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The Winners and Losers of Facebook Home

Sunday - 4/7/2013, 12:49pm  ET

Facebook unveiled Facebook Home on Thursday, an innovative new take on the power of Google’s Android operating system. With Facebook Home, the social network is pushing the definition of a mobile app to the next level.

Facebook’s radical move has prompted a lot of speculation among investors: will Google have to change Android? Will people give up their Apple iPhone? Right now, there are still a lot of unknowns, but the mobile computing world may never be the same again.

Facebook is a clear winner

Other than the opportunity cost of using resources on developing Facebook Home, the company was a clear winner. At worst, consumers will pass on Facebook Home and the company will decide to abandon the project. At best, Android users will embrace it enthusiastically and use Facebook to a degree never before seen.

It’s possible consumers will decide they simply don't want their lock screen to show pictures from their Facebook. In that case, the response will be tepid, and the resources spent developing the app will have been wasted.

But the upside is worth the risk. If a significant percentage of Android users decide to install Facebook Home (or even better, purchase the HTC First) then the social network should see these consumers use Facebook like never before. That’s good for Facebook, which should be able to better monetize these more dialed-in members.

In the most wildly optimistic of scenarios, Facebook could further exploit Android, perhaps inserting its own app store or strengthening graph search on mobile.

The ball is in Google’s court

Officially, Google is saying it welcomes Facebook Home. The search giant told TechCrunch it “demonstrates the openness and flexibility that has made Android so popular.”

That’s true; Android’s openness has made it popular -- so popular it’s the dominant mobile operating system. But what good does it do Google to waste billions developing Android when the company is deriving no benefit from it?

Google’s strategy with Android has been to give it away for free as sort of a trojan horse. Get an Android phone, and next thing you know you'll be addicted to Google’s web services -- gmail, Google Drive, perhaps even Goolge+.

But if Android users aren't using Google’s web services, the company isn’t gaining anything. With Facebook Home, Google’s services are pushed aside like never before. They're still there, but buried behind Facebook.

Most dangerous is the possibility that others could follow. I wrote that it would make the most sense for Yahoo to copy Facebook Home, but it isn't just Yahoo -- it could become a full-fledged trend.

Of course, greater Android variety means the possibility of having a larger audience. Facebook Home could prove so attractive that a consumer using a non-Android phone runs to the platform just for the Facebook integration. In time, this could make Android the favored platform for mobile developers -- a key weakness of Google’s operating system.

So, it’s possible that Google will take Facebook Home in stride, continuing its policy of openness for the sake of adding new users. It’s also possible Google changes its policy, clamps down on Android and forces handset makers to conform to particular standards. At this point, the ball is in Google’s court.

Facebook Home was slightly negative for Apple

If Facebook Home fails to attract many users, it will have little effect on Apple. But it’s possible that it could sway users from Apple’s iPhone to an Android-powered device.

Many people believe in the notion of an Apple ecosystem, (I’m a bit more skeptical) and if that’s the case, someone who doesn't buy an iPhone may be less inclined to buy an iPad or purchase media through iTunes.

The worst-case scenario is that developers would begin to embrace Android over iOS. It’s debatable as to whether or not Apple offers the best handsets, but what isn’t debatable is that developers continue to favor iOS over Android. The most popular apps, such as Instagram, were developed for iOS before being ported to Android later.

Right now, it’s too early to say if Facebook Home (or similar Android skins) could draw people away from iOS. But the possibility, however remote, is there. Facebook Home certainly wasn't a positive development for Apple.

Breaking down Facebook Home

In the end, Facebook Home might turn out to be nothing. Many people might simply prefer a more stock version of Android.  Nevertheless, the mobile operating space changed Thursday.

Facebook scored a victory, although to what extent remains to be seen. Apple was slighted somewhat, though it’s still too early to say whether not Facebook Home could dissuade people from buying an iPhone.

Most interesting is Google and the decisions the company has to make in regard to Android. Google could respond by clamping down on its operating system, or embrace the change. In the end, consumers reaction to Facebook Home, and Google’s response, will be the key events to watch for.

This article was originally published as The Winners and Losers of Facebook Homeon

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