Facebook (FB) is holding a major product announcement for Friday, having sent out an invitation last week via snail mail, a somewhat curious action. The invite has a coffee stain on it, and reads "A small team has been working on a big idea. Join us for coffee and learn about a new product.”
Facebook's product announcements have not been well received by Wall Street recently. Graph Search has not been a huge hit, though the company noted it would take a while before this became a business. Facebook Home, the largely polarizing new app from Facebook, has seen more negative reviews on Google's (GOOG) Play than many were expecting. Even the revamped News Feed has been something of a disappointment, despite the fact mobile revenues continue to trend higher, now accounting for 30% of Facebook's advertising revenue.
This new product, whatever it is, very well could face the same reaction from Wall Street, as investors have not been "wowed" in the past. That doesn't mean it's not key to Facebook, both as a service, and as a business, however.
Here's some speculation on what the Facebook team may wind up announcing at the end of the week:
The coffee stain on the envelope and the invitation sent by snail mail hints that Facebook is doing something old-fashioned. It beckons back to a day before people looked at smartphones a 100 times a day, and actually relaxed with a coffee on a Sunday morning, reading the news.
Google shut down its RSS reader, much to the chagrin of several (including me) on the Web. There's been lines of code showing hints recently that Facebook could be announcing a reader application. Not only would this increase the amount of stories read and shared, but it could potentially increase the number of Facebook Connect accounts, something Facebook strives for.
Facebook wants to have as many people connected to it at all times, sharing stories, and giving Facebook more data with which to better serve ads. Facebook generated $1.458 billion in revenue last quarter, with much of that still advertising based. A product like an RSS reader could certainly help Facebook continue to monetize its 1.1 billion, and growing, user base.
Earlier this week, TechCrunch reported that the Facebook announcement would be nothing to do with an RSS reader, and in fact, not Facebook related at all.
Instagram, the popular photo sharing social network owned by Facebook, will be getting video, according to the sources. While nothing has been confirmed, I did note it interesting that in my correspondence with Facebook last week, my normal Facebook source noted it was not their event, meaning they were not the one handling it. I found this pretty peculiar, since this person is a main contact of mine at Facebook.
Instagram getting video only seems like a natural extension for the service, particularly now that Vine, Twitter's video app, has taken off. Instagram has a huge user base, over 100 million users, and users could love the idea of a social network catering to photo and video needs, as opposed to one for each separate function.