Facebook unveils new home on Android

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  Facebook CEO Mark Zuckerberg speaks at Facebook headquarters in Menlo Park, Calif. at a March 20 event. A research firm expects Facebooks mobile ad revenue to soar this year, hitting nearly $1 billion a year after the company started to splice ads into its users mobile phones and tablets.AP Photo/Jeff Chiu

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  Facebook CEO Mark Zuckerberg speaks at Facebook headquarters in Menlo Park, Calif., Thursday, March 7, 2013. Zuckerberg on Thursday will unveil a new Android product.AP Photo/Jeff Chiu

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NEW YORK –  Facebook is unveiling a new Android product Thursday, a move that comes as a fast-growing number of its 1.06 billion users access it on smartphones and tablet computers.

Advertisers are not far behind. Though mobile ads have been a big concern for Facebook's investors since before the company's initial public offering last May, some of that worry has subsided as Facebook began muscling its way into the market.

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.

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 percent this year to $7.29 billion, from $4.11 billion last year.

As for Thursday's event at the company's Menlo Park, Calif., headquarters, speculation has centered on a mobile phone, made by HTC Corp., that deeply integrates Facebook into the Android operating system. The move comes as Facebook works to evolve from its Web-based roots to a "mobile-first" company, as its mantra goes.

"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 and HTC would be using under the widely speculated scenario. Google makes the software available on an open-source basis, meaning others including rivals are free to adapt it to their needs. Amazon.com Inc. 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 percent 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.

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Android, iPhone? Nope. The new battle is to be number 3

Remember when the high-tech hype came from trade shows focused on consumer electronics and computers? Today, it's shifted to mobile phones and wireless devices, and Mobile World Congress currently underway in Barcelona.

And some of the most interesting new introductions are aimed not at well-heeled techno-geeks but at regular folks with budgets and responsibilities.

Just last year, analysts and reviewers were ridiculing the new wave of phablets or super phones being announced at the 2012 Mobile World Congress. Those are the oversized, big-screen smartphones that were even mocked on Nickelodeon's teen sitcom "iCarly." Samsung proved the critics wrong, ushering in an era of phones with 4.5-, 4.7-, and even 5-inch screens. 

The company recognized that since we rarely use phones to make phone calls any more, larger screens are better for surfing the Web, posting to Facebook, and finding your way to the nearest Starbucks.

However, this year the big news is the fight not to be number one in the market or even number two. Google and Apple have already nailed down those positions. No, the battle over the next 12 months is going to be for the number three spot.

Blackberry has already announced its touch-screen BlackBerry Z10 model, which will launch in the U.S. in a few weeks. But while the company still has a foothold with some business users, the Z10 is expected to be priced at around $200, with a contract commitment. That's in the same pricing wheelhouse as high-end Android and iOS handsets; tough competition indeed. Those prices may also subvert BlackBerry's goals as other companies rush to cut prices.

For example, another former star of the cell phone galaxy, Nokia, is introducing an inexpensive Windows Phone 8 at the show. The snazzy Lumia 520 will cost roughly €140 in Europe, without any subsidies. So that means when it rolls out in the U.S. later this year on T-Mobile it will be probably be free -- with a contract, of course.

And then there's the Chinese firm Huawei, which is rolling out its own inexpensive Windows Phone 8 model, the Ascend W1. Priced at €120 without a contract, it will doubtless be subsidized as a free phone in the U.S. (The company will try to burnish its brand with a high-end model, too, that supports the LTE Cat 4 high-speed wireless standard with a theoretical download speed of 150Mbps -- depending on the network.)

Can you get cheaper than free? Maybe.

Web browser killer, Mozilla, announced in Barcelona that it will introduce a slew of Firefox OS-based handsets around the world this year. Firefox is already the number two browser behind Microsoft's Internet Explorer; now it's taking aim at the smartphone market.

In its announcement, Firefox said more than a dozen companies have promised to support the new OS, including Sprint Nextel in the U.S. and Deutsche Telekom, the parent company of T-Mobile USA. LG and Huawei plan to make Firefox OS phones, and an early Alcatel model looked sleek and simple. Companies like Twitter have already outlined their plans to make specific apps for the phone.

Mozilla is a non-profit company. And the apps for Firefox OS will be based on HTML 5, the Web language that promises to break open Apple's App store and enable a new generation of software. It could also mean lower costs for developers and the rapid introduction of supporting apps.

A non-profit company competing in the smartphone space?! After the Firefox announcement, I'm betting people at Microsoft were spewing a stream of expletives. How can they compete for the third spot against a(nother) company that essentially gives away its software for free. They must be thinking, "What kind of a &%#@ business is this?"

It's a mature business, that's what it is. That means Windows Phone 8 and BlackBerry 10 may be too late. There are already a billion smartphones in use around the world. The competition now is how to put the technology into the hands of the next billion users. Price is likely to be the major factor.

Some analysts may see this trend as a familiar phenomena in mature electronics and technology markets: the race toward the bottom. But that's a good thing for consumers. You'll no longer have to pony up hundreds of dollars for a smartphone that's obsolete in six months. 

Now if only the major carriers would lower their prices, too.

Follow John R. Quain on Twitter @jqontech or find more tech coverage at J-Q.com.

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