diff --git a/res/drawable-hdpi/no_favorites_banner.png b/res/drawable-hdpi/no_favorites_banner.png
new file mode 100644
index 0000000..5ab45ab
--- /dev/null
+++ b/res/drawable-hdpi/no_favorites_banner.png
Binary files differ
diff --git a/res/drawable-mdpi/no_favorites_banner.png b/res/drawable-mdpi/no_favorites_banner.png
new file mode 100644
index 0000000..808d573
--- /dev/null
+++ b/res/drawable-mdpi/no_favorites_banner.png
Binary files differ
diff --git a/res/drawable-xhdpi/no_favorites_banner.png b/res/drawable-xhdpi/no_favorites_banner.png
new file mode 100644
index 0000000..da71882
--- /dev/null
+++ b/res/drawable-xhdpi/no_favorites_banner.png
Binary files differ
diff --git a/res/drawable-xxhdpi/no_favorites_banner.png b/res/drawable-xxhdpi/no_favorites_banner.png
new file mode 100644
index 0000000..518e8ef
--- /dev/null
+++ b/res/drawable-xxhdpi/no_favorites_banner.png
Binary files differ
diff --git a/res/layout/dialtacts_activity.xml b/res/layout/dialtacts_activity.xml
index 9d63514..fe1e644 100644
--- a/res/layout/dialtacts_activity.xml
+++ b/res/layout/dialtacts_activity.xml
@@ -63,6 +63,11 @@
                 android:contentDescription="@string/description_start_voice_search"
                 android:background="?android:attr/selectableItemBackground" />
         </LinearLayout>
+        <View
+            android:id="@+id/searchbox_divider"
+            android:layout_height="1dp"
+            android:layout_width="match_parent"
+            android:background="@color/background_dialer_light" />
         <FrameLayout
             android:layout_height="0dp"
             android:layout_weight="1"
diff --git a/res/layout/phone_favorites_fragment.xml b/res/layout/phone_favorites_fragment.xml
index 4d3abf4..f518f0b 100644
--- a/res/layout/phone_favorites_fragment.xml
+++ b/res/layout/phone_favorites_fragment.xml
@@ -15,19 +15,23 @@
 -->
 
 <!-- Use LinearLayout + FrameLayout, just to rely on android:divider and android:showDividers -->
-<LinearLayout
+<RelativeLayout
     xmlns:android="http://schemas.android.com/apk/res/android"
     android:layout_width="match_parent"
     android:layout_height="match_parent"
-    android:orientation="vertical"
     android:divider="?android:attr/dividerHorizontal"
     android:showDividers="end"
     android:clipChildren="false"
     android:background="@color/background_dialer_light">
+
     <FrameLayout
+        android:id="@+id/contact_tile_frame"
         android:layout_width="match_parent"
-        android:layout_height="0dp"
-        android:layout_weight="1">
+        android:layout_height="wrap_content"
+        android:layout_alignParentTop="true"
+        android:layout_alignParentLeft="true"
+        android:layout_alignParentStart="true">
+
         <com.android.dialer.list.PhoneFavoriteListView
             android:id="@+id/contact_tile_list"
             android:layout_width="match_parent"
@@ -37,19 +41,22 @@
             android:fadingEdge="none"
             android:divider="@null" />
 
-        <TextView
-            android:id="@+id/contact_tile_list_empty"
-            android:layout_width="match_parent"
-            android:layout_height="match_parent"
-            android:gravity="center"
-            android:layout_marginTop="@dimen/empty_message_top_margin"
-            android:textColor="?android:attr/textColorSecondary"
-            android:textAppearance="?android:attr/textAppearanceLarge"/>
-
         <ImageView
             android:id="@+id/contact_tile_drag_shadow_overlay"
             android:layout_width="wrap_content"
             android:layout_height="wrap_content"
             android:visibility="gone"/>
     </FrameLayout>
-</LinearLayout>
+
+    <include
+        android:id="@+id/phone_no_favorites_view"
+        android:layout_width="match_parent"
+        android:layout_height="match_parent"
+        android:layout_below="@id/contact_tile_frame"
+        android:layout_alignParentLeft="true"
+        android:layout_alignParentStart="true"
+        android:layout_alignParentBottom="true"
+        layout="@layout/phone_no_favorites"
+        android:visibility="gone"/>
+
+</RelativeLayout>
diff --git a/res/layout/phone_no_favorites.xml b/res/layout/phone_no_favorites.xml
index 9fa5d47..e0635de 100644
--- a/res/layout/phone_no_favorites.xml
+++ b/res/layout/phone_no_favorites.xml
@@ -14,21 +14,53 @@
      limitations under the License.
 -->
 
