Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.
Facebook is reportedly developing a new hardware that’s not really new at all: a smartwatch.
The company has been working on the device with the expectation to release it as early as next year, according to tech news site The Information. But the social media company is joining the race six years after the dominant player Apple entered the smartwatch market with Apple Watch and decades after what some consider to be the first smartwatch, a Linux wristwatch that debuted in 1998.
Analysts say they don’t expect Facebook become a major player in the space, at least not right away. But developing a watch could help the company with its bigger goal: Developing its own operating system that would give it more control over the kinds of software and hardware it builds. It also could help the company better track its users to improve ad targeting.
“I don’t think it will compete with the Apple Watch,” said Mark Shmulik, analyst at brokerage firm A.B. Bernstein. “But it could give them the learnings they need to go where they want to go in hardware and operating systems.”
Facebook’s smartwatch will reportedly combine health and fitness features with the company’s social capabilities as well as third-party apps, The Information reports. That means users may not only be able to track their workouts but share or compare them with those of their friends and connect to devices like Peloton exercise bikes. It’s also expected to include some of Facebook’s messaging features.
But many of those features are already available on the Apple Watch, which generated $2.3 billion in sales, accounting for nearly half of global smartwatch revenue during the third quarter, according to research firm Counterpoint Technology Market Research. And Facebook’s revenue is overwhelmingly from digital ads rather than its tech hardware, which currently includes video conferencing device Portal and its virtual reality headset Oculus.
“My long-standing thesis is that advertising is Facebook’s core business, and e-commerce and, in this instance, hardware are hobbies,” said Tom Forte, analyst at investment bank D.A. Davidson. That means hardware products like a watch are “less important initiatives by the company … as its long-term success is less dependent on them.”
The news comes just two weeks after Facebook CEO Mark Zuckerberg took several shots at Apple about its new privacy measures that are expected to hurt Facebook’s ad business. He also described Apple as a growing Facebook competitor.
Facebook is increasingly wading into Apple’s pool by exploring a smartwatch, an operating system, and by continuing to focus on improving its messaging services. And Apple is reportedly working on expanding its ad network and is rumored to be working on a virtual reality headset that would compete with Facebook’s Oculus.
“We’re reaching this point where the four or five biggest tech companies are all coming up with products and services that are in direct competition with each other,” Shmulik said. “I have this theory that they’re all going to be going after each other’s core revenue pools soon.”
