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Facebook Could Unveil Its Video-Chatting Device Next Week

By Evan Niu, CFA - Sep 21, 2018 at 3:36PM

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Would you trust Facebook to put a video camera in your home?

Investors have been hearing about Facebook's ( FB -1.14% ) rumored video-chatting device for over a year, and it sounds like it's finally ready to launch. The company decided to move forward with development earlier this year, and initially wanted to show off the device at its F8 developer conference in May, before pushing that timeline back to a summer launch. Facebook decided to delay the launch date so that it could focus on the fallout from its multiple data privacy scandals.

Facebook's "Portal" product could at long last be ready to ship.

Echo Show on a counter next to wire bowl filled with lemons and limes

Can Facebook's "Portal" compete with Amazon's Echo Show? Image source: Amazon.

Portal incoming

Cheddar reports that Facebook is planning to unveil the Portal next week. There will be a smaller model priced at $300 and a larger version priced at $400, according to the report. Those price points are lower than the $500 price that was initially rumored.

Portal is expected to utilize facial recognition to identify people within view of the device's wide-angle camera, but Facebook has added a physical shutter that can cover the camera to address potential privacy concerns. Facebook is keenly aware that users have developed justifiable trust issues with the company following a seemingly endless string of controversies that have eroded confidence in the social networking giant.

In a twist, Facebook is now said to be integrating Amazon.com's ( AMZN -1.38% ) wildly popular Alexa virtual assistant into the device. Amazon just unveiled a boatload of products, including a refreshed Echo Show that is intended to serve as a video-chatting device. The new version features a much larger 10-inch display and costs just $230. Prior reports suggested that the large version of Portal could feature a massive 15-inch display, comparable with many professional laptops.

Can Portal compete?

It's unclear what music-streaming services will be supported, but Amazon Music Unlimited seems obvious, while Facebook has a long-standing partnership with Spotify. Facebook has inked licensing deals with the major record labels, but those are primarily to avoid copyright violations related to user-generated content. The company could conceivably build a music-streaming service with those licenses, but that would come later, if at all.

After killing off its "M" virtual assistant (which never reached voice functionality) in January, Facebook probably realized that it needed to turn to a third-party alternative. Portal needs a virtual assistant to be competitive, and the company would certainly prefer to partner with Amazon for Alexa instead of Alphabet subsidiary Google, which is Facebook's biggest rival in the digital ad market (although the threat posed by Amazon there is growing).

Portal will represent Facebook's first hardware product -- not including its Oculus subsidiary -- to come out of its Building 8 hardware lab, which was formed in 2016 and was once led by ex-Googler Regina Dugan. Dugan stepped down almost a year ago.

Facebook is venturing into unfamiliar territory here, and the rumored details regarding Portal don't make it sound especially competitive. Growing distrust of Facebook won't help either, particularly when it will essentially be asking users to place a video camera in their homes. CEO Mark Zuckerberg famously covers his own laptop camera with tape due to privacy concerns.

The company also has a poor reputation of launching new services, often leaning too heavily on artificial intelligence and algorithms, which at times leads to "very disturbing" situations. Maybe Facebook should move slower and break fewer things.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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