Zuckerberg unveils Facebook phone software

Facebook unveiled a new application for Android-driven smartphones and tablets Thursday, a move that comes as a fast-growing number of its 1.06 billion users access the social networking site on their mobile devices.

CEO Mark Zuckerberg took the stage a little after 1 p.m. ET in Menlo Park, Calif., to unveil what the company is calling Facebook Home.

It's essentially an all-encompassing app for any Android device. Facebook Home becomes the homescreen for the phone, a filter through which all other devices and applications can be used.

Zuckerberg began the presentation by noting that currently, smartphone users spend 20 per cent of the time they're using their devices on Facebook. And the company wants to increase that by transforming itself into a central hub through which all other applications can be used.

"We’re not building a phone," Zuckerberg said. "We’re not building an operating system. But we are building something that’s a whole lot deeper than an app."

Among the features are something the company is calling "chatheads" that boil down to having a user's facebook profile picture come up whenever a user's contact interacts with them, without the smartphone user ever having to leave whatever they were doing in the first place.

Later in the presentation, Facebook announced that Taiwanese phone maker HTC will build a Facebook-branded phone, called First, which will be available to U.S. consumer starting April 12th and will come with all the latest Facebook-related apps and the Home technology pre-installed. That's the news that people were expecting, but as it turns out, the software being used on more Android devices was the larger news of the day.

Others, including HTC's One X and One X Plus and Samsung's Galaxy S III and Galaxy Note 2 will follow. And the upcoming HTC One and Samsung Galaxy S IV will also be able to run Home.

The move is aimed at helping Facebook make gains in the mobile space. Although it's the most popular social network on the planet, with more than a billion users, Facebook is a laggard in the mobile space as it struggles to get advertising revenue from the growing base of users who go on Facebook through their phones.

Last year, the company began showing ads to its mobile audience by splicing corporate sponsorships and content into users' news feeds, which also includes updates from friends and brands they follow. Among the challenges Facebook faces now is showing people mobile ads without annoying or alienating them.

Ads will eventually be incorporated into Home, but not at first.

Gartner analyst Brian Blau says he's impressed with Facebook's commitment to update Home once a month with additional features. He says Home "could be a game changer if you are a heavy Facebook user."

The mobile advertisement market is growing quickly. That's thanks in large part to Facebook and Twitter, which also entered the space in 2012. Research firm eMarketer expects U.S. mobile ad spending to grow 77 per cent this year to $7.29 billion, from $4.11 billion last year.

"What Facebook wants is to put itself at the front of the Android user experience for as many Facebook users as possible and make Facebook more elemental to their customers' experience," said Forrester analyst Charles Golvin.

EMarketer said Wednesday that it expects Facebook Inc. to reap $965 million in U.S. mobile ad revenue in 2013. That's about 2.5 times the $391 million in 2012, the first year that Facebook started showing mobile ads.

Clark Fredricksen, vice president at eMarketer, said it's "tough to speculate" how much effect Thursday's announcement would have on ad revenue.

At the same time, he says "there are some clear reasons why a deeper integration with mobile operating systems and handsets make sense for Facebook. At the end of the day, the more deeply Facebook can engage consumers, no matter what device or operating system or handset," the better.

Facebook's rival, Google Inc., makes the Android software that Facebook would operate under. Google makes the software available on an open-source basis, meaning others including rivals are free to adapt it to their needs. Amazon.com does just that in modifying Android to run its Kindle tablet computers.

Facebook is No. 2 behind Google Inc. when it comes to mobile advertisements, and it isn't expected to surpass the online search leader any time soon. Google dominates the mobile search market with 93 per cent of U.S. mobile search advertising dollars, according to eMarketer. Online music service Pandora Inc. is in third place when it comes to mobile ad dollars, followed by Twitter.