Facebook Moves Deeper Into Hardware With The Launch Of Three New Portal Devices

Facebook announced three new hardware products today focused on video calling and augmented reality, doubling down on its voice assistant products that will compete with similar devices from Google and Amazon for an increased share of consumers’ attention. 

The second-generation Portal, the new Portal Mini and new Portal TV each feature a camera and a set of microphones, and combine video calls with augmented reality features such as multiplayer games and 3D camera lenses. All three devices, priced $129 to $179, are available for preorder starting today in the U.S., Canada and Europe.

The social media giant’s budding hardware division is still a footnote to its booming advertising business. Facebook doesn’t explicitly state the revenue for its Oculus or Portal hardware divisions, instead rolling both into the category of “payments and other fees” in its earnings reports. Revenue from that division generated $262 million in the second quarter, which represents less than 2% of the company’s total revenue.

“We’re not really focused on the business model right now, admittedly,” said Facebook VP of consumer hardware Andrew “Boz” Bosworth in an interview with Forbes. “It’s a new category. ... I think the most important thing for us right now is getting [Portal] experiences out there. If this becomes something that is a major part of people’s lives in the next several years, I think the opportunity to develop a business on top of it will present itself.”

According to eMarketer, nearly 112 million people in the U.S., or one third of the population, will use a voice assistant at least monthly this year. The Amazon Echo, a pioneer of the product category, still dominates market share with an estimated 63% of all U.S. smart speaker sales in 2019. The category is facing increased competition, however, with Google estimated to reach 31% of sales this year and others such as Facebook and Apple estimated to collectively reach 12%. 

The catch to surging adoption rates is that most of these companies make only a small percentage of revenue from smart speakers and voice assistant devices. The business strategy is more nebulous, with a long-term goal of locking users into a “walled garden” ecosystem that reaches different areas of their lives: their homes, cars and smartphones. Companies like Google and Facebook generally hope to gain insights about consumer behavior through persistent interactions with their products that are eventually used for targeted advertising. In Amazon’s case, those insights are used to help sell goods on its website.

Facebook launched its first Portal device amid intense scrutiny of its privacy practices from U.S. and European regulators in 2018, prompting backlash from several tech reviewers. The company is now making privacy controls one of the key selling points of its Portal products, by letting users disable the camera and microphone by pressing a kill-switch button or using a physical slider that blocks the camera lens and mutes the microphone.

Facebook is also adding a new privacy option to all Portal devices that allows users to view, listen and delete any of their voice interactions using the Facebook Activity Log. Users can also turn off voice storage in the settings at any time, which means voice interactions will not be stored or reviewed by any of Facebook’s workers.

The devices will also be the first to run Facebook’s updated Portal operating system that was announced at the company’s annual F8 developer conference. One of the key features of the new operating system is that users can now make video calls using WhatsApp, including from a Portal device directly to a smartphone. All WhatsApp calls on Portal devices are end-to-end encrypted.

In a surprising move, Facebook is adding Alexa skills including flash briefings, smart home controls and Amazon Prime Video to all of its Portal devices. Alexa will be able to run simultaneously with the Facebook voice assistant, but cannot be set as the default voice assistant.

The Portal TV—a camera bar that plugs directly into your television set—is basically a streaming device with video-calling capabilities. But the device is hampered by its weak streaming-video content offerings. Although you can stream Amazon Prime Video and Facebook Watch, the device is noticeably missing the most popular streaming service in the U.S.: Netflix.

But Facebook executives don’t seem to be fazed by its exclusion. “If someone wants to watch Netflix, they probably have a way to watch Netflix,” said Boz. “If that becomes the major blocker, I’d be pretty surprised.”