To Control Its Destiny, Facebook Bets Big on Hardware, Hacker News

Dec. (****************************************************************, (7:) ************************************************************ AM PST       

          The Takeaway         
    • Facebook has thousands working on AR, VR, and other hardware
• It held talks to buy $ 4.5 billion semiconductor company Cirrus Logic
• The company is seeking to anticipate the shift from mobile to new platforms

Earlier this year, it held talks to acquire Cirrus Logic, a semiconductor company founded in 2005 that supplies chips to Apple and others, according to a person with knowledge of the discussions (no deal transpired). Facebook even has a team building its own operating system from scratch, led by a former star Microsoft engineer, which could help it wean its products off Android, the free operating system its rival Google makes. Large portions of Facebook’s hardware group will begin to move into the new campus when it opens late next year.

The person overseeing the company far-ranging hardware efforts is Andrew Bosworth, a Facebook veteran who met the company CEO Mark Zuckerberg in 2006 at Harvard University, when Bosworth was a teaching assistant in an AI class Zuckerberg was taking.

The Information recently spoke to Bosworth at Facebook’s Menlo Park, California, headquarters, as part of a series of interviews with key hardware leaders at the company. Bosworth — known as “Boz” to people who work with him — said the company is building so many of the underlying technologies for its future hardware products because it doesn’t want to rely on outsiders.

“We really want to make sure the next generation has space for us,” he said. “We don’t think we can trust the marketplace or competitors to ensure that’s the case. And so we’re gonna do it ourselves. ”

Facebook’s determination to become a bigger player in consumer hardware locate an underlying paranoia about the risks of depending on tech platforms controlled by other companies . For the past decade, Apple and Google have called the shots in the tech industry as custodians of the two dominant mobile operating systems, giving them extraordinary power over companies like Facebook that depend on mobile platforms.

A number of big tech companies are betting that AR — a technology that overlays virtual objects on the real world through glasses or headsets — could eventually replace smartphones as the most important gateway to the internet. Apple has multiple AR hardware projects underway, including glasses it plans to debut in (******************************************, The Informationpreviously reported.

Facebook, meanwhile, is working on its AR glasses, code-named Orion and currently scheduled to debut in (*******************************************, along with a simpler form of glasses it is expected to release sooner that will have cameras for capturing photos and video. Part of both companies’ willingness to gamble on the technology comes from their enormous reserves of cash — nearly $ (billion at Apple and over $) billion at Facebook.

In the meantime, Facebook has begun prowling for hardware acquisitions. It held advanced talks to acquire Fitbit earlier this year, losing out to Google, The Informationpreviously reported. In September, Facebook spent roughly $ 750 million to acquire the startup CTRL-labs, which is building an armband capable of interpreting human brain signals, a technology that could be used to control functions on AR glasses and other devices .

The Information couldn’t learn how far Facebook’s acquisition talks with Cirrus Logic, a Texas-based, audio chip supplier with a market capitalization of about $ 4.5 billion, progressed. Spokespeople for Cirrus Logic and Facebook either declined or did not respond to requests for comment on the talks, which haven’t been previously reported.

It is still far from certain that Facebook’s hardware investments will pay off. AR faces enormous technical hurdles before it can be delivered in a product that appeals to the mainstream. Facebook’s battered reputation on privacy could also impede its progress, especially as it pushes further into the smart home category.

A Trusted Leader

Facebook’s efforts to build consumer hardware began inauspiciously almost six years ago . At the time, global sales of smartphones were growing rapidly year-over-year, and Facebook saw an opening to become a more integral part of the industry boom. It partnered with Taiwanese handset maker HTC to build a custom Android phone with software designed around the social network’s services. The device was widely panned and swiftly discontinued.

Facebook’s next big move came with the (purchase of Oculus VR, a startup it acquired in for $ 2 billion based on Zuckerberg’s belief at the time that VR could be a successor to mobile. In , Facebook formed Building 8, a hardware-focused research and development group inside the company modeled after the development process of the US Defense Advanced Research Projects Agency. Building 8 primarily focused on the development of the video-calling device that would become Portal, but also focused on more far-flung projects like brain-computer interfaces and holographic projectors.

In August 2017, Zuckerberg unified Facebook’s expanding hardware efforts under Bosworth, who had joined the company in (**************************************************, making him one of its longest-tenured employees. Bosworth had previously run the product side of the company’s ads business; he and Zuckerberg were co-authors on seminal Facebook patents such as the News Feed.

