Is Facebook Working on a Branded Smartphone?

The Internet has been buzzing with discussion of the possibility of a Facebook smartphone being in the works. Is this actually happening, or is it merely rumor?

On one side, you have Vivian Wagner. She notes that Facebook CEO Mark Zuckerberg, on his company’s earnings call, flatly stated that building a smartphone “wouldn’t really make much sense for us to do.” She also pointed to a Facebook spokesperson who said “Our mobile strategy is simple: We think every mobile device is better if it is deeply social…We’re working across the entire mobile industry, with operators, hardware manufacturers, OS providers, and application developers to bring powerful social experiences to more people around the world.”

While Wagner notes that these comments don’t explicitly rule out the possibility of Facebook working on a smartphone, there are other barriers. Zuckerberg isn’t dumb; when he says it wouldn’t make much sense for his company to work on a smartphone right now, it’s because he knows his company’s strengths and limitations. Think about all the things that would go into creating a smartphone. The social network would need to change its entire business model, or at least modify it heavily. According to tech consultant Eric Brown, “Dealing with manufacturing, suppliers, distributors, returns, inventory, seasonal sales cycles – these are all concepts that are presently foreign to a social network management firm selling advertising.”

And yet, the idea of Facebook developing its own branded smartphone seems to be a rumor that just won’t die. Adrian Kingsley-Hughes covered it on Friday for ZDNet. According to him, Facebook is collaborating with HTC to bring a Facebook-branded smartphone to market by some time in 2013.

If the Bloomberg story Kingsley-Hughes cited can be believed – always risky when the sources in the item refuse to be named – it sounds very nearly like a dream team working on the project. At least, it could potentially be an interesting marriage of technologies. Facebook is supposedly working on a modified operating system for the device, which may be based around Google’s Android OS, and has assembled a team of Apple programmers to move things forward. Does anyone other than me find the mix of Apple, Google, and Facebook influences on this rumored project to be…intriguing? Possibly even too good to be true?

Kingsley-Hughes thinks Facebook has both a motive and the ability to develop such a smartphone. For the former, he points to the fact that so many Facebook users are browsing the site on mobile platforms, but the social network’s ad income relies on them browsing on the desktop. Apparently Facebook’s own app hasn’t redressed that issue, but perhaps putting out its own smartphone might. For the latter, he simply points to help from HTC, which would presumably get around a lot of the issues raised by Brown.

But Kingsley-Hughes puts his finger on the real issue – and that isn’t whether Facebook could create a smartphone if it had a compelling reason, but whether that phone could successfully compete against what is already out there. As he points out, “It’s not like there aren’t a lot of cheap handsets out there already.” And how, exactly, will Facebook convince its users to get a Facebook handset just to see ads?

Kingsley-Hughes suggests that Facebook could take the Amazon route, by offering a dumbed-down version of Android on its phone, and perhaps heavily subsidizing it with ads. Going that route is a gamble, and could leave the company bleeding money. And Brown seems to think it might not succeed: “To be successful, the device would need to invisibly integrate all the smartphone features with [the] Facebook system – email, photo sharing, check-ins, etc…A ‘chat’ and ‘videochat’ app would most likely be included as well – both using the Facebook ecosystem.” That doesn’t exactly sound like a dumbed-down smartphone, or the kind of phone you’d get if the device were heavily subsidized.

No, it makes a lot more sense to assume that Facebook is simply working closely with lots of hardware manufacturers to get functionality for its website’s features more tightly integrated into a wide variety of smartphone devices. Then again, even Wagner observed that this wouldn’t be the first time a CEO has played coy while keeping a project under wraps before it’s ready to be revealed. We’ll just have to wait and see.

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