The Seattle Times is reporting that Facebook could be designing a smartphone. But they already have a social media app and it works so well with other devices, you say…
Yes, yes…but from an investor standpoint for a company that just went public and the IPO, while impressive, has outshone the stock performance? Well, analysts love ideas, even if they seem a little risky. And when the analysts love it, a rise in stock can follow. Plus, for a team of talented creatives like Facebook has, the question is there: Why use someone else’s creation when they could make their own? Not to mention, this would broaden Facebook out past their substantial social media presence and provide a more well-rounded portfolio.
In terms of business, this is potentially a very saavy move. Facebook previously purchased Instagram, the immensely popular photo app, and has begun branching out (sorry for the pun) with Branch Out, a career type service which edges into LinkedIn territory. Facebook is the definitive leader in terms of data, with its more than 900 million users volunteering their personal preferences, geographic location, job identities, and salary ranges. The market research needed to design exactly the kind of mobile device target is well in hand. All the necessary ingredients appear to be in place.
The cons, though, are plentiful. Mobile devices are saturating the market, with mammoths like Google and Apple the current reigning champs. Additionally, the barriers to entry remain high. Although that 900 million number would be wonderful to pitch the idea of a Facebook phone to, one has to wonder who outside of the early adopters would trade their current smartphone for an unknown, no matter how well known or respected the brand. Then there are the actual phone companies that control the contracts, such as AT&T, Sprint, Vertizon, etc. They’ve built a big, consistent, and profitable business out of their partnerships with Google and Apple. Would they be willing to trade bed partners for an unknown?
Personally, as much as I enjoy Facebook, I don’t know that I would switch. My phone is my conduit to the business world and I’ll be honest as an Apple disciple, I wholeheartedly believe that my iPhone is the best path for me. I wonder if Mr. Zuckerberg’s team could provide a better user-interface than what I am working with now. A lower price point, I absolutely believe, they could drive down to, but what will you lose in terms of quality while they’re in beta? Plus, as the article mentions, while Facebook could purchase a group like Research in Motion, the work needed to make that phone system work as smoothly as some of the other competitors, I feel like maybe these R&D’s dollars would be better spent creating something completely new rather than reinventing the smartphone wheel.