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Facebook's F8 Developer Conference Day 1: Key Takeaways

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Facebook Inc. (FB - Free Report) kicked off its annual F8 software developer’s conference in San Francisco yesterday. On day 1, the social media giant outlined its plans for the next decade, which is all about going full throttle with AI and AR/VR technology. Audience indeed was thrilled.

CEO Mark Zuckerberg’s address to the audience at F8 also underscored Facebook’s mission to “connect the world”. “Instead of building walls, we can help build bridges. And instead of dividing people, we can bring people together, one connection at a time.” He also added “It takes courage to choose hope over fear.” This reflects Zuckerberg’s ambitious plans to transform Facebook into something bigger than just a social media platform.

What’s in Focus?

Messenger, which recently crossed the 900 million users’ milestone, was again Facebook’s key topic of discussion. The company remains pretty excited as it opened the app to developers for creating chatbots that would enable businesses to extend customer service and other transactions. Chatbots is the new buzz word in the tech space. Essentially, chat robots, a part of artificial intelligence technology, are designed to “simulate an intelligent conversation with one or more human users via auditory or textual methods”.

Apart from sturdy user bases, Messenger and WhatsApp have a combined 60 billion sent messages every day. Chatbots could serve as a powerful strategy to monetize the platform. Though the company said it isn’t yet focusing on monetizing the platform. Zuckerberg used examples of CNN and 1800 Flowers to show chatbots functions while announcing that it now has 40 partners in the commerce, transport and aviation sectors. Recently, KLM Airlines became the first airlines to offer flight updates, check in & more on Messenger.

Facebook’s move in AI and AR /VR technology has long been viewed by analysts as a long-term growth engine. At F8, Facebook chief stated “our goal with A.I. is to build systems that are better than people at perception: seeing, hearing, language, and so on.” A few days back, the company had launched a tool for the blind, which comprehends pictures and objects in the image and then reads it to the user. As far as AR/VR is concerned, the company said it was making a VR hardware called hand held controllers, which is “going to add a whole new layer of immersion”. It recently started shipping the much anticipated VR headset Oculus Rift.

Facebook also announced its VR camera rig Facebook Surround 360. As Tech Crunch reports, it is a 17 lens 3D camera that can produce 4K, 6k and 8K images and will require minimum post production work due to lens genlocking. Facebook said it will share the design of the camera on Github.

The company continues to stress on live video streaming. Last week, Facebook added many new features to Facebook Live, its live video broadcasting feature. Facebook’s gargantuan 1.6 billion user base records 100 million hours of daily video viewing. Now, it has opened Facebook Live API to developers to design newer ways for users to “share and interact in real time” on Facebook. Moreover, it will enable streaming video from any device and Zuckerberg used a drone to demonstrate what he was saying. 

Moreover, Facebook launched Account Kit which will enable users to login to new apps using their email or phone number, thereby eliminating the need for passwords. The new kit will help developers to attract more audiences for their apps.

Apart from that, Facebook launched Free Basics simulator for Free Basics developers. As per FB, developers can use the Free Basics Simulator to “test their websites early and often, which will make the submission process easier and more efficient”. In addition, the launch of Demographic Insights, will help developers to comprehend the types of people using their services on Free Basics and based on that demographic data, developers can modify their content.

Facebook opened its Instant Articles program to all publishers across the globe. It also introduced a new tool for publishers called Rights Manager, which will enable publishers to effectively manage and protect videos on Facebook while imparting higher flexibility and control over the use of the same.

Our View

After more than decade of its existence, Facebook continues to be the number 1 preferred social platform. The company with its gigantic user base continues to find newer ways to keep users hooked on to its site.

Apart from an ever expanding user base, we continue to be bullish on the stock owing to the multibillion dollar opportunities that its subsidiaries (Instagram, Oculus, Messenger and WhatsApp) present. Another factor that is likely to drive growth is the company’s strength in mobile, which will continue to outpace growth in desktops in the foreseeable future. Moreover, Facebook is popular in many emerging markets where most new users start with mobile.  Facebook’s move into the emerging AI & AR/VR market, a bold step in our view, is expected to bear fruit over the long term.

At present, Facebook carries a Zacks Rank #2 (Buy). Other stocks worth consideration include Etsy Inc (ETSY - Free Report) , 21Vianet Group, Inc. (VNET - Free Report) and Alphabet Inc. (GOOGL - Free Report) . While Etsy sports a Zacks Rank #1 (strong Buy), 21Vianet and Alphabet carry same rank ass Facebook.

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