It was a pretty big score when Facebook (NASDAQ: FB) poached Regina Dugan from Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google in early 2016. Dugan led the search giant's Advanced Technologies and Projects (ATAP) group, which works on experimental new hardware ideas that have the potential to one day become moonshots. For example, Google's Project Tango, which added 3D environmental sensing capabilities to mobile devices, came out of ATAP, as did the Project Ara modular phones.
The social network scored Dugan to lead its Building 8 team, which similarly works on experimental hardware projects; Facebook has begun dabbling in hardware development in recent years. Another prominent hire for Building 8 was Rich Heley, whom Facebook poached from Tesla just a couple months after hiring Dugan. A year and a half later, Dugan has announced that she is stepping down.
Dugan will stay on for another few months to ensure a smooth transition for Building 8, and plans on leaving in early 2018. On a related note, Facebook promoted Andrew "Boz" Bosworth in August to run all of the company's hardware projects, including those at subsidiary Oculus VR as well as Building 8. It's not clear if these two events are related.
Hardware is hard
In terms of what kinds of hardware Facebook has up its sleeve, there are a few hints. For starters, Facebook acquired Nascent Objects last year, a small start-up that specialized in rapid prototyping of modular devices using 3D printing. This acquisition was likely done in order to accelerate Facebook's broader ability to develop hardware and not directly related to any specific product in the pipeline.
Beyond virtual reality (VR) products from Oculus, there have been numerous reports of other devices that the company is working on, including but not limited to a smart speaker, a video chatting device, a drone, and an augmented reality (AR) headset. (It's possible that the speaker and video chatting device are the same product, based on the rumored specs.) There's also the Surround 360 video camera that Facebook announced in April, which would naturally be intended to capture VR content. While not a consumer device, Facebook has also been working on its solar-powered Aquila internet drone for a few years now.
It's pretty tough to envision Facebook making a dent in consumer hardware markets anytime soon, but at the same time the major software and services giants, including Google and Microsoft, have all been focusing increasingly on building their own hardware in pursuit of Apple-esque levels of hardware and software integration. Despite poor odds, Facebook has the resources to play the long game, so I wouldn't count the social network out quite yet.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Evan Niu, CFA owns shares of AAPL, Facebook, and TSLA. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), AAPL, Facebook, and TSLA. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.