Zuckerberg introduces Home. Photo: The Verge
FORTUNE — Having watched Mark Zuckerberg introduce the new Home interface for Android phones, Wall Street analysts wresting with the implications for Facebook (FB), Google (GOOG) and Apple (AAPL) drew on every literary, musical and film reference they could think of, including The Wizard of Oz (“There’s no place like home”), ET (“Phone home”), Simon and Garfunkel (“Homeward Bound”) and, in a stretch, Robert Frost (“Fork in the road”).
Some excerpts from their notes to clients:
J.P. Morgan’s Doug Anmuth: Facebook Builds a Home for Android Users. “Home [is] a free app-like tool that takes over the home and lock screen for Android devices, providing a deeper integration between Facebook and Android. Our initial takeaways are that Facebook Home provides an improved Facebook experience for Android devices, increase Facebook mobile engagement and time spent, and is most likely to be favored by mid-to-heavy Facebook users… Facebook Home will initially launch on April 12 for a select number of Android smartphones, but will eventually be available for all Android devices. Additionally, HTC announced a new smartphone called HTC First that will be the first device to launch pre-installed with Facebook Home, exclusively through AT&T on April 12.”
Wells Fargo’s Jason Maynard: There’s No Place Like Home. “We see Home as a new chapter in Facebook’s evolution into a mobile first company. CEO Mark Zuckerberg had previously downplayed the possibility that Facebook would manufacture its own phone, and now we understand some of his thinking. With Home, we see an approach that is neither device nor operating system. We like the logic of a software-driven strategy rather than a device approach. In many ways (device independent software, monthly feature push, free cloud download) Home resembles a PaaS personalization tool more than mobile app. In our view this approach is likely to appeal to many of Facebook’s one billion+ members, while avoiding device/platform lock-in.”
Morgan Stanley’s Scott Devitt: New Social Path for Android, but Not a Fork in the Road. “Contrary to speculation, Facebook Home is not an operating system or a “fork” for Android, but a new layer in between the Android operating system and traditional applications. Home is made possible by Android’s “Intents” that allow Facebook to take over a smartphone’s home and lock screens without modifying the operating system. By building Home in this fashion, Facebook believes it can potentially reach hundreds of millions of Android users compared to tens of millions at best if it built an OS or single-digit millions if it built a phone itself.”
Sterne Agee’s Shaw Wu: Potential Competitive Impact. “We think FB Home posts a threat as it essentially becomes the main user interface for an Android smartphone and puts services like Gmail, search, YouTube, and Play in the background. The big question is whether Android licensing terms will change in the future to prevent something like this to happen. The other downside is that FB Home arguably further fragments Android requiring the need for developers to make multiple versions of the same apps.”
Sterne Agee’s Arvind Bhatia: Key Takeaways. “FB already commands a more than 20% share of people’s time spent on mobile devices (25% including Instagram). We believe Home has the potential to boost this share of time even further due to its ease of use and reduced clutter from the user’s standpoint. We believe Home would be particularly appealing and sticky to FB’s younger audience that tends to be fickle. This is important because FB has seen some signs of weakness in engagement with this key audience that represents the next-generation on the Internet.”
Credit Suisse’s Stephen Ju: A New Skin for a Defensive and Offensive Bid to Boost Engagement. “Our initial impression is that this new product release serves two purposes. In the near/medium term, we believe Home can help Facebook to boost mobile engagement given the richer user interface and at the same time help it to fend off competition from emerging mobile messenger services such as Kakaotalk and LINE… And while this is yet to-be-confirmed, Facebook may presumably be able to collect additional data from Home users in regards to app usage activity – a likely blind spot once users close the Facebook app – to build better user profiles for improved ad targeting. And we also wonder if this is the beginnings of a mobile ad network for certain app publishers that opt in to have Facebook sell ad inventory from the App Launcher.”
Piper Jaffray’s Gene Munster: Should Appeal To Facebook Power Users. “During the Facebook Home event, CEO Mark Zuckerberg noted that 20% of time spent on smartphones is spent with Facebook. We believe that as with many products, time spent with Facebook likely follows the 80/20 rule and 20% of Facebook’s power users likely provide 80% of that time spent. For those users, which on average probably spend more than half of their time on the phone, Facebook Home is likely to be adopted. However, we believe it will be less attractive to core users because Facebook Home seems to de-emphasize apps on the phone. For those users that spend the majority of their phone time in apps other than Facebook, we believe it is less likely to be adopted.”
JMP Securities’ Ronald Josey: Homeward Bound. “Home infuses Facebook content across a user’s phone. A typical user checks Facebook’s mobile apps ~10-12x per day and as FB content is surfaced on a smartphone’s lock-screen via Cover Feed, we believe this interaction could significantly grow. For context, FB believes users check their smartphone ~100x per day. With 680M mobile MAUs as of 4Q12, Facebook’s mobile audience is sizable and users typically spend ~3x as much time within FB’s apps than any other app available.”
Merrill Lynch’s Justin Post: What will others do? “Facebook Home will likely be offered as a preinstalled operating system/App to other Android phone manufactures, who will be closely watching adoption and sales of the Facebook HTC phone to determine whether to adopt Home. While the Home app is not available on Apple iOS for the iPhone and iPad, if adoption for takes off it is possible that Apple would consider partnering with Facebook, but we see a partnership as unlikely. Google could come out with a competing product that better features search and its apps on Android phones, or make some tweaks to Android that limit an app take over of the home screen.”
RBC’s Mark Mahaney: Could Be A Positive for User Engagement. “Keeping users engaged with Facebook content for longer will allow for more ad impressions. However, the question of adoption still remains. The app is not yet available on tablets and there seem to be no current plans for iOS integration. We think that the choice to integrate with Android speaks to the advantages of the open platform and, if FB Home takes off, could be a win for the ecosystem. Having the app pre-installed on phones is likely a good strategy, but adoption by carriers and OEMs is also still in an early stage.”
Oppenheimer’s Jason Helfstein: Implications. “Home should encourage increased usage as FB will be the first content users see after unlocking their phones, while full-screen News Feed images create a higher quality advertising experience. We believe FB is targeting teens as early adopters of this interface… While Home may attract users away from iOS, the installation method highlights GOOG’s lack of control over the Android operating system. However, we note that GOOG has approved the download of Home in its Google Play store.”
Pivotal’s Brian Weiser: FB Phone Home. “Our view is that the news is not itself directly material for Facebook, at least based on what we have seen so far. Even a successful launch is unlikely to meaningfully alter the company’s revenue trajectory, which we think continues to be favorable for other reasons. Building a better interface or means of access is simply what Facebook – or any other software company – does on an ongoing basis. We don’t see a strategic shift in this effort, although it does look, potentially, as provocative towards Google, to the extent that it places Facebook in a position with more direct access to consumers (at least those using the application) in mobile environments than it would have had before.”
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