-<FrameLayout
+<RelativeLayout
     xmlns:android="http://schemas.android.com/apk/res/android"
     android:layout_width="match_parent"
     android:layout_height="match_parent"
+    android:orientation="vertical"
     android:minHeight="?android:attr/listPreferredItemHeight">
 
+    <ImageView
+        android:id="@+id/nofavorite_image"
+        android:layout_height="wrap_content"
+        android:layout_width="match_parent"
+        android:layout_gravity="center"
+        android:layout_alignParentTop="true"
+        android:layout_alignParentLeft="true"
+        android:layout_alignParentStart="true"
+        android:paddingTop="36dp"
+        android:paddingBottom="16dp"
+        android:src="@drawable/no_favorites_banner" />
+
+    <FrameLayout
+        android:id="@+id/show_all_contact_button_in_nofav_frame"
+        android:layout_width="match_parent"
+        android:layout_height="wrap_content"
+        android:layout_alignParentBottom="true"
+        android:layout_alignParentLeft="true"
+        android:layout_alignParentStart="true"
+        android:background="@color/background_dialer_list_items">
+
+        <include
+            android:id="@+id/show_all_contact_button_in_nofav"
+            layout="@layout/show_all_contact_button" />
+    </FrameLayout>
+
     <TextView
         android:id="@+id/title"
         android:layout_width="match_parent"
-        android:layout_height="match_parent"
+        android:layout_height="wrap_content"
+        android:layout_gravity="center"
         android:gravity="center"
-        android:text="@string/listTotalAllContactsZeroStarred"
+        android:layout_below="@id/nofavorite_image"
+        android:layout_above="@id/show_all_contact_button_in_nofav_frame"
+        android:layout_alignParentLeft="true"
+        android:layout_alignParentStart="true"
+        android:text="@string/no_favorites"
         android:textAppearance="?android:attr/textAppearanceLarge"
-        android:textColor="?android:attr/textColorSecondary"
+        android:textColor="@color/nofavorite_text_color"
         android:layout_marginTop="8dp"
         android:layout_marginBottom="8dp"/>
 
-</FrameLayout>
+</RelativeLayout>
diff --git a/res/values/colors.xml b/res/values/colors.xml
index e64ea4c..3c3d41f 100644
--- a/res/values/colors.xml
+++ b/res/values/colors.xml
@@ -67,4 +67,9 @@
 
     <!-- Undo dialogue color -->
     <color name="undo_dialogue_text_color">#4d4d4d</color>
+
+    <!-- Background color for no favorites state -->
+    <color name="nofavorite_background_color">#ffffff</color>
+    <!-- Text color for no favorites message -->
+    <color name="nofavorite_text_color">#a9a9a9</color>
 </resources>
diff --git a/src/com/android/dialer/list/PhoneFavoriteFragment.java b/src/com/android/dialer/list/PhoneFavoriteFragment.java
index 32ec71c..aa81858 100644
--- a/src/com/android/dialer/list/PhoneFavoriteFragment.java
+++ b/src/com/android/dialer/list/PhoneFavoriteFragment.java
@@ -17,7 +17,9 @@
 
 import android.animation.Animator;
 import android.animation.AnimatorSet;
+import android.animation.ArgbEvaluator;
 import android.animation.ObjectAnimator;
+import android.animation.ValueAnimator;
 import android.app.Activity;
 import android.app.Fragment;
 import android.app.LoaderManager;
@@ -26,7 +28,6 @@
 import android.content.Loader;
 import android.content.SharedPreferences;
 import android.database.Cursor;
-import android.database.MatrixCursor;
 import android.graphics.Rect;
 import android.net.Uri;
 import android.os.Bundle;
@@ -42,7 +43,6 @@
 import android.widget.AdapterView.OnItemClickListener;
 import android.widget.ImageView;
 import android.widget.ListView;
-import android.widget.TextView;
 
 import com.android.contacts.common.ContactPhotoManager;
 import com.android.contacts.common.ContactTileLoaderFactory;
@@ -128,6 +128,7 @@
         public void onLoadFinished(Loader<Cursor> loader, Cursor data) {
             if (DEBUG) Log.d(TAG, "ContactTileLoaderListener#onLoadFinished");
             mContactTileAdapter.setContactCursor(data);
+            setEmptyViewVisibility(mContactTileAdapter.getCount() == 0);
         }
 