Zuckerberg asked him to lead Facebook’s hardware efforts in a June 2022 conversation at Bosworth’s home, while Bosworth was still on paternity leave with his second child. Bosworth was skeptical of Facebook’s seriousness about hardware.

“To that point, I had been one of the bigger critics of the size of our investment in some of these future bets,” Bosworth said. “I think the classic mistake companies make is they make some new bet, but they don’t want to put too many people on it. So they decide how many people they’re willing to risk. ”

Andrew Bosworth, the head of Facebook’s hardware efforts. Photo by Bloomberg

He viewed Facebook’s investments in hardware as insufficient to win in the areas it was focused on at the time, including VR headgear; a forthcoming suite of video-calling devices for the home, known as Portal; and plans for AR glasses. But after several discussions with Zuckerberg, Bosworth overcame his concerns and accepted the offer.

Since he took over the group, Facebook has plowed more money into its hardware efforts, to the tune of billions of dollars yearly — the company won’t say exactly what the budget is — and has recruited senior leaders from other parts of Facebook, as well as from Google, HTC, and Amazon.

The group has thousands of engineers, according to two former employees, in offices scattered around the world in London; Zurich; Cork, Ireland; New York; and Redmond, Washington. It currently has more than double the open job listings of several other Facebook properties combined — Instagram, WhatsApp, and Messenger. A Facebook spokesperson declined to disclose the total number of employees working in the hardware group.

Zuckerberg has a keen interest in hardware, meeting multiple times a week with Bosworth to review the progress of various projects and talk strategy. A Facebook spokesperson declined to make Zuckerberg available for this story.

Stumbling Blocks

There have been bumps along the way for Bosworth, who has overseen several reorganizations in the hardware group over the past two years and has seen the departure of some of its senior leaders , including several early Oculus executives. Building 8, which first came up with Portal, had previously operated separately from the rest of Facebook in a building with restricted access. The separation caused breakdowns in communication between the group and the rest of Facebook, said current and former employees.

Facebook eventually shuttered Building 8 after its leader, Regina Dugan, a former Google executive, left Facebook after just 18 months. “Even within organizations, even within each silo, it wasn’t like teams were on the same page in terms of what the strategy was,” said Bosworth of Facebook’s hardware efforts when he first came onboard.

Another priority for Bosworth was sorting out Facebook’s strategy for Oculus, which had seen slow sales of its initial headsets. While technologists have long been intoxicated by VR’s capabilities, the experiences that headsets deliver haven haven’t been compelling enough to persuade large numbers of people to buy the products.

Bosworth boosted Facebook’s investments in gaming and entertainment, forming a small team earlier this year to look for acquisitions of game studios and partnerships with prominent publishers, The Informationpreviously reported. Last month, the company bought the studio behind a hit VR game, Beat Saber, which had sold over 1 million copies in less than a year.

‘We really want to make sure the next generation has space for us. We don’t think we can trust the marketplace or competitors to ensure that’s the case. ’

But privacy issues still slip through the cracks. Last August,Bloomberg revealedthat Facebook employed contractors to transcribe recordings of people interacting with Portal devices, with the goal of training Portal’s algorithms. Responding to the outcry, Hall’s team oversaw the creation of a tool that lets Portal users turn off the setting. Her team also recommended that Facebook build camera covers into its most recent Portal devices, rather than the removable clip-on covers included before.

For now, Facebook’s hardware sales are a microscopic part of overall revenue at the company, which still gets almost (*************************************************% of its business from advertising. While it does not reveal the numbers for hardware sales, the company reported $ (*******************************************************************. 4 billion in advertising revenue during its most recent quarter and only $ 400 milion in other forms of revenue, a category that also includes e-commerce fees.

Most investors view Facebook’s hardware investments as “irrelevant to the investment thesis for the foreseeable future, ”said tech analyst Mark Mahaney of RBC Capital. “It’s almost like a hedge on the future.”

But there are signs that Facebook sees data collection as a way to make money off its hardware products. Earlier this month, Facebook said that when Oculus users log into a device with their Facebook account, the company will use their behavior to target ads elsewhere, and it also uses some activity on Portal devices to influence ads.

