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Who Will Facebook Buy to Make a FacePhone?

  • Facebook picking up ex-Apple staff
  • Possibly buying up Opera
  • Who would a FB phone appeal to?
Written by Adam Wajnberg
28/05/2012

PhoneBook maybe? Whatever it will be called, Facebook will almost certainly be releasing a smartphone soon. The social network will be looking for opportunities to capitalize on their $16bn pool of cash following their public flotation last week, and releasing a handset and an operating system around their network is a given.

facebook phone

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Why does this seem like a natural fit? Let’s break it down:

What’s in an OS?

The main components of a phone operating system, besides the phone and network supported SMS, are contacts, music and video, photos, browser, messaging client, calendar, email and maps. Facebook already provides a messaging client, calendar functions, photos, email and more besides, and the other parts are basic to build. The Facebook app for Android and iPhone already duplicates many features of the phone, with the advantage of your data being cloud based. Swiping through a Facebook album is still not quite as smooth as swiping through the camera roll on your phone, but it’s there, and it just needs to be tweaked. Given that a phone is a communication device first and foremost, developing an operating system around Facebook seems like a natural evolution for both phones and social networks.

On the hunt

Word is that Facebook has been poaching Apple staff, and have their eyes set on acquiring Opera, a web browser that is known for its smooth implementation of HTML5. Apps and games delivered in HTML5 can be more easily optimized for mobile devices.

Plenty of fish

The mobile world is on the brink of consolidation. With Apple and Samsung the only two companies making money on handsets, it’s time for struggling manufacturers to find homes. HTC can probably remain independent for a while, but LG has got to be bait at this point. Nokia has been on the verge of a slippery decline for a while, but would be a better fit for Microsoft, given their partnership and the presence of an ex Microsoft executive in charge at Nokia.

RIM, the makers of the BlackBerry, are about lay off 2000 people and are in danger of collapsing. More importantly, they seem to have no graceful exit strategy. They’ve been burning money and consumer patience with a string of poorly executed marketing campaigns, and they haven’t released a new handset in nearly a year. They’re without debt and their stock is trading below their price to earnings ratio right now, so they have some room to maneuver. But right now they seem to be throwing everything behind their next operating system, which doesn’t look to be enough, and have stated they’re committed to their existing keyboard phone form factor. They look mismanaged, and Facebook needs a company with good mobile patents. It wouldn’t be a love match, but successful unions have been made from less (that’s me channeling the old lady from Downton Abbey. Have you watched this yet? It’s pretty good).

Needmoneynowthx

Facebook’s IPO has crashed and burned somewhat, confirming the worst fears of naysayers- that the company has been overvalued by Wall Street insiders to make a quick buck, and will never get back to their opening price. They have a point. Facebook opened at $38 per share, got up to $43 in the first few hours, then crashed to the low 30’s, where it looks destined to sit for at least a while. That few hours was enough for time for institutional investors to get in and get out, making buckets of money and leaving the company in a desperate rush to make good on some of their promises. In a nutshell, they were valued at $104bn, for a company that has never made over $2bn a year, on a product (online advertising) that is quickly losing its cache. For that same last reason,

Google may be looking at Motorola Mobility, which it recently acquired, as a means to step into the ‘real world’ and start manufacturing a product that people can put in their pocket.
Facebook has tried to get a phone going for a while now, but now it has a few elements that tend to push things along – money, and not enough money. And shareholders.

But would it work?

Yeah, definitely. For all its hip cool funkiness, Facebook has a product that appeals to the one part of the Usersphere ™ that other phone makers do not – older folks. Seniors and non-tech types make up a big portion of Facebook’s user base – a big and enthusiastic part.

RIM goes for business types, Android for tinkerers and Windows Phone for people more familiar with how Microsoft does things (that's a generalization - but Windows Phone doesn't quite know what its niche is yet). A basic phone that incorporates Facebook would appeal to the people who log on every day out of a need to connect, and not just boredom.

The 600 pound gorilla here is Apple. Apple lives in a similar place – despite appealing to fashionistas and design students, Apple focuses on people who need their stuff to work, and who like to share photos and keep in touch. Apple owns the warm-and-fuzzy space right now, and their dedication to intuitive user interface makes them the firm for Facebook to beat. They also have an enormous war chest and a share price that might keep going up until we convert money over to iBucks. Arguably, no company in the world enjoys the consumer confidence that Apple does – and shareholders are happy to let them do their thing, taking away some of the pressure.

The world can withstand the introduction of a new mobile operating system, but it probably couldn’t withstand another line of phones. Customers are overwhelmed by choice when it comes to Android and even Windows Phone – manufacturers just can’t resist releasing several dozen attempts to reach every possible customer. Even RIM, with proprietary software on proprietary phones, can’t resist diluting their brand with several models, each of which does something but none of which does everything. If Facebook can find a way to focus on THE Facebook phone and not MANY Facebook phones, then it has a fighting chance. And many consumers will have a proper alternative to the iPhone.

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