Facebook probably isn’t the platform you’d expect to share your resting heart rate or calories consumed with—but Mark Zuckerberg is looking to change that.
The latest announcement from the big blue is its plan to launch a smartwatch next summer. There’s no surprise there: Facebook has shown a tendency to follow trends (stories, reels, and shopping). But this is both hardware—not a natural playground for Facebook—and highly personal. Consumers are already wary of Facebook’s loose relationship with data privacy, and many are jumping ship from the network as a result. In the wake of Cambridge Analytica, the idea that data from strapping something round their wrists could end up in the hands of political operatives may not sit well.
Cracking hardware is harder than jumping on the latest social media fad. The smartwatch market is well established and not an easy one to break into, unless it’s with a truly revolutionary product. Also, the tech giant has a lot of structural problems to work through first, like its scrappy startup mentality and seemingly unshakable bad press around privacy, before it can successfully expand into hardware.
Not a strong start
Facebook is not a natural when it comes to hardware, even when the initial synergies are clear. Its first foray into phones was not a success. The HTC First, launched in 2013, plummeted in price from $99 to 99 cents after only a month on sale, before vanishing from view that same year. The HTC First was reported to have only sold 10,000 handsets at launch.
Portal, launched in 2018, seemed to be a more natural extension of the social network’s messenger application, allowing people to connect over video. If anything, it was even more prescient, given the dash to video conferencing precipitated by the coronavirus pandemic. And yet, the company still won’t release any figures relating to sales; plus, the Portal is also the subject of deep discounting—and not just on Prime Day.
It’s also worth noting that Portal is the only living product to come out of the company’s own hardware division, Building 8—a super-secret lab within the Facebook HQ that requires an escort to enter. The initiative’s leader, Regina Dugan, an experienced Silicon Valley engineer and executive with stints at Google and Motorola, among others, left in early 2018.
Critics of the company point to Facebook’s previous privacy failings as a reason many consumers might be nervous about having a hyperconnected video platform lurking in the corner of their sitting room. With privacy concerns only intensifying since the launch of the Portal, it is possible that the smartwatch could have a similar backlash from consumers, since people may worry about Facebook selling their health and location info to advertisers.
That’s not to say Facebook’s track record with hardware is entirely cursed. Oculus 2, the latest version of its virtual reality headset, has outsold all previous iterations combined, and was in demand for Christmas 2020 when it quickly sold out. However, it’s also worth noting that Oculus was a “buy, not build” for Facebook. The company has yet to create a market-defining piece of hardware in-house.
Why the smartwatch market?
Perhaps the biggest challenge facing Facebook’s smartwatch efforts is the reality that the market is already mature. Its competitors—Apple with the Watch and Google with Fitbit—are already established and will prove a hard nut to crack.
Apple Watch’s dependency on the phone is a benefit, rather than a hindrance, as a mere 8% of users think they will switch brands for their next handset. Fitbit, on the other hand, has all but cornered the mainstream health-monitoring segment—mid-range enough to have wide appeal with functionality good enough to appeal to serious fitness buffs. Garmin is for the health-and-performance nuts, Withings for the style mavens. So where does Facebook fit? Is Facebook a premium service worth a premium price tag, or will it be at the cheap and cheerful end of the market? It’s hard to say.
A smartwatch does have the potential to transform Facebook’s hardware fortunes, particularly if it can align all the elements of camera, price point, connectivity, and experience in a way none of the incumbents have managed yet. If rumors are true, Facebook is looking to differentiate with not one but two cameras. It could also eventually become a partner to augmented reality glasses, which are also in the pipeline.
Facebook’s “move fast and break things” ethos could also be behind its failure to launch, technologically-speaking. Long production timelines, high quality demands from the get-go, and enough volume to satisfy market demand are anathema to the “always in beta,” “done is better than perfect” Facebook philosophy. This, and the lingering issues over privacy-data leakage, plus user trust are giving the company some big hills to climb if it wants to take on Apple and Google on their own turf.
Carl Uminski is the cofounder and COO of Somo.