who’s smartphone usage is already centred around Facebook. This is a small addressable audience and it would be hard to envision a scenario where the install base reaches over 5%-10% of compatible devices by the end of 2013.