Brief:

• Facebook debuted two video-chat devices, per an announcement. The Portal comes in two sizes, priced at $199 and $349, and lets people make video calls to contacts on Facebook or its Messenger chat app.
• Amazon's Alexa voice assistant is preloaded on the devices, which have a camera to detect how many people are in a room and automatically zoom in or out to fit everyone on the screen. Spotify Premium, Pandora and iHeartRadio let users stream music on the devices, which also show programming from Facebook Watch, Food Network and Newsy. Facebook says in its blog post that it plans to add more content providers.
• To allay privacy concerns, Facebook said it doesn't listen to, view or keep the contents of video calls, which are encrypted for security. Users can disable its microphone and camera, which also has a cover to block the lens. Facebook sends voice commands to its servers after users say "Hey Portal" to wake up the device, and that voice history can be deleted from a Facebook Activity Log.

Insight:

The marketing opportunities for Facebook's Portal are unclear, given that the devices currently don't have ads, but the company notes that advertisers can reach Portal users with ad inserts in third-party video programming, per Facebook's Portal privacy page. The Portal's compatibility with Amazon Alexa expands its functionality with tens of thousands of voice-powered apps, or "Alexa skills," that are another avenue for reaching audiences or providing customer service. 

The Portal devices mark Facebook's entry into the home devices market, which is growing crowded with voice-enabled smart displays, such as Amazon's Echo Look and numerous devices that run on Google Assistant. Apple also offers FaceTime video chat on iPads that use WiFi or cellular connections. Facebook is offering Portal devices in discount bundles to urge people to buy them for relatives, Wired reported. While the social network has experience in making hardware with its $2 billion acquisition of Oculus, the maker of virtual reality (VR) headsets, Facebook's HTC smartphone released in 2013 was deemed a flop. The market for smart home devices is growing rapidly, unlike the more mature smartphone market, giving Facebook an opportunity to gain a foothold in a nascent technology space.

Studies suggest there's room for Facebook in the market for smart-home devices. While voice-enabled smart displays like the Portal are in a budding product category, ownership of smart speakers like the Amazon Echo or Google Home will rise to 48% of U.S. consumers after this holiday season from 32% in August, Adobe Analytics forecast. Amazon's global share of smart speaker shipments fell to 41% in Q2 2018 from 76% a year earlier, while Google boosted its share to 28% from 16% during the same periods, according to researcher Strategy Analytics, highlighting that no one device maker has yet dominated the space. The firm estimated that device makers shipped nearly 12 million smart speakers in Q2 2018, about 8 million more than a year ago.

Facebook's introduction of a device that peers into people's homes may make many consumers uncomfortable with the social network's repeated privacy scandals, including its biggest-ever data breach two weeks ago that exposed information of about 90 million users. In addition, the Securities and Exchange Commission, the Federal Bureau of Investigation, the Justice Department and Federal Trade Commission are investigating how Cambridge Analytica obtained data on as many as 87 million Facebook users without their consent during the 2016 U.S. election.

To address privacy concerns, Facebook is taking pains to highlight the security features of Portal, including encrypted video calls and functions that run locally instead of on the company's servers. Facebook isn't pre-loading its social networking app or image-messaging app Instagram on Portal, emphasizing the device's role in more active communications instead of passive browsing. The greater reliance on Messenger may help ease privacy concerns. In the past, Facebook has said it doesn't scan photos sent through its Messenger platform to use for advertising, and instead monitors image content to stop abusive behavior. Still, it's not clear what other kinds of data Facebook will collect about Portal users, such as geographic location, programming preferences or other behavior.