         @Override
@@ -179,9 +180,12 @@
     private CallLogAdapter mCallLogAdapter;
     private CallLogQueryHandler mCallLogQueryHandler;
 
+    private View mParentView;
+
     private PhoneFavoriteListView mListView;
 
     private View mShowAllContactsButton;
+    private View mShowAllContactsInEmptyViewButton;
 
     private final HashMap<Long, Integer> mItemIdTopMap = new HashMap<Long, Integer>();
     private final HashMap<Long, Integer> mItemIdLeftMap = new HashMap<Long, Integer>();
@@ -253,10 +257,9 @@
     @Override
     public View onCreateView(LayoutInflater inflater, ViewGroup container,
             Bundle savedInstanceState) {
-        final View listLayout = inflater.inflate(
-                R.layout.phone_favorites_fragment, container, false);
+        mParentView = inflater.inflate(R.layout.phone_favorites_fragment, container, false);
 
-        mListView = (PhoneFavoriteListView) listLayout.findViewById(R.id.contact_tile_list);
+        mListView = (PhoneFavoriteListView) mParentView.findViewById(R.id.contact_tile_list);
         mListView.setItemsCanFocus(true);
         mListView.setOnItemClickListener(this);
         mListView.setVerticalScrollBarEnabled(false);
@@ -266,10 +269,19 @@
         mListView.setOnDragDropListener(mContactTileAdapter);
 
         final ImageView dragShadowOverlay =
-                (ImageView) listLayout.findViewById(R.id.contact_tile_drag_shadow_overlay);
+                (ImageView) mParentView.findViewById(R.id.contact_tile_drag_shadow_overlay);
         mListView.setDragShadowOverlay(dragShadowOverlay);
 
-        mEmptyView = inflater.inflate(R.layout.phone_no_favorites, mListView, false);
+        mEmptyView = mParentView.findViewById(R.id.phone_no_favorites_view);
+
+        mShowAllContactsInEmptyViewButton = mParentView.findViewById(
+                R.id.show_all_contact_button_in_nofav);
+        mShowAllContactsInEmptyViewButton.setOnClickListener(new OnClickListener() {
+            @Override
+            public void onClick(View view) {
+                showAllContacts();
+            }
+        });
 
         mShowAllContactsButton = inflater.inflate(R.layout.show_all_contact_button, mListView,
                 false);
@@ -280,7 +292,6 @@
             }
         });
 
-        mContactTileAdapter.setEmptyView(mEmptyView);
         mAdapter = new PhoneFavoriteMergedAdapter(getActivity(), this, mContactTileAdapter,
                 mCallLogAdapter, mShowAllContactsButton);
 
@@ -290,7 +301,7 @@
         mListView.setFastScrollEnabled(false);
         mListView.setFastScrollAlwaysVisible(false);
 
-        return listLayout;
+        return mParentView;
     }
 
     public boolean hasFrequents() {
@@ -298,6 +309,51 @@
         return mContactTileAdapter.getNumFrequents() > 0;
     }
 
+    /* package */ void setEmptyViewVisibility(final boolean visible) {
+        final int previousVisibility = mEmptyView.getVisibility();
+        final int newVisibility = visible ? View.VISIBLE : View.GONE;
+
+        if (previousVisibility != newVisibility) {
+            Integer colorFrom = visible ?
+                    getResources().getColor(R.color.background_dialer_light) :
+                    getResources().getColor(R.color.nofavorite_background_color);
+            Integer colorTo = visible ?
+                    getResources().getColor(R.color.nofavorite_background_color) :
+                    getResources().getColor(R.color.background_dialer_light);
+            ValueAnimator colorAnimation = ValueAnimator.ofObject(new ArgbEvaluator(),
+                    colorFrom, colorTo);
+            colorAnimation.addUpdateListener(new ValueAnimator.AnimatorUpdateListener() {
+                @Override
+                public void onAnimationUpdate(ValueAnimator animator) {
+                    mParentView.setBackgroundColor((Integer)animator.getAnimatedValue());
+                }
+            });
+            colorAnimation.addListener(new Animator.AnimatorListener() {
+                @Override
+                public void onAnimationStart(Animator animator) {
+                    if (!visible) {
+                        mEmptyView.setVisibility(View.GONE);
+                    }
+                }
+
+                @Override
+                public void onAnimationEnd(Animator animator) {
+                    if (visible) {
+                        mEmptyView.setVisibility(View.VISIBLE);
+                    }
+                }
+
+                @Override
+                public void onAnimationCancel(Animator animator) {}
+
+                @Override
+                public void onAnimationRepeat(Animator animator) {}
+            });
+
+            colorAnimation.start();
+        }
+    }
+
     @Override
     public void onStart() {
         super.onStart();
diff --git a/src/com/android/dialer/list/PhoneFavoriteMergedAdapter.java b/src/com/android/dialer/list/PhoneFavoriteMergedAdapter.java
index cf2aeee..3347437 100644
--- a/src/com/android/dialer/list/PhoneFavoriteMergedAdapter.java
+++ b/src/com/android/dialer/list/PhoneFavoriteMergedAdapter.java
@@ -116,14 +116,12 @@
     }
 