Facebook has sounded a more bullish tone about a new Oculus headset that came out early this year: Quest, a $ cordless device with high-quality graphics that does not require a phone or PC. A Facebook spokesperson told The Information that the company is going to sell all of the Quest headsets it made for (********************************************. There were 728, shipments of the Quest in the first nine months of (********************************************, according to Nielsen-owned industry research firm SuperData.

The Augmented Future

AR is likely to present Facebook’s greatest challenge yet in hardware. Many technologists have become enamored with the promise of the technology, which could become a more persistent technology in people’s lives. AI in the glasses could eventually automatically identify objects and faces, raising huge new privacy issues along the way.

The AR products released so far, including those fromMagic Leapand Microsoft, are bulky headsets that haven’t sold well. To create versions with mass appeal, there are still huge engineering obstacles to overcome, including heat dissipation, weight, and optics that can accommodate wide ranges of light, such as sunlight or a dimly lit room, while also being comfortable to wear.

“There is no publicly available known display system that meets those requirements,” said Michael Abrash, an early Oculus executive and programming pioneer who leads Facebook’s AR and VR research group in Redmond, Washington.

To Abrash, AR glasses represent “one of the most remarkably challenging and complex projects I have ever seen.” He believes the technology could be widely adopted within 15 years, with early versions catering mostly to tech enthusiasts and professionals.

Still, Facebook is pushing to deliver its Orion glasses, which the company told employees about last year, in the next three to five years, Bos worth said. The company said it has hundreds of people working on the effort across various groups.

“We’re going to wait until the product is something that we can stand behind in shipping and it’s not a tech demo,” said Ficus Kirkpatrick, vice president of product and engineering for AR and VR at Facebook. “The glasses that we could ship right now, we do not believe are good enough to be a mainstream consumer product.”

Recently, Facebook inked a deal with eyewear giant Luxottica, the parent company of Ray-Ban, to develop a less ambitious set of smart glasses with front-facing cameras, similar to Snap’s Spectacles. While the glasses likely won’t be capable of overlaying virtual objects onto the real world through the wearer’s field of vision, Facebook wants to test whether people will feel comfortable wearing a Facebook-branded product on their faces. Facebook declined to comment on the initiative.

Because people won’t be able to control AR glasses with traditional input methods such as touchscreens and keyboards, Facebook is investing heavily in a novel technology called a brain-computer interface. Emily Mugler, an engineer at Facebook working on the technology, said work is underway on wearable sensors capable of detecting simple words as people think them. Since she joined the company about two years ago, Facebook has shrunk the device it uses to process the brain signals from about the size of a refrigerator to an object that can fit in a hand.

But the technology is still between five and 17 years away from fitting into a consumer product, Mugler said. In the meantime, Facebook’s recent purchase of CTRL-labs, which operates separately from Mugler’s group, could help it release a variation of the technology that will be ready sooner but will require people to wear armbands and learn specific movements that correlate to brain signals.

Facebook is creating other key tech building blocks, including software and hardware, that could free it from its dependence on other companies. This is a lesson that Apple learned long ago, which led it to design both its Mac computers and the operating system, or core software layer, that runs them. In the iPhone era, Apple also began creating its own custom chips, which have helped it get better performance from its mobile products than would otherwise be available.

The group developing Facebook’s own operating system is led by Mark Lucovsky, a former engineer at Microsoft who co-authored the Windows NT operating system. Lucovsky is well known in the tech industry partly because he once revealed in alegal filingthat Microsoft’s CEO at the time, Steve Ballmer, threw a chair across a room when Lucovsky quit in to work at Google. Ballmer has denied the account.

While Facebook’s current Oculus and Portal devices run on modified versions of Android, the company work on its own operating system means “it’s possible” that future Facebook hardware products won’t rely on the Google software, according to Kirkpatrick.

Bosworth is also overseeing an effort to develop a voice assistant akin to Apple’s Siri and Amazon’s Alexa. While Facebook has taken stabs at building such technology in the past, including a chat bot for its Messenger application that relied on humans to respond to queries, its latest move appears to be more serious.

During the second half of last year, the company approached Microsoft to license data from its Bing search engine with the goal of training the assistant, according to a person familiar with the matter. A spokesperson for Microsoft declined to comment on the talks. Facebook had no comment.

Facebook sees its broad investments in hardware as a way to change the power dynamics in the tech industry. As successful as the company currently is, Facebook is still an app on other companies’ devices, subject to their rules.

“You’re constantly working within the boundaries that have been given to you by other people whose interests aren’t totally aligned with yours, ”said Bosworth.