4 possibilities for new Facebook products

http://dtg.fm/1EjE


Investors are eager to hear what Mark Zuckerberg and company are up to at Facebook Inc., driving up the social network’s shares to their highest level in nearly six months.

Facebook (US:FB) sent out media invitations late Tuesday for a Jan. 15 event at the company’s headquarters in Menlo Park, Calif. That has sparked speculation that the social network is about to unveil a major product announcement.

The buzz spread to Wall Street on Wednesday, where Facebook shares jumped 5.3% to close at $30.59. The stock passed the $30 mark for the first time since July last year — when the stock was in rapid descent following what was considered to be a disappointing IPO at $38 a share.

Some analysts are betting that the Facebook’s announcement has something to do with two key areas: online ads and mobile.

The company has rolled out a series of new online-advertising services, including its new Facebook Exchange, as well as changes to the way it displays and promotes posts and sponsored ads.

“They are all about monetization, so [Facebook] will probably talk about promoted offers, which I’ve seen a lot of lately,” Wedbush analyst Michael Pachter told MarketWatch. “But it could be yet another new product.”

Analysts have speculated that Facebook may surprise the tech world by venturing into new frontiers. Here are four possibilities that have been mentioned, and what some industry watchers think:

A smartphone
The company could build its own smartphone, but many analysts think that is a long shot. “I’m skeptical they will ever bring a phone to market,” Tim Bajarin of Creative Strategies told MarketWatch, while Roger Kay of Endpoint Technologies Associates said “a phone seems odd.”

But Crawford Del Prete of IDC gives a Facebook phone a 65% probability, noting that the company may “want to control more of the experience in the mobile environment” and take on Android — rival Google Inc.’s (US:GOOG) popular mobile platform. Such a move could “create a better Facebook experience,” Del Prete added.

Chief Executive Mark Zuckerberg largely has dismissed the idea of a “Facebook phone” in public comments. In the company’s second-quarter earnings call on July 26, he said the company is better off supporting all of the mobile ecosystems and having a presence on an array of smartphone devices: “There are lots of things that you can build in other operating systems as well that aren’t really like building out a whole phone, which I think wouldn’t really make much sense for us to do.”

A search engine
Bajarin thinks this effort is more likely, saying “creating a search engine tied to the Facebook community would add great value to Facebook users.”

But Kay cautioned that this “also seems a stretch, since Facebook can already search its own property with existing technology, and it would be hard and expensive to beat Google at the search-algorithm game.”

Del Prete echoed a similar view, giving this scenario a 5% probability because search is simply beyond Facebook’s core expertise. “Would they construct the back end? Who would power it?” he asked.

A music-sharing service
“This ship has kinda sailed,” Del Prete said of a proprietary music offering. “I think [Facebook] would be late to the market and would be better off announcing a deep partnership for Facebook customers to have a better music experience.”

Rob Enderle of the Enderle Group also argues that music would be “a tough area to enter, given the number of competitors and the amount of lock-in Apple has,” referring to Apple Inc.’s (US:AAPL) widely adopted iTunes.

But Kay said Facebook may just give this one a try, pointing out that music sharing seems “more plausible because Facebook is already about sharing, and such a service would keep users on the site for more time.”

Facebook already has a partnership with the Spotify music service.

An e-commerce play
This is what Enderle thinks would make sense for Facebook, noting that the company would “likely get plenty of partners given how powerful Amazon (US:AMZN) has become.”

Kay of Endpoint Technologies also sees e-commerce as a likely path “because it solves important Facebook problem: monetization. Also, e-commerce would be less of a stretch technologically for the Facebook team,” he added.

Del Prete of IDC said there’s a 25% probability that Facebook is looking an e-commerce/online-shopping offensive.

Given his own view that Facebook may opt to make its own phone, he commented: “The e-commerce play that they have so far is interesting and could be further built out to encompass broader reach — and a better experience on a Facebook phone.”