The Smart Phone Wars: Enter Facebook

Tech analysts have pontificated on the possibility of a Facebook phone for years and it seems that their wildest wet dreams (or nightmares) may finally be coming true.

The New York Times reported that Facebook has been hiring former Apple engineers who worked on the iPhone and iPad to help build a Facebook phone.

However, it remains to be seen if a software company can ultimately succeed in the hardware business. After all, Microsoft and Google have made several efforts with mixed successes into hardware and of course Apple comes from the hardware world.

And sure, Facebook's social network is a triumph of design and function, but would you buy the Facebook phone? And what makes Facebook so hurried to build a hardware platform at all – shouldn't they concentrate on developing their core ad business first?

After reading the NYT article, it immediately made sense to me why Facebook wanted to raise so much money in its IPO. Sure, greed and liquidity were probably higher priorities, but the Zuck has ambitions to compete directly with all of the major tech heavyweights as it increasingly expands its platform.

It seems that Zuckerberg has grown very nervous at the thought that Facebook could just merely go down as an application on other companies' platforms as opposed to being a platform within itself. What's more is that he sees the opportunity closing to get a foothold in the phone market before Apple and Google consolidate it.

Facebook joins the mobile hardware arms race just as Google is completes its acquisition of Motorola and Apple gets ready to roll out its next product line of phones, pads, and TVs. This is all setting up to make mobile the great brand war of our time... or has the victor already been decided before the major battles could be fought?

In the current age of App stores and anal retentive music/movie library organization, consumers who have utilized their phones to their fullest potential have invested a great deal of time and money personalizing and organizing. Given the purposeful incompatibility between phone brands (mostly because Apple insists on imposing authoritative digital rights management on all of their media and software), it is not easy to switch phone brands. Think of the person who went through three generations of the iPhone and bought over 50 paid apps that become useless if they buy the new Android.

On the other hand, the social network which Facebook has created is arguably even stickier than the apps on your phone; the time last I checked you can't buy friends on Facebook. Facebook plans to make its social network ubiquitous to the extent that everything you do on your computer or mobile device (chat, email, web search, shop, consume media) would be done through their platform. They basically want to re-rout 80% of the Internet and sell ads with goofy pictures of your friends on them all along the way.

I am very skeptical that Facebook will become the Internet's one-stop-shop mostly because I believe that product focused sites like Ebay or Netflix will always have a huge competitive advantage in any given space. To me, Facebook's ambition of being the next Internet conglomerate puts it in the same category as Google and Yahoo in that it tries to do too many things at one time and often fails where it loses focus. Facebook may very well have the next great smart phone, emailing service, or commerce platform. But will it have all those things? Definitely not.

Whenever the Facebook phone does come to market, I expect it will be little more than a novel distraction. Unless Facebook takes itself off competing platforms, the phone is unlikely to differentiate itself enough. The phone would most likely have a limited appeal to kids and college students who want to feed their fish and pick their tomatoes in class.

Do you guys like the idea of a Facebook phone? Does that make the stock more attractive to you? Do you think they can execute on their dreams or are they too lofty to be realized?

 
roymondito:
No respectable adult would want to be seen with a Facebook phone, much in the same way that they didn't want to be seen with a Sidekick

i loved the sidekick, so gangsta. it was in every rap video

 

If anything this makes me believe that Facebook's stock is going to tank even more if/when this idea becomes a laughingstock of a flop.

Currently: future neurologist, current psychotherapist Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)
 

What an incredibly terrible idea.

1) Their branding is not conducive to a smartphone. I would much rather hold a "Samung" or an "Apple Iphone" than a "Facebook phone".

2) Out of principle I simply wouldn't purchase a Facebook phone. I don't need more connectivity in my life and I don't want someone making money off adds for me simply using the phone.

3) Apple and Samsung have some pretty damn good phones out. They have been doing this for years. What makes Facebook think they can do better?

 
Best Response

I am getting tired of Facebook getting mentioned in the same sentences as Google. It is not and will not ever be half of what Google is, can be and will be.

That being said, Google has the far superior OS in Android and with its recent acquisition of Motorola, is now a serious contender against Apple (the smartphone hardware giant) who relies heavily on its hardware to prop up its inferior OS. We will see in the coming years with a Motorola owned Google and a growing and more aggressive Samsung, Apple begin to take a complete back-seat in the hardware department just as it has done in its mobile OS department.

Back to Facebook: Facebook is kidding itself if it thinks it can play with the big boys. It is nothing more than an app and a website and will never be more than that. Its value is inflated based on its user-base potential and that has been made clear since its IPO. Not sure how much you guys keep up on tech, but the most revolutionary thing Facebook has done aside from being Facebook is releasing a separate app for its chat client that they packaged with the actual Facebook app. All that did was piss people off that a separate app was forced upon them.

I don't think I need to remind everyone about the Microsft Kin and what a massive joke that thing was. The same thing will happen with the Facebook Phone.

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.
 

Facebook has a ton of earning potential, but it isn't a tech giant like the folks they are attempting to compete with. I would be happy with FB if they just put out a decent app for Android. Half the time my FB app doesn't work on my phone and any updates they do just seems to make it worse.

And to complicate the matters, rumor is Google will be designing and releasing branded, unlocked phones by year end. Unfortunately for the manufacturers, it is just extremely hard to make your black rectangle with glass front stand out from the other black rectangles with glass fronts...so they add their bloatware and special apps and proprietary skins in order to make a particular phone 'their phone'. This, of course, causes problems on the back end when Google updates it's OS because then it's a super extended, super lengthy process to push those updates to each different device because the manufacturers have to update all of their crap first and decide if it's advantageous to release new software on existing devices before the release of devices that are currently highly anticipated.

I think FB is wasting it's time and money heading in that direction but maybe they know better than me.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so." - Ronald Reagan
 

I can understand the rumor that FB is looking to acquire the browser Opera just to make it easier for them to show ads on phones. The problem is that then people may switch from Opera or come up with an app that removes ads on smart phones.

Getting into the smart phone market through hardware is a bad idea. Software is FB's strenght, and also where they'll keep their margins up and growing. I'm just never going to buy that stock and I'll buy a brand new car for everyone if FB hits $100 in three years if they choose the hardware approach.

CNBC sucks "This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up
 
Working9-5:
I can understand the rumor that FB is looking to acquire the browser Opera just to make it easier for them to show ads on phones. The problem is that then people may switch from Opera or come up with an app that removes ads on smart phones.

Getting into the smart phone market through hardware is a bad idea. Software is FB's strenght, and also where they'll keep their margins up and growing. I'm just never going to buy that stock and I'll buy a brand new car for everyone if FB hits $100 in three years if they choose the hardware approach.

Still boggles my mind that people consider browsers outside of Chrome. Opera will die if FB acquires it.

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.
 

I'm extremely interested to see how facebook decides to move forward with their (rumoured) phone platform. I also think that their strange hold on the global social networking front is not to be dismissed. A very interesting and dominent company could evolve from this.

"All things are difficult before they are easy" - Thomas Fuller
 

Sounds to me like they are just trying to get their mobile app fully integrated with iOS platform, similar to Twitter, which would be a wise move on their part. Kind of silly they haven't handled this already. It's pretty well known that FB and AAPL do not play well with one another, but if FB becomes a direct competitor to AAPL it will get really ugly. Should be interesting either way.

 

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