Facebook opens lab to pursue 'moonshot' projects

MENLO PARK, Calif. – Facebook built its fortune on the internet, that non-physical space where people share updates and digital videos with friends. But deep inside its Silicon Valley headquarters, engineers have stocked a new lab with computerized lathes, industrial mills and tools for making physical goods.

It's not a factory for mass-producing smartphones or other consumer products. Rather, it's where engineers will be working on some of the high-tech gadgetry needed for the company's long-term plans to connect people through smart devices, virtual-reality headsets and high-flying drones that deliver internet signals via laser to remote parts of the world.

And like Google's celebrated X lab, where the internet search giant pursues "moonshot" projects such as self-driving cars, Facebook's new research facility demonstrates that leading tech companies are rarely content to keep doing the same thing.

The lab will be a space for engineers to design energy-efficient servers for data centers, test new laser mounts and drone propellers and perfect a prototype 360-degree video camera that Facebook unveiled in April.

Facebook announced the lab's opening Wednesday. It's been dubbed Area 404, an inside joke that plays off the "error 404" message internet users see when they try to visit a web page that can't be found. Facebook says its engineers had long talked about wanting such a workspace, but it couldn't be found because it didn't exist until now.

The company won't say how much it spent on the lab, but it took months to build the facility, which is about a third the size of a football field, inside a refitted office building on its main campus.

Facebook became a Silicon Valley powerhouse and Wall Street darling because its vast online network is a mecca for digital advertisers. The company sold more than $6 billion in ads in the April-June quarter, reaping more than $2 billion in profit.

Two years ago, the company spent $2 billion to buy Oculus VR, a startup that makes high-end gear for virtual reality. Facebook CEO Mark Zuckerberg has predicted that virtual reality will be a leading platform for communication, entertainment, education and business in the future. In recent speeches, he outlined a 10-year vision for Facebook that includes services based on virtual reality, artificial intelligence and internet access for under-developed regions.

Zuckerberg has hinted at other aspirations, too. This spring, he announced the formation of a mysterious research-and-development group known as "Building 8." It's led by prominent engineer Regina Dugan, a former director of the Pentagon's Defense Advanced Research Projects Agency, or DARPA, the agency that created the internet in the late 1960s.

Analysts say it's too early to know if these ideas are "vanity projects" or if they will boost Facebook's bottom line. But rivals including Google, Amazon and Microsoft have similar ambitions.

"When you're big enough, you need to think bigger picture and longer term," said Bob O'Donnell, chief analyst at Technalysis Research.

Aside from Oculus, most of Facebook's hardware isn't aimed at the consumer market. Several years ago, the tech industry was abuzz with rumors that Zuckerberg wanted to build a Facebook smartphone. That never happened, although Facebook created special software for an HTC phone that didn't sell well.