     @Override
-    public boolean isEmpty() {
-        // This adapter will always contain at least the all contacts button
-        return false;
-    }
-
-    @Override
     public int getCount() {
-        return mContactTileAdapter.getCount() + mCallLogAdapter.getCount() + 1;
+        if (mContactTileAdapter.getCount() > 0) {
+            return mContactTileAdapter.getCount() + mCallLogAdapter.getCount() + 1;
+        } else {
+            return mCallLogAdapter.getCount();
+        }
     }
 
     @Override
@@ -198,7 +196,7 @@
     public View getView(int position, View convertView, ViewGroup parent) {
         final int callLogAdapterCount = mCallLogAdapter.getCount();
 
-        if (position == getCount() - 1) {
+        if ((position == getCount() - 1) && (mContactTileAdapter.getCount() > 0)) {
             return mShowAllContactsButton;
         }
 
diff --git a/src/com/android/dialer/list/PhoneFavoritesTileAdapter.java b/src/com/android/dialer/list/PhoneFavoritesTileAdapter.java
index 882d3c6..939a1ea 100644
--- a/src/com/android/dialer/list/PhoneFavoritesTileAdapter.java
+++ b/src/com/android/dialer/list/PhoneFavoritesTileAdapter.java
@@ -73,8 +73,6 @@
     private Context mContext;
     private Resources mResources;
 
-    private View mEmptyView;
-
     /** Contact data stored in cache. This is used to populate the associated view. */
     protected ArrayList<ContactEntry> mContactEntries = null;
     /** Back up of the temporarily removed Contact during dragging. */
@@ -362,15 +360,10 @@
         return mNumFrequents;
     }
 
-    private boolean isEmptyView(int position) {
-        return position == 0 && (mContactEntries == null || mContactEntries.isEmpty());
-    }
-
     @Override
     public int getCount() {
         if (mContactEntries == null || mContactEntries.isEmpty()) {
-            // empty view
-            return 1;
+            return 0;
         }
 
         int total = mContactEntries.size();
@@ -493,7 +486,7 @@
 
     @Override
     public boolean isEnabled(int position) {
-        return !isEmptyView(position);
+        return getCount() > 0;
     }
 
     @Override
@@ -512,10 +505,6 @@
 
         int itemViewType = getItemViewType(position);
 
-        if (itemViewType == ViewTypes.EMPTY) {
-            return mEmptyView;
-        }
-
         ContactTileRow contactTileRowView  = (ContactTileRow) convertView;
 
         ArrayList<ContactEntry> contactList = getItem(position);
@@ -547,7 +536,6 @@
 
     @Override
     public int getItemViewType(int position) {
-        if (isEmptyView(position)) return ViewTypes.EMPTY;
         if (position < getRowCount(getMaxContactsInTiles())) {
             return ViewTypes.TOP;
         } else {
@@ -1164,10 +1152,9 @@
     }
 
     protected static class ViewTypes {
-        public static final int COUNT = 3;
         public static final int FREQUENT = 0;
         public static final int TOP = 1;
-        public static final int EMPTY = 2;
+        public static final int COUNT = 2;
     }
 
     @Override
@@ -1216,8 +1203,4 @@
         setInDragging(false);
         handleDrop();
     }
-
-    public void setEmptyView(View emptyView) {
-        mEmptyView = emptyView;
-    }
 }